Suddenly, Credit Cards!

wackman

My last 4 remodels have all wanted to pay with credit card. Until these 4 I've never had a decent sized job want to pay with their credit card and we don't do any service work.

This includes a 36k kitchen, a 42k kitchen, a 32k bath addition and now a 84k home make over. If I just said yeah then I would have given up almost 6k in credit card fees (at 3%).

So far I just told them all that they can pay that way but the fee will be passed on to them and they said "never mind".

They all want the points or miles or whatever.

It's enought that now I'm thinking I better find a cheaper way to run cards and just accept them.

I know there are other threads on these but I didn't find what I was looking for. What rates are you guys paying and where?

cbtexas

Did they ask you if you accepted credit cards before you quoted them a price. If they did then I would have quoted them a price that included the 3% markup. Then you would be covered if they agreed to the job. If they ended up paying cash, you would have been that much more ahead. I doubt if they would have even noticed the 3% above what you would normally quote. Heck they don't even know what your normal quote is. I guess a guy should ask them how they plan on paying for the job when you first meet with them. Will it be personal savings, bank loan, credit card, ect. Do you use quickbooks? You can set up merchant account through there and not have to buy or lease a terminal. I think I pay nearly 3% but it is worth it for the customers that want to pay that way.

CB

dougchips

OMG, what's their credit limit and why would someone walk around with a card that they can charge over 80k? Ask them if they have a black Amex.

2.95%
2.65% Amex and Discover forget which is which

MC/Visa I think is at .8% but everyone uses Amex or Discover for the cash back or the points.

Did you sign the jobs without taking credit cards?

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Vinny

Wackman,

I think you will find all merchants are around 3% some alittle less maybe, but not enough to notice. We have been accepting cards for several years now and the usage rate is increasing all the time. While the 3 percent can be painfull you just gotta plan for it in your annual budget and go with it. We normaly figure the possibility of 30% of our residential base using either credit cards or same as cash, which cost the same, and we put that expense amount in our credit card and bank fees line item of our G&A overhead.

So then instead of worrying that you didnt pick it up with that individual client, all clients are really funding it in the sell price. Then if that money isnt spent on those fees it goes to the bottom line, assuming you hit your other targets.

You will need to look at this objectivly and really try to estimate what the potential for use is. Our average job is only $10,000 but I'm sure you can adapt that to your buisness model

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cbtexas

[quote=dougchips;268525]OMG, what's their credit limit and why would someone walk around with a card that they can charge over 80k? Ask them if they have a black Amex.

quote]

I have a Chase Visa that has a 44,000.00 limit on it. I use it in my business all the time. I get 1% cash back on it. I also have a personal VISA with a 21,000 dollar limit. I charge everything I can on it and would jump at the chance to pay for the remodel job with it. A 36,000 remodel job would net me 360.00 back to me personaly from VISA. That is 360.00 that can use for whatever I want. It is just as easy to write a check to VISA to cover the charge as it is to you. The perks are what people are after. If you upcharge the job 3% and you tell me, then I see it as going in the hole 2% just trying to get the perks. If you don't tell me, I probably wouldn't know you added 3% and you probably would end up getting the job. I used to use a Southwest Airlines VISA and got so many roundtrips that I couldn't use them all. That is when I switched over to the cashback card. I forgot to add that you MUST pay the balance off each month or the reward perks are pointless.

CB

GregS

Price your job with the extra 3% and then offer a cash discount of 1.5%.

Just be careful you never tell your client that using a credit card costs more.. some merchant agreements state you cannot charge extra if the client uses a credit card.

RobertCDF

The local BBB that I am a part of has a processor as a member so they set up a special program for BBB members... 1.7-1.9% for most transactions. Up to 3.3% in rare occurances (like if you dont swipe and it asks you for a zip code to verify and you dont enter it) Plus the .25 or .50 per transaction and I think a .75 batch fee (once at the end of the day) Monthly statment fee of $7.5 and $10 if you rent a machine (The only way to get the low rates us to use a machine to swipe) The machine should pay for itself on the lower rate if you use it a few times a year.

Wish I could tell you the name of the company to see what other programs they offer but I cant find the email.

