Credit Card rant

[hacknchop]

Our problem with credit cards is that we sell fishing and hunting licences for which we receive a fee from MNR ranging from .75 to 1.50 for each licence we sell a one yr non resident fishing licence and outdoors card cost 100.00 CDN so we lose money on each licence we sell a lot of Bait Shops now have a computer set up and  for a fee the customer buys and pays for his licence online himself.That is what we might end up having to do, before the pandemic we averaged about 20000.00 a yr in licence sales.

[Larry]

Another way to siphon off money between the buyer and seller is peer to peer (P2P) schemes like Venmo.  No value added.  Just another layer on top of credit cards and banks.  Seems the millennials are in to it and trying to convince old farts like me that its wonderful.

I like green!!!

[Ianab]

I'd have to question if at a ~1% commission you are even making money selling the licences? And yes if you lose 3% for CC purchases, then it's a loss before you even consider your time spent. Have the fees been that for years, when the licences were $20 and $1 was actually worth something?

If I pay the registration on my car trailer (for example as the bill is on my desk), If I pay online (with a CC) it's $32.48c. That includes $3:74 for printing the label and posting it to me.

If I want to pay in person at an Agency, it's $35.57, which will be the extra fee that's paid to the Agency for their time, minus the postage I guess. So the Agency is getting more like $5 for the processing, which is more realistic. 

[Ianab]

I like green!!!

I see your point, but you are assuming there is zero cost associated with handling (and securing) cash. Back in the day stores would need security guards to carry takings to the bank, and likewise payroll cash to the business for wages. Tempting target for a robbery. And that's not even considering employee theft, and the staff needed for basic accounting, arranging for supplies of change in the tills etc.   Until recently local supermarkets actually asked if you wanted any "cash out" with your purchase. It worked out cheaper for them to do that than keep the cash and take it to the bank. NZ runs an EFTPOS system that's separate from the CC companies, owned by the banks, and with much lower fees (under 0.5%). Now they don't actively ask, because so few transactions are in cash. They will still do extra cash out with transactions, but don't actively push it. They might do 10 or 20 transactions without opening the cash drawer. 

It's easy for an individual to see cash as better, what's in your wallet is just what it is, nice and simple. But as things scale up the costs of handling cash do too. To a large store, the fees they pay on the credit card transactions are probably cancelled out by a couple of less wages / security guards, not to mention the robbery risks. Yeah I know electronic "money" can still be stolen, but that will be done from a distance with a computer, not via a gun in your clerks face. 

[stavebuyer]

I'd have to question if at a ~1% commission you are even making money selling the licences? And yes if you lose 3% for CC purchases, then it's a loss before you even consider your time spent. Have the fees been that for years, when the licences were $20 and $1 was actually worth something?

If I pay the registration on my car trailer (for example as the bill is on my desk), If I pay online (with a CC) it's $32.48c. That includes $3:74 for printing the label and posting it to me.

If I want to pay in person at an Agency, it's $35.57, which will be the extra fee that's paid to the Agency for their time, minus the postage I guess. So the Agency is getting more like $5 for the processing, which is more realistic.

Most stores here that sell the Hunting/Fishing licenses will not accept credit cards because it is a loss. The only benefit to selling licenses is selling the gas/beer/ice/snacks/ammo etc. that hopefully go along with the license purchase.

[TroyC]

Another way to siphon off money between the buyer and seller is peer to peer (P2P) schemes like Venmo.  No value added.  Just another layer on top of credit cards and banks.  Seems the millennials are in to it and trying to convince old farts like me that its wonderful.

I like green!!!

I've had a few people want me to do transactions like this and being the 'old fart' that I am, I can't see the reasoning behind it. I loose my CC rebate and I have to figure out and keep track of another financial system. Another way for someone else to target me. I also have no need for a debit card- once again, loose my rebate and protections the CC offers. I've bought boat motors, motorcycles, and a tractor, all on the credit card. Had a car dealer limit my transaction amount once, a long time ago. No need to carry large sums of the green (scary, and dangerous). I bought a tractor once and the seller demanded cash only, not even a certified check. I had to go to 3 bank branches to get that much cash.

[hacknchop]

I have clients ( friends) who have been coming in for their licences for decades , no we do not make money selling licences but its one of those things where you hope that bait sales and other merchandise will make up for it.

[moodnacreek]

Another way to siphon off money between the buyer and seller is peer to peer (P2P) schemes like Venmo.  No value added.  Just another layer on top of credit cards and banks.  Seems the millennials are in to it and trying to convince old farts like me that its wonderful.

I like green!!!

Larry, Either you sound like Me or I sound like you, good post.

[WV Sawmiller]

   In the 12th grade (Back when dinosaurs still roamed the earth), I did a research paper/report on credit cards. I don't know how much has changed since then but the 3% interest paid by the store was not particularly profitable to the card companies. It was barely break even, if that, but allowed the store to make some extra sales they could not have and was probably safer than checks. The CC companies made/make their money on the interest on the unpaid balance. The company does not want their customer to pay the balance monthly or they make no money on the transactions.

   There is/was a $50 liability on a credit card. If you lose your card and report it you are not responsible for any charge made after your report. If your card is used before you know it is missing you are only responsible for $50. So if you have 4 credit cards in your wallet your actually liability is only $200 ($50 per card).

