Update on Am I being bold or stupid

[Northeast Puller]

Update on Am I being bold or stupid
Thanks for every ones in put. I am going thru True Value for the card processing but no discounts on the new equipment. If I had a POS system it would be even more costly to up grade. On a side not if you use an Amex card on Friday 7/10 and say a holiday is Monday it does not go in till Tuesday and is 4 business day to process Discover is two day’s It is placed in my bank on 7/17 at 11:59 pm. The bank does not put it in to my account till Monday at normal banking hours. So the purchase you made on 7/10 with a holiday is not usable to me till 7/20 that is 11 days and the most fees of all cards. That is another reason some stores do not take amex. First off the 2 or 4 percent transaction fee is not going to force me to lock the doors and give up. But if you cut operating cost wear you can because the rent goes up electric goes up workman’s comp goes up it all adds to the cost of doing business and in the end the customer pays for it. So by cutting cost ware and when you can the customer wins. I think raising prices to cover credit card cost is unfair to the cash paying customers so you can get points to pay for your next vacation or cash back from your card or whatever you get from it by using your card. This is a no win situation. If you add a fee to the card user, they feel slighted. If you give a cash discount, the card user still feels slighted. Jr sutten makes good points on the use of cards in any store and some I have not thought about. So I thick the best thing to do as cards are here to stay is just pass the cost along to every one .Now to poke the bees nest with a stick For the folks that say it is the cost of doing business and to just suck it up. Lets put the shoe on the other foot. Now what if your employer tacked on a 2 or 4 percent every time you punched the time clock as a transaction fee to you as a cost of you coming to work (cost of doing business to you) you would be a bit po-ed by Friday I think.

 

[Traditional Farmer]

The difference is unless a customer is financially irresponsible they can apply for and get a credit card and use it if they want its their choice,with direct deposit these days
(required by Social Security) its a problem for some people to go to the bank and get cash so they leave the money in the bank and write a check for the Credit card bill when they get it.Wouldn't bother me either way as I'd just keep it in mind when buying at wherever I deal sort of like a buyers premium at an auction some folks get all worked up about it no big deal to me I just bid accordingly.

 

[Hay hay hay]

You set the price. I'll decide to buy or not based on that price (and convenience factors).
I don't know what costs are in your stores pricing formula and don't want to.
You are making this far too complicated. You know your customers.
You will learn at the cash register if you were right.

I will tell you that I have just quit buying at 2 retailers who sent me notes in their monthly bills
sharing their woes about costs, billings policies from their suppliers and tacking on 1.5 or 2% per month late charges.
They need not worry, I will never have a late charge from them.....or any other charge either.

 

[jstpa]

Hay, Just curious why you'd be offended that you paying late would incur a late fee. It does that everywhere else, why not private business. jstpa

 

[NY 986]

I agree. There is no 100 percent painless way to solve this and at the same time is making a mountain out of a molehill. Set the pricing so a 3 percent cash discount works and don't worry about it. Most people still respect the power of cash. A person can still find that great first car for their kid that is sitting in front of somebody's house via a stack of 100 dollar bills. If somebody is hung up over your cash discount policy then they were not going to be long term customers anyways and are the type that would cross the street over a penny anyways.

 

[Russ from MN]

We travel by a gas station that offers .05 gal discount for cash, but we get 3-5% rebate on all credit card purchases, which is way more, so it's a no-brainer. I would do very little shopping at a store that didn't accept credit cards.

 

[rrlund]

"unless a customer is financially irresponsible they can apply for and get a credit card and use it"

What a joke. Three years ago,I was starting to get attitude from Enterprise when I'd rent a car with my debit card,so VERY reluctantly I applied for a Visa credit card through the bank where I've banked for more than 35 years. One of the assistant vice presidents filled out the paper work for me. She said they didn't handle them themselves since they weren't a large enough bank,but the card would have their name on it.
A few weeks later I got a letter from some bank in Florida saying I was denied. Why? No debt. They said not enough credit history and not enough recent payment history.
I was telling a cousin about it right after it happened. He grinned and said the same thing happened to him for the same reason at another local bank. He said he complained to one of the higher ups and had a card in a few days.
I told the gal who'd filled out the paper work for me,about the denial letter. She said if I wanted to re apply,she'd make sure it went through this time. I told her to forget it,if somebody wouldn't take my debit,they didn't need my business.
On the flip side,there was a guy here in the neighborhood who filed bankruptcy a few years ago. He was in debt $350,000 on credit cards. My brother asked him how in the world you get that far in debt on cards?! He said "Hey,they kept sending them,so I kept activating them.". Real responsible there.

