Hi all - I've been researching merchant accounts that enable a small company to accept credit cards and right now am looking at Electronic Transfer, Inc.

But, just wondering if anyone here accepts credit cards and if so, using what company?

Thanks

I do not, but I have heard from some guys that do, that is is a great selling point.

Some folks (contractors) also have their own financing available to customers, who in turn pay a higher rate, but once again, it is a great selling feature to some.

I never thought about having yourown financing, interesting. How would that financing be secured? Strict contracts and court cases if they default, or using a finance company?

I do not know how they do it.

I would imagine some underwriter and financial institution would be involved.

It sounds like a great marketing tool.I would think a customer would go for more things thinking $140/ month vs 4 or 5k up front. Or however it works out.

Plus the advantage would be a constant cash flow, predictable to an degree.

Now, like you stated, how many go into default is an issue.

We accept credit cards and are getting set up for financing for our customers. Fisrt of all, it is very easy, just call your bank. Secondly, it takes the risk from you of getting paid. The card company pays us and the customer is liable to their card company. Remember, they are paying with their card and your account just receives the payment. Keep in mind there are fees so it is not free. Fees are such as % per transaction, statement fees, minimum charge/month, etc. Shop around, there are some good deals.

For financing you can do the same thing. Call your bank. There are also dommercial finance companies that might work with you as well. As far as this being a much hire rate, it is usually less then credit cards.

I seem to think I saw something about Nextel being able to accept the cards right on the spot . Anybody checked into this yet ?

Maybe I'll check into the financing. Would be a great way to sell without worrying about getting paid if the bank or finance co. handles defaults. Also would be one less excuse customers could use as to having the work done now or in 6 months.

Hi again,

My sister-in-law and her husband do financing (not electrical - Tree Removal, etc.) - but they are also looking into credit cards.

We've had enough inquiries from customers for me to research accepting credit cards. Seems to me that with fewer but bigger ticket charges (versus a store selling doo-dads for small change) that the fees could even out. It could also be helpful for commercial work as so many companies have American Express cards.

Anyway - thanks for the info about financing - I'll be looking into that again, too. But, if anyone does accept charge cards, I'd appreciate learning with what company and if you are happy with the service. I am interested in the online services. I've read many places that banks tend to charge a higher percentage per charge. Although, I guess I should check with our bank just to make sure.

Thanks again

LK, does the credit card co. that you use have additional charges if you use it less, or are slow for a few months? Do you need to set up different companies for MC, Visa or is it just one setup and monthly fee?

We use the Nextel service. It's actually a company called Creditel that processes the charges and sells you the machine (Power Swipe) that attaches to a Nextel phone. The cost is $10 per month and 1.81% with a $15 min. You can find slightly lower rates, but they usually have highr minimum charges and requirements. For mobile processing, this is the least expensive. The Power Swipe was about $250 and I couldn't find any other mobile unit for less than $1000. You can always do paper processing, but you get lower rates if you can swipe the card and you get your money faster.

We have found that some customers will spend more if they can charge it.

[This message has been edited by Electric Eagle (edited 04-09-2005).]

I'm going to check into this myself soon, can certainly see the many advantages.

I posted a letter from card svc person at my bank, NationalCity:

Our simplest program would be our phone service. This is just an 800 number that you dial into to get authorization.

The costs associated with this service is 2.63% of the transaction plus .44. For every $100 it would cost you $3.00 a transaction. Visa requires a monthly minimum of $1200 going through the system. If you don't reach that minimum then the fee is charged. At most it would be $18. This $18 is only charged if you have zero sales. The fee is prorated based on the monthly volume. There is also a monthly statement fee of $9.95. This statement shows you all activity and fees associated for the month. The last fee is our implementation fee. This fee is to build your files with us and Visa. This is a one time charge of $175.

Keep looking! We don't have a minimum required amount. Our intrest rate is around 1.5% - 1.7%. I believe we have a $10/month statement fee. Bear with me, it is a new company and I might be off a little. The point is this has become a pretty competitive market and if you do a little homework you can save alot of money.

I don't accept credit cards directly yet, but I set up a business paypal account. It has worked out well as some of my customers enjoy putting the home repairs and upgrade coss towards reward points and such.

Tom, can you explain how that works? Do people then pay their bill through the internet and it is the same as accepting a credit card? How much does it cost and what is the prcedure to pay the bill (customer's side) and procedure to collect your money (contractors side)?

Jps, its very easy.

1. You go to paypal.com and set up an account for your business.

2. After it is setup, you tell your customers that they can pay thru paypal, they just need to set up an account for free. To pay thru paypal is at no cost, to receive thru paypal it is fee based, 3%, but don't quote me on that number.

3. Depending on the type of account you have, you can transfer funds electronically or request a paper check.

This method works really good for the customers that I have that use AMEX, they pay their bill and get reward points.

I like the Paypal idea BUT on a $10,000 job you would lose $300. Now if the customer wants to pay the 3% juice that would be acceptable in my book.

Sparky 134, Look at it this way. Just up all your prices 1% and don't worry how anyone pays. It'll work out in the end.

What if you have a customer that asks you for an estimate and you quote $10,000. They say they want to do the work, do you take Visa. You say no, they say thanks anyway, maybe we'll call back when we have the cash. Or you could say yes and get the job.

Actually providing financing is a cool thing when done right. I used to provide financing thru third party for my alarm / access control customers when I also used to contract those types of systems. You get paid for the full amount of the job right away, less the percentage you pay the finance company. They then become the owner's of the note and any problems collecting on the payments are their problems, not your problem. So you can get your payment for the full job up front and not have to worry about getting stiffed for partial amounts owed. Where it does not work so well is if the project is going to have a lot of extra's, like alot of electrical contracts usually do have. Alarm systems were more straitfoward - pay this much and you get this system installed.

I'm looking into this and have found a few in the 1.77% range for discount rate (retail swiped), 20 cents transaction fee, and $10/month statement fee. If anyones doing better than that, I'd appreciate the address. What equiptment are you using? I'm finding this in the $279-$379 range.

Dave

Be aware that in most states you cannot have one price for the credit card, say $1,000 and a discount, say $30 off, if they pay by other means. This is charging a fee for a customer to use a credit card and is against the law--it is a law the credit card companies lobbied for.

My father was self employed for many years... It doesn't take many bum cheques to make other means of payment more attractive. The last fellow that left my employer to start on his own is taking only cash or credit card.

In my area some retailers (computer stores especially) offer a 2-3% cash discount. Then they're not singling out credit-card purchases specifically.

If you offer a cash discount in Calif. written or on tape, you could end up in court.