Credit card charges.

[Anonymous-poster]

Now that more and more people want to pay by card why can the buisiness not make a charge for supplying this service?
If you put your prices up then you are penalising cash buyers.

I know this if irrelevant to bigger ticket items but for small amounts it makes a huge difference to margin.

[Ham_and_Jam]

Anonymous-poster said:

Now that more and more people want to pay by card why can the buisiness not make a charge for supplying this service?
If you put your prices up then you are penalising cash buyers.

I know this if irrelevant to bigger ticket items but for small amounts it makes a huge difference to margin.

I suppose it all comes down to perception. If you charge one customer more than another, you piss one off. Not good business.

Look at your business as a whole, calculate your profit margin for your business over all your products and customers. There are always certain products, services or customer types you make more money on, but what matters most is the bottom line overall.

I was reluctant to taking card payments at first, I hate paying for services where I don’t see the obvious benefit. However after having a card machine in our retail business for the last 2 years, we have seen our sales significantly increase. Probably 15% year on year. That has made the charges seem insignificant.

What I see everyday with people paying for things by card is adding extra items that they wouldn’t have when paying by cash. The average sale of a card is definitely higher than a cash sale.

I would say embrace it, proactively advertise you take card payments. You should do better business.

[Anonymous-poster]

Ham_and_Jam said:

Anonymous-poster said:

Now that more and more people want to pay by card why can the buisiness not make a charge for supplying this service?
If you put your prices up then you are penalising cash buyers.

I know this if irrelevant to bigger ticket items but for small amounts it makes a huge difference to margin.

I suppose it all comes down to perception. If you charge one customer more than another, you piss one off. Not good business.

Look at your business as a whole, calculate your profit margin for your business over all your products and customers. There are always certain products, services or customer types you make more money on, but what matters most is the bottom line overall.

I was reluctant to taking card payments at first, I hate paying for services where I don’t see the obvious benefit. However after having a card machine in our retail business for the last 2 years, we have seen our sales significantly increase. Probably 15% year on year. That has made the charges seem insignificant.

What I see everyday with people paying for things by card is adding extra items that they wouldn’t have when paying by cash. The average sale of a card is definitely higher than a cash sale.

I would say embrace it, proactively advertise you take card payments. You should do better business.

We have and are but why should the cash buyer be penalised for increased costs or me ,while the card payer gets of lightly even with a minimum £5 spend?

[Ham_and_Jam]

I understand what you’re saying, I’m in the same situation so I get it.

However in my head, I have completely removed the charges from my calculations per sale, and just put them into general overheads. They really pale into insignificance compared to other costs, and overall my profit is up compared to my business pre-card sales, so it doesn’t really bother me.

Don’t forget paying for change, depositing large wads of cash, and frequent carting it back and forth to the bank has it’s own costs too. I have to say for someone who was uber reluctant to move to card sales, I’m a convert and have started to push for more. We are currently around 45% card sales, and hopefully a continuing trend

[MagnusFrater]

Ham_and_Jam said:

Anonymous-poster said:

Now that more and more people want to pay by card why can the buisiness not make a charge for supplying this service?
If you put your prices up then you are penalising cash buyers.

I know this if irrelevant to bigger ticket items but for small amounts it makes a huge difference to margin.

I suppose it all comes down to perception. If you charge one customer more than another, you piss one off. Not good business.

Look at your business as a whole, calculate your profit margin for your business over all your products and customers. There are always certain products, services or customer types you make more money on, but what matters most is the bottom line overall.

I was reluctant to taking card payments at first, I hate paying for services where I don’t see the obvious benefit. However after having a card machine in our retail business for the last 2 years, we have seen our sales significantly increase. Probably 15% year on year. That has made the charges seem insignificant.

What I see everyday with people paying for things by card is adding extra items that they wouldn’t have when paying by cash. The average sale of a card is definitely higher than a cash sale.

I would say embrace it, proactively advertise you take card payments. You should do better business.

H & J is right, people will spend more on cards than they do on cash. Most people have heard the phrase "It's not like spending real money". That's how most customers perceive spending on plastic (or metal nowadays).

You might also need to look at your rates if they are taking a sizeable chunk of your revenue on each transaction. Most people would be using debit cards no? Which hopefully you are paying less for? Average split industry wide for most businesses is 85%/15% in favour of debit cards.

[Mr Overheads]

But what does your bank charge you to bank the physical cash, usually there's a charge on that too. How much time does it cost to reconcile the cash in the till? What extra security procedures to you need in place to deal with cash, etc etc. Cash has a cost too.

[MagnusFrater]

Mr Overheads said:

But what does your bank charge you to bank the physical cash, usually there's a charge on that too. How much time does it cost to reconcile the cash in the till? What extra security procedures to you need in place to deal with cash, etc etc. Cash has a cost too.

Also, this is bang on!

[Mashwort]

Anonymous-poster said:

Now that more and more people want to pay by card why can the buisiness not make a charge for supplying this service?
If you put your prices up then you are penalising cash buyers.

