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Good Morning Everyone,

     I have a question concerning fees for taking credit cards. I have been using Square since July 2011 for credit cards and I like how it works. I have a diddiculty concerning fees.  I have a client that wants to use her credit card to buy a package of 10 massages, so she can get airline miles. I am a bit conflicted here in that I am giving a $10.00 discount on each massage and then there is the $22.00 in credit card fees hanging there.

     On the good side I am taking in a large amount of money and on the bad side it's costing me an additional $2.20 per massage. So the client gets a $10.00 discount and if I eat the fee, it really then cuts into my margin, it works out  to a 20% discount off my regular price.

    I have a client who is a personal trainer and has many people pay by PayPal.  She tells me that she adds the fee to the client's bill.  I am interested in this and wanting to do this for people buying more than two or three sessions with their credit cards.

     Any suggestions would be much appreciated.

Cheers,

jh

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You can add the CC fee also if your policy states that. Actually I don't see the issue. If the client paid each visit you also have the CC fee. Reduce your discount if it seems to be too much. Also look for a cheaper CC processor if you don't like the cost. Your expenses including processing of CCs should be part of what you figure your pricing on.

Adding to what Daniel said:  definitely check your agreement with your merchant processor (in this case Square) to see if you are allowed to charge a fee for credit card transactions.  I'm not sure if it's changed over the years, but I seem to recall that at one time Visa/Mastercard would not permit merchants to charge a fee for using their credit cards though there never has been a restriction on charging fees for debit card transactions IIRC.  

FWIW, as I look at this in my practice, merchant processing fees are a cost of doing business and I wouldn't consider charging a fee specifically to client's who pay with plastic.  As Daniel said above, if you're concerned with the cost of credit on packages, perhaps you need to reduce your discount??  (Since Square charges 2.75% of the trans and with their fee you are taking approximately a 20% hit on packages, I would estimate you are giving about 15% off as a package discount?)

 I have a client who is a personal trainer and has many people pay by PayPal.  She tells me that she adds the fee to the client's bill.  I am interested in this and wanting to do this for people buying more than two or three sessions with their credit cards.


Aside from the fact that you are "taking in a large amount of money," these clients are also demonstrating their loyalty and commitment to you; they are also giving you a guarantee that they will show up.  Since you already have been paid, when dealing with no-shows you simply just mark the session as redeemed.  


How many of your clients pay for packages with credit cards?  Most of mine do, but some don't.  While $22 per package transaction does add up it might help to put it in the perspective of how much this totals over the course of a year.  It might not be as much as you think....???

Daniel and Pete,

Thanks for your input. After much deliberation, I  have decided to absorb the fee. I agree that the client is showing a lot of loyalty and commitment. So, to move forward, I realize that while about 10-25% of my weekly receipts are from credit cards, only a few people buy packages of 10 sessions. I realize that this fee is a cost of doing business and much less than the hardware I would need to take credit cards with a land line and card machine.

Thanks,

jh

Jody, I am pulling this info off the top of my head.  I remember reading something at ABMP's website about a business that will provide a CC reader free of charge to ABMP members.  The CC company's fee will still apply, I'm sure.  It's worth checking out.

gopayment.com has a set percent per transaction which is around between 2.5% and 3.5% plus a small transaction fee. There are no contracts and no minimum transactions. You pay for what you use and if you have a compatable device they will send you a free swiper, if not you can run the transaction from you computer. It's very simple, I wish it was the route I chose, instead I signed a 3 year contract and pay monthly and annual fees and 1.5% and a transaction fee to use the processor machine at the salon I work in. I'm going gopayment when my contract is up for sure.

Thanks, lisa.  About 3 more months before my license!

Lisa said:

gopayment.com has a set percent per transaction which is around between 2.5% and 3.5% plus a small transaction fee. There are no contracts and no minimum transactions. You pay for what you use and if you have a compatable device they will send you a free swiper, if not you can run the transaction from you computer. It's very simple, I wish it was the route I chose, instead I signed a 3 year contract and pay monthly and annual fees and 1.5% and a transaction fee to use the processor machine at the salon I work in. I'm going gopayment when my contract is up for sure.

I recently switched to a cheaper cc servicing company instead of Square.  My reader was free, I pay a $10 service fee a month and then .49% for bank issued credit/debit cards and 1.59% for regular VISA, MC & Discover.  AMEX sets their own fees and they are expensive so I choose not to accept AMEX.  This is with BankCard USA.  Ryan Zone was very helpful and not pushy at all (it takes me forever to make a decision). 

...another thing about gopayment is its portable, wherever your phone works it will work and I don't think that there is the pci compliance fees, I just got hit with a $75 annual pci fee that my company failed to tell me about when I signed up. Grrr, I like having the credit option available for my guests but I don't use it enough to make all the fees worth while. Would love to hear any other good options people have found out there, my salon really wants to switch but if they don't find a better solution I'm going to have to find my own way. I don't mind paying a small fee per transaction but the monthly fees don't work out so well. We are located in a small working town and sometimes business gets slow and I'm still paying.

Thanks to everyone for all your input. I have decided that Square is actually best for my practice. The 2.75% fee is exactly $2.48 per one hour massage. After using it since July 2011, it has been helpful for those who forget their checkbooks, etc. The only bump in the road is that it won't run any cards from "cafeteria" plans. I will contact Square and see what, if anything, can be done.

By the way, the card reader is very portable, it goes with the iPhone.

Cheers,

JH

In response to the OP, I also offer packages and I price them for cash and credit separately. My clients understand that they are saving 15-30% by prepaying, and as such, reduces the income per session, so that processing fee does take a bigger hit. Most of my clients pay by check/cash to save themselves that extra money. I do not charge a processing fee on individual sessions, but those sessions are not typically reduced by 15-30% either. I feel confident in this pricing method and have not had any complaints.

It is illegal to charge the client the credit card fee. It is just a part of doing business, but You can raise your rates overall (and should!) when the cost of business higher.   I think CC fees are one of the biggest problems in the world - Every company charges more for the product in general to absorb the costs.  It is just business - so don't be afraid to raise your rates.  Why should you be the one to pay?  Add it up over the year - say if half your clients used the CC  - how much would you lose? if you figure $2.20 a massage and you have say 25 clients a week and half use it, $1375 a year you would lose.   Can you afford that?

It's not illegal to charge the client the cc fee. You will have to check your contract. My contract with Transfirst specifically states that I am allowed to charge the cc fee on top of my regular price. As with Jody, I choose to absorb the cost as well since my massage rates are high enough for me to afford it, also my cc fees are only around 1.64%.

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