I don't think that would take hold as a widespread payment method in the U.S.  There is so much fraud, you have to be really careful about what information you give out.  I even use the temporary credit card numbers your issuer provides for shopping online.  Unless I had a "dummy" account that had the funds swept from it every day, I would never give out my bank account number to a customer.

 

Liz
 

AAny ideas for chargeback policies? How to deter people by telling them what actions you'll take should they do a chargeback. The reporting to a collection agency would be a good one to deter me since i wouldn't want to hurt my credit.

A

I agree, and vice versa. A customer won't want to give us their account numbers either

A

Cashing a check at the customer's bank? I've had banks that don't want to or can't help you or they'll charge you a fee unless your a member of that bank. Haven't had to cash any checks in a awhile but that's been my experience.

AThe main reason direct bank transfers hasn't really caught on in the US is probably the ubiquity of credit cards and debit cards. Several customers were surprised that my bakery didn't accept credit cards, but if your product is good enough they will go through the extra hassle of writing a check.

Regarding sharing account information, many people don't realize that their account number and ABA routing number is printed on every check they write, but IMO there is a psychological barrier (at least in the US) if someone asks you directly for this information.

No, I would provide my account number and they transfer the money directly into my account. They cannot withdraw from it.

Most individual banks will provide this service in the form on online bill pay, but I've never seen a universal turnkey system in the US that will automate this process from the customer's end (Chase QuickPay is probably the closest but it's still limited.) . I would imagine that such a system would provide a chargeback or reversal function similar to a credit card company..

Yes, I talked with the accountant and business lawyer about S-Corp vs. LLC and was recommended to go S-Corp.

Was this recommendation based on tax advantages or liability protection? I can certainly see why a lawyer would recommend an S-Corp, considering they typically involve more billable hours than an LLC.

A

There's really not much you can do to deter a chargeback (aside from not accepting credit cards). Making it clear that the customer's balance is still payable (and will be collected) if they dispute the charges without working something out with you first might help, but then again a customer who pulls this might already have poor credit, in which case it's not much of a threat.

I do like the idea of requiring third-party mediation before disputing a payment, if the customer goes right to a dispute this would give the credit card company a pretty solid justification for denying the chargeback. Then again they might just issue the chargeback anyway if the customer lies and says they have already gone through mediation.

Hi Sweetalexjane

 

An EFT is exactly the same as handing someone cash, except it's electronic. The customer logs into their bank account online (online banking, yeah?), which is protected by both a pass-number and a password and encrypted. From there, they can pay bills, transfer money between their own accounts or transfer money to someone elses account.

 

If you give someone your bank account details, they can't access your bank account and make withdrawals, they can only transfer money to it. If there was a dispute and the customer wanted their money back, there is no way they could get it unless you transfered it back to them (or took you to court and you were ordered to pay) - just like cash.

 

Cris.

A

That's another reason this won't fly in the US...why would a customer choose a payment option with no recourse if they have the option of a personal check or credit card? Immediate EFT also gives the customer zero float time.

I haven't had that problem but they cannot get it back, it is the same if they walk into the bank and deposit into my account instead of electronically. they need me to transfer it back to them

A

Yeah, the psycho who pulled the credit card payment back on me was the same one who also told me that the contract didn't matter. Someone who would dispute a charge just to get a refund isn't the kind of person who would respect the terms of a contract.

AWhat it comes down to is, if you don't want to deal with customers disputing payments with a third party EVER, don't involve a third party in your transactions and just use cash or money orders. They can even put a stop payment on a check if they're that hard core about being shifty.

A

With checks, I would only accept it for deposits and wouldn't start an order until it cleared my bank

My terms and conditions are quite clear and they state that a refund will only be given in exceptional circumstances. This might include the death of the spouse to be but him running off with the bridesmaid isn't lol!

If i'm hospitalised I will have another experienced cake designer take the commission for me but otherwise a refund is up to me unless i've seriously screwed up the order but they don't get their deposit back - PJ x

A

And keep in mind thqt if you take the check to the bank to cash it and you don't have an account at that bank, they charge you a fee to cash it. So if you plan to let people pay close to the date with a check because you're just going to cash the check yourself, add the amount of the fee onto what they have to pay you.

If you are in the U.S. and want to accept a form of EFT, you can accept checks and get the terminal from your bank or credit card processor that immediately withdraws the money and deposits into your account.  You even hand your customer back their check as a receipt.

 

Many gas stations and convenience type stores in the U.S. do this, but I don't even know if most people carry checks or checkbooks with them anymore??

 

Liz
 

A

If the only options are cash or non-recourse EBT there's no difference, my point is that paying by check or credit card offers several advantages to the customer.

I certainly use my credit card whenever possible, you can't beat an interest-free loan.

Most people who I know carry very little cash, and they also don't pay for large purchases with cash. A lot of people also want t pay for thngs with credit cards because of the purchase insurance that comes with it, and the points that they get on their card accounts. I get people asking me if I take credit cards because they have a specific credit card for the wedding that they're saving travel points or whatever on.

