|
Grex > Coop8 > #72: Should Grex take credit card payments? | |
|
| Author |
Message |
aruba
|
|
Should Grex take credit card payments?
| 
Jun 4 03:20 UTC 1996 |
When I was at the bank on Friday, I asked what it would take for us
to be able to accept credit card payments. The woman there told me
that Michigan National Bank farms out that business to another
organization (I think it's called Michigan Credit, or something like
that). A woman named Cathy at that other company called me back
today, and I have the lowdown on how much it would cost us.
There is a one-time "application fee", a monthly fee, a
per-transaction percentage, and an "approval fee" for transactions
over $50.
The application fee is $60 for regular businesses and $150 for
businesses run out of the home. When I described Grex to her, she
said we could probably compromise at $80, but she'd have to get that
approved. (I don't know, perhaps if I was more forceful I could have
convinced her that Grex was just a regular business which happened to
be located in the basement of a house. But this seemed to worry her,
so maybe paying an extra $20 isn't so bad.)
The monthly fee is $6.
The per-transaction fee is 5.15%, unless we go electronic. Apparently
it saves them money if we send them orders electronically, because
they have a variable-rate plan which goes as low as 3.27% (depending
on volume) if we do that. The catch is that the software to do so
costs $310. We would have to do more than $16,000 of business before
that would pay for itself, so I don't think it's worth it.
For transactions over $50, we have to call up and have them approved
before submitting them. The "approval fee" is 60 cents.
So say we took in $180 this year via credit cards, and for the sake of
argument say it was in 3 $60 chunks. Then we'd net:
$ 180 gross payments
$ -80 application fee
$ -72 monthly fees
$ -9.27 5.15% bank cut
$ -1.80 approval fees
--------
$ 16.93 net
In other words, 3 $60 payments gets us past the break-even point, and
each $60 payment thereafter nets us $56.31 . If these were payments
we otherwise wouldn't get at all (such as from foreign users), this
definitely seems worth it to me.
Next year, of course, we won't have to pay the $80.
What does everyone else think?
|
| 70 responses total. |
rcurl
|
|
response 1 of 70:
|
Jun 4 03:28 UTC 1996 |
What's this stuff about "regular" business and some other kind? CCI is
a Michigan non-profit corporation. Where we conduct our business is
none of their business. Find out what is really needed. Our *business*
address is either our registered address or whatever we choose to use
(including a PO Box, if we want).
It can't be justified on the basis of cost per user, but as you say if
it gets users that wouldn't pay otherwise, it is a great idea. No harm
in trying it for a year.
|
janc
|
|
response 2 of 70:
|
Jun 4 04:02 UTC 1996 |
This sounds like worth trying.
I wouldn't expect huge amounts of income from India though. First of all,
$60 is a lot harder for Indians to come up with than Americans. Second, most
of our Indian users seem to be students, and no richer than American students.
Third, credit cards aren't all that common in India.
Still, I expect between various Americans and foreigners, this will get us
more than 3 additional members. Of course, it is also likely that many of
the users now paying by check will prefer the convience of paying by credit
card, which could lose us income.
|
aruba
|
|
response 3 of 70:
|
Jun 4 04:11 UTC 1996 |
Re #1: Idon't know Rane, she asked me if the business was run out of my
home, and said the rates were different if it was. I described where Grex
was housed, and she sounded dubious. I didn't really know what to tell her.
|
omni
|
|
response 4 of 70:
|
Jun 4 04:56 UTC 1996 |
I don't like it. Grex should be putting it's money toward things that are
needed. People who have credit cards can always get a cash advance, or a check
drawn at a smaller cost than Grex wouod incur to cater to these people.
And I will bet money that this only covered Visa/MasterCard or American
Express, but not both. The money is needed in so many more areas than this.
|
robh
|
|
response 5 of 70:
|
Jun 4 06:46 UTC 1996 |
Re 2 - I recall seeing three requests from users from India who
wanted to send us money with a credit card, just during the
last few months. Maybe the money won't come rolling in, but
it's worth looking into.
Re 4 - Sure they can get a cash advance with their credit card.
In the local currency. How were they supposed to get that to
us, exactly? (This applies to users from Europe as well.)
Ever tried getting a check to someone overseas, in a form
they can use? It's not as easy as you think, and costs a
fair amount.
I like the idea. Obviously I'll like it more if rcurl is
right and we talk our way to a lower startup fee. >8)
|
scg
|
|
response 6 of 70:
|
Jun 4 07:06 UTC 1996 |
What Rob said.
This item probably doesn't have enough background in terms of why we're
looking into this, so I'll go into a little detail about that. We're now
finding that a sizable portion of our user base is in India, and we're
starting to get a fair number of requests from people in India who want to
donate money to us. That's great; Grex needs the money, and we'd love to be
able to accept donations from them, just as we accept donations from our
American users. However, we haven't found a good way to get money from them.