I know this if irrelevant to bigger ticket items but for small amounts it makes a huge difference to margin.

Businesses are not allowed to make a charge when a (consumer) card is used as the EU regulated part of the industry back in 2015/6 and capped the fees the card issuer charges the merchant's acquirer (the company who processes the transactions for the merchant). The regulators logic was that if they reduce the profit the issuer makes on the transaction, this would be passed through to the merchant and ultimately to the consumer and thus the consumer shouldn't be charged for user their card in a regulated market. How much of the saving the acquirers passed through to merchants is an interesting question and apart from removing surcharging, the consumer benefit is even more questionable but thats never stopped a regulator before....

On the second point, the ticket size is not relevant. When the EU regulated interchange (the fee the acquirer pays the issuer) they set debit and credit interchange as a %. In turn acquirers charge merchants a % on each transaction. So if you acquirer charges you say 1.5% for each transaction, the margin impact on a £2 transaction is the same as a £2000 - the merchant gets 98.5% of the transaction after the acquirer cost is taken into account.

All of these minimum £5 transaction value notices don't make any sense (if the merchant is paying flat transaction fees which would impact margin on lower ticket sizes, they should move to an acquirer that charges %s!)

[red_slr]

Mr Overheads said:

But what does your bank charge you to bank the physical cash, usually there's a charge on that too. How much time does it cost to reconcile the cash in the till? What extra security procedures to you need in place to deal with cash, etc etc. Cash has a cost too.

Remember, many, many businesses try not to bank physical cash to avoid those fees. They will carry it in their petty cash account and use the cash as they go to pay suppliers who will take the cash or for actual petty cash like fuel or small purchases.

For example if we have a larger purchase coming up say an item of plant I will tell accounts to hold back that cash over a period of time so then I can use it to pay for the item and save the banking charges.

[Ham_and_Jam]

red_slr said:

Remember, many, many businesses try not to bank physical cash to avoid those fees. They will carry it in their petty cash account and use the cash as they go to pay suppliers who will take the cash or for actual petty cash like fuel or small purchases.

For example if we have a larger purchase coming up say an item of plant I will tell accounts to hold back that cash over a period of time so then I can use it to pay for the item and save the banking charges.

This is exactly what we do.

We are approximately 45% card sales, so wages and smaller purchases are all done via BACs.

We have a couple of our main suppliers who invoice weekly and they are paid cash. It balances out really well.

[Ham_and_Jam]

Mashwort said:

On the second point, the ticket size is not relevant. When the EU regulated interchange (the fee the acquirer pays the issuer) they set debit and credit interchange as a %. In turn acquirers charge merchants a % on each transaction. So if you acquirer charges you say 1.5% for each transaction, the margin impact on a £2 transaction is the same as a £2000 - the

All of these minimum £5 transaction value notices don't make any sense (if the merchant is paying flat transaction fees which would impact margin on lower ticket sizes, they should move to an acquirer that charges %s!)

Most acquirers charge transaction fees aswell as % charges.

Typically they are 4p / sale. Doesn’t sound much but it can eat into margin on very low ticket items. They typically charge up to 1% AND the 4p transaction charge. That is 5p on a £1 sale (5%).
We use iZettle and the moment, they don’t charge a transaction fee, but hide it in their higher % fees. So swings and roundabouts. They also have a min £1 sale. Something we have no control over.

[Mashwort]

Ham_and_Jam said:

Most acquirers charge transaction fees aswell as % charges.

Typically they are 4p / sale. Doesn’t sound much but it can eat into margin on very low ticket items. They typically charge up to 1% AND the 4p transaction charge. That is 5p on a £1 sale (5%).
We use iZettle and the moment, they don’t charge a transaction fee, but hide it in their higher % fees. So swings and roundabouts. They also have a min £1 sale. Something we have no control over.

The 4p per sale was introduced back in mid 00's as the auth fee (back then it was 3p) - it was a way to manage margin by the acquirers - they started charging for the authorisation as if it were a new service but it was embedded in the fee previously. Personally I would move from any acquirer charging transactional fees, their costs are fundamentally % driven and thus wouldn't pay. If you are already taking cards, negotiating to move is straight forward and there will be one of the players wanting to take you on without the transactional fee. If you can't be bothered to move, contact your current provider, most will negotiate to keep you and if you have low transaction value, negotiate the transaction fee away.

[cheekymeerkat]

I've worked this out in my shop, it all depends on volume but then again on the retail side we only take 400k per year with an average transaction of £12

Cash paying in charge 0.30%
Blended card rate 0.60%
G4S 1 collection per week: £850/year

I hate cash, I hate counting it, I hate doing safe checks every other day incase staff are fiddling, I hate cashing up, it's tedious (even with a scale!), And I had wasting time queuing at the bank, so I'm happy to pay the fees outlined above. None of my suppliers accept cash so banking it works well for me.