Credit Card Questions- To Those Who Accept Them

Business By karateka Updated 17 Jun 2010 , 4:56pm by TexasSugar

karateka Posted 17 Jun 2010 , 1:14pm
post #1 of 13

I have a question about accepting credit cards. I'm going to call my credit card company whenever I can find some time, but thought I'd ask those who accept them, too.

It costs me money. Is it worth it to your business to lose this cash? Do you get business you wouldn't otherwise get? you know what the rules are for disputing charges? Have you had anyone dispute charges from you, and what did you have to go through to get that dispute dismissed?

How do you check the credit card number to see if it is legit? Say I collect a card # from someone for the purpose of charging for a tasting no-show. What if they give me a bogus number and when I go to charge it, it won't accept the charge?

Do you offer a discount for cash customers? I've heard it is against the credit card agreement to charge the card holders more to cover the fees.

Who do you use to process your cards? I'd like to be able to tell my clients to go to my site and press X button to pay...or is there a better way? Take their number over the phone and process that way? I used to use paypal but am not sure that's the best way.

Thanks in advance for any help.

12 replies
-K8memphis Posted 17 Jun 2010 , 1:43pm
post #2 of 13

If you have enough volume it's worth it. If you are a walk in store front yes for sure. They say you get about 20% more business with cards.

Disputes most often go to the consumer--I worked for a processor. Everytime I personally have disputed charges on any of my accounts they have been upheld--I won and the merchant lost--but as a merchant I've never been on the receiving end of a dispute...yet.

To determine if it's legit--I mean you could pop it for a penny but it's gonna cost you more to do that. Even if you refund--you're charged for the initial transaction and then charged for the refund. Plus you can be charged more for the card not being on site. having fun yet

I use NPC but I am a brick & mortar--I just swipe my cards--I have all the equipment and the hookups and believe me thay are not for the timid--the mountain of compliance attestation I am going through right now is flat silly. if I was a custom cake shop I'd prolly go with a big box processor (Sam's) or paypal.

I don't offer a discount for cash or anything.

indydebi Posted 17 Jun 2010 , 1:47pm
post #3 of 13

I went thru my bank to find a credit card processing company. I didnt' call "visa" or "amex" direct.

Yes it will cost you money to rent or buy the equipment. (This is assuming you're not using Paypal or some other free service like that). To me, it's no different than your electric bill. You have to have electric to run your oven and you have to pay for it 24/7, not just when your oven is on.

The fee for using a credit card is minimum. One of my rates was 1.75%, which meant for every $100 I took in, I paid the credit card $1.75. That is so minimum it almost doesn't need counted! Even at 3%, it means I keep $97 and they get $3. Big deal.

You'll know it's a bad number when you run it and it doesnt' go thru. You also pay a higher rate for keyed-in numbers as opposed to swiped cards. If the card doesnt' go thru, you just simply call the bride and "verify the number".

Note: On debit cards, some have a daily limit. I ran into a couple where my charge wouldn't go thru because they had already spent $200 that day elsewhere. It was nice to know that because it removed the 'embarassment" on their end when I was able to ask, "Is this a debit card with a daily spending limit? That's happened to me before...."

I never gave a cash discount. (Somebody has to pay the overhead for that machine!)

To 'process' the card: I had a card swipe machine on my desk, just like in the stores. It was like $15/month. Minimal expense. I either took their card in my hand and swiped it, or I took their number over the phone and keyed it in.

snocilla Posted 17 Jun 2010 , 2:23pm
post #4 of 13

I went through my bank and set up a Merchant Services account. Since my bakery is in-home, I don't have an actual machine, just a secure website to type everything in. I do still have to set up the button on my website to link to it, but then they can do it themselves and don't have to give me the number. Mine is set up to authenticate as soon as the card is entered, so I will automatically know if it is no good. I can choose to authenticate and charge later, if I need a card to hold a tasting. Also, by going through the bank, they just take the 2.5% out of the bank account once a month.

karateka Posted 17 Jun 2010 , 2:36pm
post #5 of 13


I guess I'm concerned about all the buyer's remorse out there. I can't afford for some bride to dispute a $600 cake because the icing was a half shade off true or a rose leaf was too green or some other BS claim like you see on here all the time. Or if they paid for a cake, then don't pick it up for whatever reason, then dispute the charge because they never came to get it. Then I've made the cake, it's sitting here, but they changed their mind. Am I just SOL?

Aren't there any protections for the vendor?

Indy...I mainly meant that if I'm not charging the card right away...say if I'm only supposed to charge it if they no show their tasting do I know if they gave me a valid #? Have you ever had anyone do that? Give you a bogus number because they didn't want to be charged if they no-showed you?

Sorry if I seem obtuse.

cakesdivine Posted 17 Jun 2010 , 3:16pm
post #6 of 13

99% of my business is credit card or bank card business. Very rarely do I get a cash pay. I do not accept checks or money orders either. I have never had a chargeback and my prices accommodate the cost of sales amounts deducted.