Currently, all we can deal with are checks in US dollars, and American cash.
According to the Indians who have wanted to give us money, there is no easy
way for them to get American money in India. Credit cards are available
there, so that would be a way they would be able to pay.
I think we would probably get enough money out of this to make it useful, so
I think I support it if there isn't a cheaper way to do this. Mark, did you
ask if there were any ways other than credit cards for Indians to easily
transfer money to us?
|
ajax
|
|
response 7 of 70:
|
Jun 4 07:07 UTC 1996 |
Jim, re #4, I know this looks like wasting money on nothing to
save people the trouble of writing a check, but I think (hope) it
will actually entice people to contribute who ordinarily wouldn't.
If we could use the billing style of online services, with $6 a
month automatically charged (optionally), it could also help retain
members who might let their memberships lapse through neglect.
Would giving credit card info be considered an adequate form of
ID for membership? If not, I could see that undoing much of the
convenience of becoming a member by credit card.
The application fee is a bummer, but overall, I think it sounds
worthwhile, if Mark is up for the added treasuring!
|
scg
|
|
response 8 of 70:
|
Jun 4 08:36 UTC 1996 |
I wonder if we could even automate this, with a become a member web page, or
something like that. It raises some other interesting issues, but it could
be done.
|
rickyb
|
|
response 9 of 70:
|
Jun 4 14:09 UTC 1996 |
When I began to take CC's in my office i had several companies breaking down
my door to get my business. They compete by offering me the 'lowest' rate
(% of each charge they take). As I recall, they were otherwise pretty close
to the same in set-up charges, monthly service fees, etc. Going through a
local bank is _much more_ expensive.
I had a rep from Discover (Novus) whom I ultimately contracted with. They
set me up with an account (through a clearing house in Florida, NaBanCo) who
actually processes the charges. I got a terminal and card scanner, which is
what I pay the monthly fees for (Oh yeah, I got a printer too). To make a
charge I just hit the "sale" button, key-in the card number and expiration
(or scan it, if i have it in-hand), and press "transmit". I then get an
approval # on the terminal which also prints out on the printer with the rest
of the transaction. If the person is in front of me, they sign the printout
and get a copy. This is deposited into my local bank account within 24hrs
(so they say). I get daily and monthly statements of the account, and the
transactions show up on my bank statement.
Currently, I pay less than 2% per transaction (1.7% or 1.2% I think. Rates
change and are different if I take Discover/Novus or if it is Mastercard or
Visa...because my vendor is promoting Novus).
DON'T do this through your bank...it's considerably more expensive. If you
want to do it, search the market for the best vendor. These are a little like
long distance service companies, each one wants to out-do the others to get
your business. Once you're enrolled, you'll get solicitations from
competitors regularly for "better deals".
|
carson
|
|
response 10 of 70:
|
Jun 4 14:17 UTC 1996 |
I'd be interested in helping to defray the cost of the start-up.
|
robh
|
|
response 11 of 70:
|
Jun 4 15:59 UTC 1996 |
Ooh, a credit card peldge drive?
|
brighn
|
|
response 12 of 70:
|
Jun 4 16:22 UTC 1996 |
I'm still unconvinced this is fiscally sound... but how about
adding on a credit card fee? $6/mo for check/cash, $7/mo fo credit card.
The extra dollar would pay for the processing, roughly speaking.
(if someone else already said this and i missed it, pardon me)
|
rickyb
|
|
response 13 of 70:
|
Jun 4 17:38 UTC 1996 |
Can't do that paul. A standard part of these agreements prevent it. Just
think, as a consumer...would you want to pay _more_ for something just because
you're using a CC and will likely also be paying finance charges at an ungodly
rate? The CC companies say the fee is the cost of the merchant getting their
money up front.
For me, I have to say it's been good. People who owed me $ but didn't have
it, or didn't send a check, now pay with a card. Some who might not have been
able to pay cash for services now charge it and I get a little less, but
increased revenue in the long run.
OK, now I'm at the office and, while I don't have the most recent rates in
front of me, here's what I've got:
Merchant set-up fee (one t
(oops...sorry 8*)
Merchant Set-up fee (one time) $0.00
Monthly Service fee $0.00
Rental of terminal (per month) $5.00
Rental of printer (per month) $5.00
(these can be purchased, new or used, btw)
Discover Card Rate Charge 1.99%
Visa/Mastercard Rate Charge 1.99% - 2.5%
For this company, you require the terminal, but not the printer, although it
is very helpful. You can get more info from Discover Card Services, Inc,
1-800-982-8185.