A

I know banks charge a fee but some won't cash it for you at all. I'm thinking I'll just deposit it at my bank.

A

People do carry checks with them still and have check books. Also here in the US there are prepaid credit cards that can only be loaded with cash. They can be loaded up too $500, the customer pays a fee for the card and loads the money they want on too the card. I've seen people come in with $500 cash to load onto a card. Most ppl that do this don't have regular credit cards or bank accounts or they want to use it to pay bills. The dumb thing about people with this though is they want to treat it like a debit card and get cash back off of it( which they can't do). It's dumb, why put cash money on a card if they're just going to take it back off again.

AIf people really want your product they'll pay in the methods you have available.

A

Some credit processors charge you a higher fee to take reward cards that earn points or cash back. All depends on the person. I've met people that don't use any plastic at all anymore. These people though have had credit cards before and just don't like debt and feel they're just postponing having to pay it later.

My fellow Aussies (and SugaredSaffron in the IK) have answered your further questions for me.

 

For the amount of difficulty that it appears non-payment and cheques clearing/bouncing, and CC payments being reversed, and Paypal locking your accounts and refunding money to the client...I would have thought EFT makes a hella lot of sense. I DO understand the psychological leap needing to be taken to go direct deposit. When it was introduced here, there was a bit of resistance, particularly from older members of society. However, when you think about the amount of time and money you save by not having to write checks, post payments in the mail, show up in person at the post office etc etc, its much easier to do your banking online.

 

As far as our current discussion regarding payment for your cakes. Yes, this acts just like cash. As I said, though, everyone has a record of the transaction - unlike cash - and  so the tax office is happy as there is evidence of company income.

 

If you are saving points or whatever for your wedding purchases, you can certainly open a debit card account (eg a Visa debit card, that functions JUST like a CC but you are using your own money) and use this information to pay via EFT and get your points etc.

 

Recourse/float time? What is so wrong with shifting the balance more towards the vendor? If you have a contract anyhow, then the onus in then on the client to show how your product failed. It doesn't necessarily have to go to court, but the client needs to provide evidence, lodge a complaint in a timely manner and allow for resloution either directly with the vendor, via mediation or in worst cases - through the court system. Remember though that these days we have the benefit of things like the BBB in the USA, or Dept of Fair Trading here in Oz who keep a record of suspect businesses, plus the myriad wedding directory websites/vendor ratings, facebook reviews etc etc that means the onus IS on the vendor to settle any disputes in a swift and complete manner. So it would be a foolhardy vendor indeed who would say "Suck it up! I got your money! You've got buckleys in getting a refund' ... or words to that effect :-)

 

Another point: in Oz at least more and more businesses are charging the 1-3% fee (the real cost of offering CC facilities) directly to the customers who want to use their CC. So, if anything, people are moving away from CC usage, in order to save yet another ridiculous bank fee. So I have a highly motivated clientele who WANT to use EFT. Bear in mind, my target clientele are young peeps getting married. They are au fait with this system. Sometimes I DO have a dear old thing who wants me to make a small birthday/anniversary/minor event cake and in this case I am more than happy to accept cash in hand, or a bank cheque from them. Some older people still can't/won't manage the whole bank transfer/EFT thing :-)  I can say, however, not ONE person in the past 6 years has declined to use my services because I do not have CC facilities, and do not accept personal cheques.

 

So for the very suspicious, or luddites (be it age- or mentality-related), I am still okay with them posting me a bank cheque even though these now take 10 days to clear (!!ridiculous!!). Whether you are in Oz or in the USA, the bulk of us demand FULL payment before receipt of cake, so what difference does it make?

 

No bank fees, no cards to carry, no EFTPOS device, no CC charges, plus the onus on the client to prove wrongdoing (instead of stopping payment, getting a refund through Paypal or the CC company, thus being a huge PITA for the business). Makes sense for many small and micro businesses such as the home-based bakery/cake decorator.

A

That's really the key. If you give someone the choice between a payment method that provides several advantages to the customer and a payment method that provides no advantages to the customer, you'd better have a significant price differential in place if you want people to choose the latter.

In the US at least, there is no logical reason for a customer to choose to pay with a direct EBT or debit card over a credit card unless they can't get a credit card, they can't manage their credit, the vendor doesn't accept credit cards, or there is a significant added fee.

AWhere I live there are a lot of hair salons that only accept cash, not including chains because they do accept credit cards. I mean small business hair salons where there is only one location of that name. People seem to have no problem going to those salons and paying with cash, the prices people pay vary from salon to salon depending on the services offered and who their target market clientele is but it can be upwards of $250 a client. So it seems to me if there are people paying cash to go to salons I don't see why they would mind paying cash only for other businesses as well. The only thing people like direct deposit for so far is for their employers to deposit their checks into their bank accounts because they get their money faster and don't have to go to the bank to cash it. Same concept I know but I think people see it differently in that this is their employer versus another business they're buying goods/services from

AI would like to set up direct deposit with my clients is there a specific Bank that does it best? I tried to get a direct deposit from a friend and they made me set up a account and I forgot the password and the money went back because it was too much trouble. I think it was chase bank.