Toptier Posted 17 Jun 2010 , 3:18pm
post #7 of 13

Yes, there are some protections for the vendor but they are limited. You need to have the customer sign the receipt and contract so you have proof of the transaction, take a picture of the cake at delivery. The problem is, once you start accepting cc, everyone will want to use them and not pay cash, so they get their card perks. And, you're correct, you are not supposed to give a discount for cash, but I understand that this is changing under the new cc legislation.

I, for the first time, disagree with Indydebi! I think the transaction fee is A LOT for what they do - it's all electronic, for goodness sake, and they skim off 1.5-3.5 % (American Express is $$$$) which adds up to a lot at the end of the year, on a $1000 wedding cake it could be $35. The processing industry is also rife with con men and shady business tactics. There are so many different rate levels on the different types of cards it is impossible to compare apples to apples when comparing two processors. Costco has pretty good rates. It is, however, useful for things like guaranteeing tastings and for last minute bookings (don't have time to let the check clear) but it will cost you a pretty penny.

If you do end up taking cards, make sure you understand your processor's rules, as roccosmom said - you get dinged for more if the card isn't in your possession (it's a higher risk) but there are some ways to process it to get a lower rate, for example by getting the cvv or security code as well as the number and expiration date.

To keep your costs down you could consider just taking Visa/Mastercard and not American Express which has the highest rates.

indydebi Posted 17 Jun 2010 , 3:23pm
post #8 of 13

My AmEx was under 2.5% which surprised me because I'd always heard how expensive they were.

If out of $1000, I receive $965 and give $35 to AmEx, I'm ok with that. As someone said to me once, "Would you rather have 100% of nothing or 97% of something?" I still made very good profit on that $965.

The only thing on AmEx is if you are courting corporate accounts. Many companies use AmEx as their company card so if they are buying the office birthday cake, it becomes a hardship for them to find alternate payment methods.

I used to travel a LOT with a former company I worked with (averaged 3 days a week on a plane) and in the places I went on a regular basis, I knew what restaurants, etc., accepted my AmEx company card and which ones didn't. I never went to the non-AmEx places, simply because it wasn't worth the hassle of paperwork to get reimbursed for personal funds.

Toptier Posted 17 Jun 2010 , 3:30pm
post #9 of 13

That is true about AMEX, Indydebi, I agree if you do a lot of corporate work it is helpful to take it.

-K8memphis Posted 17 Jun 2010 , 3:41pm
post #10 of 13

Amex is very important for catering not as vital for cakes--everybody with an Amex also would have MC & Visa already.

There are monthly fees too. Mine are $22 I could get a better deal but I hate changing and learning a new dealio. There's a per transaction fee plus the percentage based on the type of card presented--corporate cards cost the merchant the most. Cards that have beaucoups of perks for the card holder cost the merchant more too--hey somebody's paying for that stuff!! Airmiles & stuff like that.

Also watch out for monthly minimums--You will pay x amount every month whether you actually have generated that amount of fees that month or not. That's especially true for newly opened merchant accounts. So watch for it.

Unfortunately the people who really have to watch out for the creeps in processing are folks for whom English is not their first language. It should be a crime--they get roto rootered.

tracycakes Posted 17 Jun 2010 , 4:09pm
post #11 of 13

We recently started accepting credit cards and we did a lot of research beforehand to determine the best option for us. We chose to use paypal, we dont' even have a swiper. We were going to get a swiper but learned that it won't work with Firefox, on Internet Explorer, so the swiper was ditched and paypal works great. The customer doesn't have to have a paypal account. They just give us the card information, either over the phone or in person and I just key it in to paypal. It will accept or reject immediately. If the person is there, I key it in then print out the receipt from paypal and give it to them.

As far as disputes, it's not different than stopping payment on a check or giving you a bad check. I worry less about disputes or bad card numbe than a bad check. I pay a fee for accepting credit cards but it's just part of business, imo.

indydebi Posted 17 Jun 2010 , 4:50pm
post #12 of 13
Originally Posted by RoccosMom

Also watch out for monthly minimums--You will pay x amount every month whether you actually have generated that amount of fees that month or not. That's especially true for newly opened merchant accounts. So watch for it.

Excellent point that I forgot to mention so I'm glad you added it to this thread! thumbs_up.gif

TexasSugar Posted 17 Jun 2010 , 4:56pm
post #13 of 13
Originally Posted by karateka

How do you check the credit card number to see if it is legit? Say I collect a card # from someone for the purpose of charging for a tasting no-show. What if they give me a bogus number and when I go to charge it, it won't accept the charge?

At my job when we do a credit card it asks us questions to verify. Sometimes it is for the ein number, sometimes it is the billing zipcode, sometimes it is the numer for the street address. You never know which question it will ask so you have to have all the information.

As far as knowing if the number is bogus to begin with, I guess I'd say if you see the card and right the number down that is better than taking their word for it.

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