I'm sure bigger merchants can get better rates, and smaller ones might wind
up with higher rates, but I think the increased revenue from sources npot
otherwise contributing will become obvious. If not, drop the contract and
the experiment and chalk it up to experience.
|
kaplan
|
|
response 14 of 70:
|
Jun 4 18:02 UTC 1996 |
Are the people who would contribute by CC willing to e-mail their CC nubers
or otherwise transmit them over the Internet? Is this safe? Would it make
more sense to use a payment method that others are using on the web?
My brother works for openmarket.com and when I told him about grex's
situation he thought we wouldn't be able to afford his company's services.
But maybe he was wrong and we need to contact a salesperson there.
Openmarket currently gives the Girl Scouts a good deal where OM lets Girl
Scouts sell cookies over the WWW with smaller than usual fees. In
exchange, Girl Scouts gives customers their first itroduction to OM.
|
ajax
|
|
response 15 of 70:
|
Jun 4 18:55 UTC 1996 |
Some people are willing to give a CC# through non-secure channels.
I've given my CC# to a program just over a telnet connection. It is
risky, but so is using a credit card at a restaurant, and I do that.
If someone stole my CC# and used it, I'd be liable for no more than
$50, so it's a risk that I can live with.
|
robh
|
|
response 16 of 70:
|
Jun 4 19:00 UTC 1996 |
Hopefully the people who wanted to send us their CC#'s would
be able to mail them to us. I'm sure we can wait the extra
time for snail mail to reach us, if it means better security
for our potential members.
|
kaplan
|
|
response 17 of 70:
|
Jun 4 20:02 UTC 1996 |
I know you can't charge the customer an extra fee for using a CC, but I've
seen some merchants offer a "cash discount" which amounts to the same thing.
All we need to do is change the rates. $60 for 11 months, one extra month
free if you pay by cash or check.
Also, when I tried to donate $20 to Univ of Mich radio WUOM, they refused to
take my CC. They only accept them for donations above a specific number.
I think it was $60. So I paid by check. I suppose their bank extracts some
kind of fee per transaction.
|
brighn
|
|
response 18 of 70:
|
Jun 4 20:18 UTC 1996 |
(I've seen cash discounts too, Jeff, hence the suggestion.)
|
rcurl
|
|
response 19 of 70:
|
Jun 4 21:31 UTC 1996 |
re #3: grex is a machine in a basement, Mark. The corporation's address
and "place of business" is not there.
re #14: I e-mail my CC number all the time. I have given up worrying about
it, and apparently so have most people (on line). The risk and liability
are very small - smaller than using it in stores, where clerks can collect
numbers anytime they'd like.
|
aruba
|
|
response 20 of 70:
|
Jun 4 23:39 UTC 1996 |
Thanks, rickyb, for all that info. I will follow up on it.
Last night I wrote to several of our Indian users who had inquored about
how they could support us, and asked them if our accepting credit cards would
solve their problem. Unfortunately, two of them said they do indeed have
Visa and/or Mastercard, but that their cards are only good in India and
Nepal. :( Bummer. So this may not solve our problem after all.
|
mcpoz
|
|
response 21 of 70:
|
Jun 5 00:13 UTC 1996 |
Another CC lead:
Marcella Smith
FBS Card Services
703 Miller St.
New Haven, Mo. 63068
800-309-2404 (then dial 99037)
1.99% fee +.20/item
.05/long distance authorization
$5/month for statements
$55 merchant set-up fee
$35 minimum monthly processing fee
$19/month rental on Tranz 380 card processor (All the companies I checked
discourage the smaller XL300 card processer)
No appliation fee.
They accept/reject based on risk. Home businesses are considered high risk.
They seek a storefront and/or advertisement as verification. They will
consider special cases. A big plus is the number of years Grex has been
in existence.
|
rcurl
|
|
response 22 of 70:
|
Jun 5 07:09 UTC 1996 |
And, boy, do we have a big storefront - the whole web! This is no "home
business" - we reach thousands (and thousands reach us). Advertise
ourselves on the web, and they will come...how many places do we advertise
(are listed) already?
|
robh
|
|
response 23 of 70:
|
Jun 5 12:50 UTC 1996 |
Every search engine I know of has us listed.
|
rickyb
|
|
response 24 of 70:
|
Jun 5 16:52 UTC 1996 |
There's another company called EFS <?>. I don't have their number handy
though. They were pretty competitive with Novus but the terminal was a little
more expensive. That was a couple of years ago, they keep calling me with
promises of lower rates but I haven't tried them yet.
re#17: Yes, it's all in the (legal) terminolgy...<don't you just love those
lawyers?>. you can't charge _more_ for credit card transactions, but
you _can_ offer courtesy discounts, or cash incentives if you want.
I think the reason some pledge drives don't take CC's for less than
a certain amount is that A] it needs to be cost effective for their
fund-raising, and B] a certain % of transactions get denied, which
can result in "chrageback" fees (like a bounced check charge) in
addition to the service charge and not even getting paid. So the
risks are calculated into the benifits and a threshold set for CC's.
|