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wackman

They've all asked after the contract is signed and the price is known. In the past people only used a credit card for emergencies but not anymore. When I think about it does make perfect sense.

We've done a pretty good job of marketing ourselves to the higher end clientele so most of our customers are lawyers, doctors, judges, engineers etc.. This particular client is a doctor (not the medical kind) who's the superintendent of one of the higher end local school systems.

I use excel to bid so I'll just add a column at 3% for credit card expenses one every dollar and run it through quickbooks like someone suggested.

I don't know if he has a black card or not, I know someone who has an ammex with a 600k limit! He has so many round trip tickets he just gives them away weekly.

Mike Finley

I use a company credit card for a lot of my companies transactions with vendors, routinely running 20-40K a month through it or more. One of my vacations every year is free thanks to the cash back my vendors help me get. I still find it ridiculous that vendors let me do this.

However, I have a couple of vendors that won't let me do it, but guess what, I still do business with them. I ask if they take a credit card, if they say yes, I use it, if they say no, I still do business with them.

I think you will find most well off customers will be the exact same way with you in regard to credit cards, they are simply seeing if they can maximize their money.

George Z

1.7%

http://www.moneris.com/index.php?context=/


Almost everyone pays credit card now.

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MVH

I have been putting a lot of thought into accepting credit cards. It is not uncommon for some people to have multiple cards with $25k limits.

Does anyone have experience using the services offered by QuickBooks?

Mike

George Z

Do a search here.
It's been discussed a lot.

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cbtexas

I charge credit cards through Quickbooks. It it easy as pie. I have to create an invoice for the customer for the charges. Then this is outstanding invoice is shown in you you accounts receivables. You simply enter the customer's credit card info in their customer information section. When you go to receive payments option, it lets you pick whether they will be paying cash, check, CC ect...

If you choose credit card, it auto populates with the info you have already entered in customer information. You enter an amount and it brings up all outstanding invoices and you choose which invoice you want to pay with the amount entered. Choose save and it starts the transaction process that is all done online. It gives you an approval that you can print out and then go back to that invoice and it will show paid stamped on it and you can print that out for the customer too.

Then you go to make deposit and check the money you just transacted to make the deposit into your bank account in quickbooks.

I really like it. Simple and no terminals to buy or rent.

CB

MVH

George Z: Did suggested search, lots'o info, thanks!

cbtexas: Thanks. Most people seem to focus on costs. I think the benefits, such as; lessening bank trips, deal closing tools, shortening cycle times, and projecting legitimacy, far outweigh the costs.

Mike

Vermaraj

A contractor friend of mine got burned pretty good accepting credit cards for a remodel. Seems the HO couldn't get a loan for the remodel so they decided to use credit cards instead. As soon as the job was completed they called the credit card company and disputed the charge.

He is out the total value of the job, until he can prove to the credit cards satisfaction that he did in fact complete the job. Problem is the credit card company has no formal method to determine that he actually completed the job. His own only recourse is liens and small claims court.

wackman

I have still signed every job that has asked about credit cards so far, without taking them. But I could see how it would make better sense for me to just add that charge to every bid and then advertise openly that we accept cards. It could sway people more easily to use us. It would be seen as a positive instead of a small negative and when people don't use credit cards then it's just that small amount extra I pocket.

Either way seems like a win/win for me.

Grumpy

We started accepting credit cards about 5-6 yearsa go at the last ocmpany I worked for. I urged my boss to do this. Why? When I lost 2 sales in one month and heard "We went with xyz, they were a little bit more and I think you would have done a better job but they accept credit cards."

Wha?

It never occured to me that some people are buying stuff they can't afford because I usually only buy things I can afford. Anyways when I started my company it was part of my business plan to setup with CC's right away. I did and though I don't overly promote I drop a casual non-chalant note, "oh yeah we accept visa and master card."

I spread the cost amongst all jobs. We periodically run numbers to see on average how much we are spending on merchant account fees. Typically I find 33% of our customers make some form of payment by credit cards. It's a cost of doing business.

Rates vary. You will find anything from 1.5-3% based on how long you've been in business, what industry you operate within. However as I said rates vary, they constantly change.

BTW I ahve always heard that asking the customers to pay your fees for the credit card transactions is illegal. I know of one company that holds it back from the salesrep's commission.