 

[rrlund]

It literally blows my mind that anybody can think that it's free to use those things,or that they're actually being paid to use them. Who pays the army of people who work in the credit card industry?

 

[JD Farmer]

Thanks for saying that, and I agree. We have become a nation of idiots who tend to go with the sheeple. SAD!

 

[2underage]

You are right and I do the same thing . When the auctioneer calls for a $100 bid increase I hear $110. I decide before the auction what my maximum bid will be and consider the added 10% as part of my bid.
I only use credit cards for convenience or online ordering as necessary but in many cases there is no other way to place an order.

As for the hardware store, I would continue to accept the credit cards and look for ways to increase sales. The 3% charge on $1000 is only $30 and I believe that is a pretty reasonable way to offer instant credit. If you start changing payment policy your most likely outcome is a loss of business and when you discover that it is too late and your store is labeled as a bad place to do business and it may not be easy to change that. If a business is viewed as a good friendly place to go it will bring in more business than any 3% discount.

 

[jimg.allentown]

Of course they are not free. They are paid for by the nearly 30% interest rate and transaction fees from the retailers. The whole idea is to suck in the users to run up balances and make minimum payments - a sure formula to lead folks into bankruptcy. They can afford to offer those sucker baits like "cash back" for using the card. Next thing you know, folks are paying off a $100 purchase for 10 years at $5 a month with the interest rolling up like the national debt. The fees that they get from merchants is just so much more ice cream for them.

 

[jimg.allentown]

The whole issue is a no-win situation. Customers are fickle. Wait until they open up a Home Depot or Lowes right down the street from you. I have sadly watched the smaller hardware stores slowly close up one after the other because of that.
Personally, I dislike the 2-tier pricing system. I do normally pay cash for my purchases. Cards are convenient - TOO convenient. One friend of mine calls it invisible money. It is an unfortunate necessity to be in business these days. There are a LOT of things that are necessary evils in business. Like high rent, gross receipts tax, self employment tax, and having to absorb cost increases from both ends - suppliers and overhead alike.
My best suggestion is to set your pricing where you can absorb the transaction fees and continue to do business the old fashioned way. Folks like that. You may want to pass the word along that you would prefer folks to pay in cash, but I recommend against extra charges for cards. There are a lot of things in this world that are not fair. This is just one on the list.

 

[Russ from MN]

Of course! The people that can't manage their money pay for my rebate, but it's their choice. We are not part of that group!

 

[Prawn Farmer]

Per 2Underage:

"As for the hardware store, I would continue to accept the credit cards and look for ways to increase sales. The 3% charge on $1000 is only $30 and I believe that is a pretty reasonable way to offer instant credit. If you start changing payment policy your most likely outcome is a loss of business and when you discover that it is too late and your store is labeled as a bad place to do business and it may not be easy to change that. If a business is viewed as a good friendly place to go it will bring in more business than any 3% discount."

Exactly. Everyone runs their business their own way but this is exactly what I was trying to convey in my earlier post yesterday. In the retail business there is what's known as variable pricing and the manager/owner has to determine what the top 20% of the merchandise sold is and be aware that those items are what the customer's price perception of that store is based upon. For example - grocery stores it is bread, milk, eggs. Parts stores: oil, filters,lower end wiper blades, etc., lumberyards: 2x4 pre-cuts, 7/16 OSB, 1/2" drywall and roofing. The retailer sells those items at or near cost. Other items are slower turns and have a higher margin on them and that is where a manager would need to make up some of the incidental margin losses on such things as bank cards. My cost of goods sold was slightly higher but my NET at the fiscal year's end was much higher. A good example is a big box store home center. Compare their prices on nails, screws, plumbing fittings (the pipe would be a variable price item) and paint sundries. Their margins are astronomical on those items as few people compare or price shop those things. They can't give everything away and must make a decent margin to stay in business, too.

 

[Hobo,NC]

Folks are forgetting there are more cost involved than just the percentage charged back to the retailer... If it were just a flat percentage of 2/3% and that was it, it would be easier to absorb it.. They are like the phone Co. its anything they can dream up and nail you with...

I have lost money on a CC sale (American Express, AE)
I sold a customer a intermediate steering shaft for his truck for $350.00 AE fee's were $26 I paid $325 for the shaft... How many would I have to sale that way and make a profit :evil: He caught me off guard :shock: It cost me to be a nice guy...

Lets don't forget that CC machine is like a phone even if you don't use it you will get a bill for it every 30 days... I like'em and hate'em

GRRRR!

