Credit Cards

Aug 27 02:34 UTC 1998

At the board meeting the topic of Grex accepting credit cards came up 
again.  The board was vastly more interested in this than it has been in 
the past.

The minuses with credit cards is that there is usually a monthly fee 
Grex would have to pay (maybe $25), plus we'd have to pay something like 
3% of everything to the bank.

But this might not be as bad as it sounds at first.  Apparantly we 
currently pay the bank a .25 fee for processing each check people send 
us.  On the $6 check that is about a 4% charge.  However, we don't 
really get all that many $6 checks.  I happen to have the Grex treasury 
on my computer just now (since I'm substituting for Mark) so I did some 
queries, and it looks like the average check size of the last few years 
is about $30, so the 25 cent check fee comes out to about a 0.8% charge, 
considerably less than the 3% charge most credit card companies charge.

So to break even on credit cards, we'd need to gain maybe 4 or 5 members 
to pay for the monthly fee, and a couple more to cover the 2.2% fee 
increase.  So the question comes down to whether having the credit card 
option available would gain Grex that many more members.

Most people seemed to think this was likely.  Not only would credit 
cards make it a lot easier to join, but it would make it a lot easier to 
renew.  Generally the board didn't like the idea of just automatically 
charging people each month like ISPs do.  That's a little too evil to be 
Grexian.  But we could send Email to people whose memberships are 
expiring saying "your membership is expiring.  Send us mail if you would 
like us to renew your membership on your old credit card number."  We 
think it is likely that a lot of members drop away because it is too 
much of a bother to write a check and mail it in.  If it was just a 
matter of replying to an E-mail message, then we might retain more 
members.

It would also be possible to set up a web page where people can buy 
memberships.  (We'd need to run secure http.)  This would allow a one 
step membership signup.

So it sounds plausible that we could get more than enough new members to 
pay for the costs of doing the credit card thing.  There might be other 
issues: extra trouble for the treasurer, problems with refunds, etc.

Our feeling was that we wanted to do some research on good deals for 
credit card setups, and maybe do something like a 6 month trial to see
how it worked for us.

Do people have suggestions, ideas or comments?

response 2 of 191:

Aug 27 18:50 UTC 1998

I'd be curious about the costs to "get out of" credit cards if we started,
then decided not to continue. Is there a set-up fee we couldn't recover? Do
we have to buy a machine (modem, card reader, etc) that we wouldn't be able
to resell?  
I would *love* to see Grex accept credit cards, but don't want us to get
bogged down in this since I'm not sure it would make a difference to marginal
members (or thinking-about-becoming members).  I'd really support a 6 month
test but want to know the total cost of running the experiment.

response 4 of 191:

Aug 28 10:50 UTC 1998

It's important to note that Grex will probably be getting far more credit card
numbers than actual physical contact with real cards.  One benefit of credit
cards is being able to get money easily from European members.

response 6 of 191:

Aug 28 16:11 UTC 1998

One cost not mentioned is sending a receipt for the money, since it is
tax deductible (for Americans). Overseas users may or may not want a
receipt, but one has to be sent if they do. [It may be that electronic
receipts would be OK for both domestic and foreign...I'm not sure what
is required.]

response 8 of 191:

Aug 28 22:04 UTC 1998

Might, but it would be unclear if that was a deductible donation or
a non-deductible purchase (of a T-shirt or whatever).

response 10 of 191:

Aug 31 14:22 UTC 1998

FWIW, M-Net is trying to set up a system to take credit cards.  I say
"trying" because our assistant treasurer is working with his boss to
have his boss' business pass our credit card requests through.  This
is not going to be awfully satisfactory, but it does save the monthly
charges and the percentage charges.  One thing to consider:  apparently
there are a lot of *fake* credit card numbers being sent to vendors,
created by "credit card number generators."  Guess which organizations
would be liable to be given these fake numbers?   8-)  As a result,
we should carefully investigate the "chargeback" arrangement in case
a credit card number we are given turns out to be bad.

response 12 of 191:

Aug 31 22:09 UTC 1998

I'm not sure M-net would be liable for anything (after all, they haven't
signed anything with MC/Visa), but the merchant could be in some serious
hot water.  If we did this with grex, though, I'm sure we'd want to be
very sure our arrangement was entirely legitimate and on the up-and-up.
We also have probable access to some people who do quite a bit of credit
card business and could tell us a lot about credit card fraud, and how
to avoid it.  In one sense at least, however, we're at a considerable
advantage over the typical credit card business.  We're not shipping
anything that cost $.   If somebody's credit card "bounced", all that
means is we'd turn that person's membership off.  In the meantime, all
we've done is give that person a much worse deal in terms of internet
access than they could have purchased from sprint, aol, or uunet--ie,
the only people who are likely to try to rip grex off are the really
stupid ones.

response 14 of 191:

Sep 1 11:05 UTC 1998

If (when) we can take credit cards, we'll be shipping Grex store merchandise
on the basis of them.  But I agree that Grex is actually fairly unlikely to
be the target of major credit card fraud.

response 16 of 191:

Sep 2 21:20 UTC 1998

Yes, minor credit card is a pain.  For the Grex Store, we certainly need to
take some anti-fraud measures, such as shipping stuff only to the card's
billing address.  For membership donations, I'm not sure what we need to do
for that, but I'm guessing it's somewhat less important because there is
somewhat less incentive to forge card information for that.

We would also probably need need a phone number for angry people who object
to teh charge on their credit card to call and complain to us.  This should
be something that, if it doesn't get answered, at least generates calls back
pretty quickly, before the person starts screaming at their card company. 
I don't know if somebody wants their home phone used for that.  I certainly
wouldn't.  It might make sense to order an extra phone line for dealing with
credit card issues, and have it installed at the house of whoever is dealing
with the card stuff, so that they can turn off the ringer when they don't want
to deal with it.  I don't know if having a phone number available for people
to call about credit card stuff is required, but it certainly seems like a
good idea.

response 18 of 191:

Sep 3 03:21 UTC 1998

er, that should have said "minor credit card debt is a pain."

As for using a modem line and a splitter, it would be a bad idea for such a
line to have busy signals very often.  The staff line, possibly.  Do those
splitters actually work?

response 20 of 191:

Sep 4 16:41 UTC 1998

Re #18:  Didn't you mean "minor credit card fraud"?

response 22 of 191:

Sep 4 23:23 UTC 1998

I think, in general, taking credit cards would be a good thing, but 
there are definitely some disadvantages.  For example, it would make the 
treasurer's job a bit more difficult

I recently obtained a merchant credit card account.  My application fee 
was $75, and I purchased credit-card processing software for $350.  
I believe I could process credit card transactions for Grex, using my 
software and Grex's merchant account, and Grex could avoid paying $350 
for the software.

I think it's one of those things that if we do it and can't increase our 
membership, it will cost us.  Not doing it, though, could cramp our 
growth.  I think, in general, it's probably worth the risk.

response 24 of 191:

Sep 7 19:44 UTC 1998

Does this need a membership vote, or a board vote, or can the treasurer do
this unilaterally?