Its your loss are your gain I do like the comment about the stick/nest it does make sense. I think I will use that technique when I won't to drive someone away...

 

[Hay hay hay]

Because I never pay late. It is the owners job to followup (or cancel) late payers directly.

Or notify the late payers in their bill. But don't harass all your best & most loyal customers as well.

If one employee is often late, speak to that employee.....

don't call a meeting and lecture the entire whole work force.

2%/month is ridiculous, borderline loan sharking. If a business does not value the loyalty that business
charge accounts engender......then stop them altogether.

 

[Traditional Farmer]

Not me I pay each card off every month,I agree if you're a poor money manager don't get credit cards but a poor money manager will find a way to waste the $$ anyway.

 

[jstpa]

Hay, I'm asking because I have charge accounts that are late, and some that pay by the end of the month. I'Ve been thinking of a late fee too, but it wouldn't kick in till the bill was already 30 days late. Trying to figure out what will run off custmers and what won't. jstpa

 

[SparepartsTN]

Personally, I use a credit card because I get to borrow their money for 30 days with no interest since I pay the monthly bill when it comes in. They also do my bookkeeping for me so I know where I spent my money, again at no charge to me. I am aware of the transaction fee to the business so when it is a smaller purchase I use cash. I realize this doesn't help your decision. I've never been offended by a sign saying "discount for cash", it is still my choice which to use, of course "discount" sounds better than "pay extra for credit cards".

2underage does make a good point about a friendly store. A mom and pop hardware store opened in a small town near me about six years ago, nice, clean, friendly place. Started going there to get my stuff, owner and son running it, all was good for three years. Then I bought a 20 dollar item that wasn't needed, took it back the next day, new, untouched with the sales slip, had to fill out a 8x11 form with my life history to get my money back. I've shopped at Lowes since that day. I use to shop at Tractor Supply, bought equipment and parts etc, then I tried to return a part for less than $10, they insisted on the life history form, that part is hanging on my wall to remind me not to go back. If you have a friendly, helpful store, that doesn't make extra money selling your customer's life history, I, and most people, would be happy to shop there if your pricing is fair.

 

[Hay hay hay]

I am just really sensitive about this issue. I pay religiously every month, and have had some of these
accounts for 12 to 13 years, since I bought the farm. They get all my business. I hate paperwork and like writing one or two checks each month to cover lots and lots of items. I sit down near the end of the month when all the bills have arrived and write and mail checks. I do it, I do not have a bookkeeper.

Then one day their store bookkeeper is having a bad day, and she circles a $7 disputed expense in red and adds a note
"overdue"!!!!!! No, it is questioned...not overdue.

Just be careful, bookkeepers run off a lot of business over pennies. Several silly bookkeepers have lost my business for their company.

I have also noted (based on suits filed in the local paper) that businesses let accounts get
way too far behind before they go after the slow pays, no-pays and skips. Candidly I think the business owners just hate to confront a bad account face to face, so they send a broadside note in with the monthly account statement which tars everyone with the same brush.

It would also be nice if the business owner would once in a while acknowledge my business, my pay practices, and say thanks.

Sorry for the rant...obviously this one struck a nerve.

 

[TomR Ont]

you don't want to be late with BELL CANADA . . . . . 42.58% they really want to buy more TV and Radio Stations,
how are the poor souls doing in the US . . . . The banks only pay .50% why do we pay 10-30%.

Bill payment options
Payment can be made by pre-authorized bank withdrawal, at most banks and trust companies, by cheque in the mail or at designated Bell Canada depositories. If paying in person at bank or trust company, please present entire bill.

Late payment charge
A late payment charge of 3% per month (42.58% per annum) will apply from the bill date if we have not received your payment before your next bill date.

 

[Hay hay hay]

Shame on your government for letting that happen....lots of names for it..... usury, loansharking, shakedown artists..
all masquarading as a legit business. We have the same in the USA due to the hidden fine print in the Credit Card contracts that shredded a lot of lives. I have been a business man all my life. But I never had to lie, cheat, steal, flim flam, or subtrefuge to survive and those that defend it as free enterprise are short on ethics and the ability to read a dictionary.

You can not count on the marketplace to resolve theft issues. That is why we have legislatures, laws, police and courts.

OT ...sorry for the rant. These crooks are giving honest business men a bad reputation by association.

 

[Sprint 6]

I don't take credit cards at my shop for two reasons. The cost to me is too high for a repair shop my size. Second, credit cards tend to bring whiners with no real assets into a business. I am too busy to deal with whiners with no money. Been in business 5 years and this policy has served me well thus far.