   I used to have scammers call and try to sell me insurance on my cards using the credit limit as my liability which is not true. I have a card with a $25K credit limit but it still only has a $50 liability just like a cc with a $500 limit would have. 

  These guys would offer insurance for $500 on 6 credit cards for me saying I had over $50K liability on them because that might be the credit limit. When I'd remind of them the legal limit of my liability was $300 for the same 6 cards they would just hang up and go chase some other pigeon.

[Southside]

Let's not loose sight of the fact those CC banks get their money from the Fed, at basically 0% interest. Even the 3% fee is a pretty good margin if you ask me.  

[Ianab]

I have clients ( friends) who have been coming in for their licences for decades , no we do not make money selling licences but its one of those things where you hope that bait sales and other merchandise will make up for it.

Understand that, but it still kinda sucks that you have to basically do it for nothing. It's almost like being an unpaid tax collector.  ???

[WV Sawmiller]

Ian,

   I understand but I'd bet you the extra business generated far outweighs the fees that most agents do collect. Back before I got a permanent lifetime old age license every year when I renewed I always bought other products at the same time.

   My wife used to do family and holiday pictures at a local department store and even though she had scheduled appointments the customers all came in early and stayed late and they all shopped while they were there. Their HQ decided they needed to start charging for her to do the pictures and drove her out of the market. We had friends who worked there and they all said they lost a lot of sales by that decision. The whole chain went belly up several years ago.

[SwampDonkey]

You wouldn't believe the business during hunting season in a little convenience store acting as a registration station.

[gspren]

The small sporting goods store in Delaware where I buy my non resident license only takes cash or check for license sales unless you are buying something else such as a box of ammo, then you can put your entire purchase on the CC.

[Southside]

Understand that, but it still kinda sucks that you have to basically do it for nothing. It's almost like being an unpaid tax collector.  ???

Guess you don't have to collect, report and remit sales tax there as part of running a business? Costs me hours every month and I get absolutely nothing for my efforts. 

[21incher]

If you look at your  online credit card information there will be a list of all sites your card is stored for reoccurring payments.  When they issue a new card number those sites can still process payments without the  new number until you activate the new number.  Atleast that is how it worked when I needed a couple cards replaced. 

[btulloh]

Same for me.  It actually makes it more convenient by them doing that.  Otherwise you might have scramble around trying to keep auto payments from being rejected.

[SwampDonkey]

Doesn't work that way here, in fact you're instructed to notify anyone your doing business with about the new card and expiration. Well, you'll get a decline email or letter anyway if you forget who. If your card is frozen because they suspect fraud, then the merchant will be charged by the CC company for the decline, and the merchant will want you to cover it. And it's not no $2 or $3 either. The consumer always pays in the end, one way or another, even if the CC doesn't charge you. If you have a good working relationship with your merchant, you'll pay. If your an ash, you'll leave quietly, and never do business again. I'm not one of those ashes. ;D

[PoginyHill]

Ah statistics.... and I do know math.  I'll throw out some numbers of no relevance.  So you buy something for $100 with a credit card that has a 3% fee to the merchant.  He/she receives $97 real dollars.  Now assume that item cost the merchant $70. First the entire $70 as the cost of goods sold (COGS) is deductible. And guess what, the $3 in merchant fees is also deductible, so the realized COGS is $67, realized sale price is $97. Difference is $30, same as the equation started with 100/70.  This factors in no other business cost or overhead, relates only to the item purchased.  

It is apparent you are sincere in your view. I am having trouble following. We agree if I buy something from your "store" for $100 and pay by credit card that I will pay the card company $100 and you will receive $97 of the $100 transaction.
The COGS excluding the credit card transaction fee we agree is $70 before any credit fees are considered. If I walk into your store and pay with a $100 bill, we both agree that your sales were $100, your cost of goods sold was $70 and your business therefore made a net profit of $30 on $100 in sales.
If I walk into your store and make the identical purchase but pay with a credit card the sales total is still $100. The credit card company keeps $3 and you get the remaining $97. I contend that your cost of goods sold was the original $70 plus a $3 transaction fee which increases your total COGS to $73. The costs and expenses are all deductions but not from each other.
Your net from the cash sale is $30(100-70) and your net from the credit card sale is $27(100-70-3)

I think a lot of the general public seems to equate "deductible" or a "write-off" as an expense a company does not have to pay for. All those terms mean is that the costs are not taxed as part of net income. So after taxes, the merchant still gets less with a credit sale versus cash. It may not be the full $3 less profit, but less profit nonetheless.

[bannerd]

I like green!!!

I see your point, but you are assuming there is zero cost associated with handling (and securing) cash. Back in the day stores would need security guards to carry takings to the bank, and likewise payroll cash to the business for wages. Tempting target for a robbery. And that's not even considering employee theft, and the staff needed for basic accounting, arranging for supplies of change in the tills etc.   Until recently local supermarkets actually asked if you wanted any "cash out" with your purchase. It worked out cheaper for them to do that than keep the cash and take it to the bank. NZ runs an EFTPOS system that's separate from the CC companies, owned by the banks, and with much lower fees (under 0.5%). Now they don't actively ask, because so few transactions are in cash. They will still do extra cash out with transactions, but don't actively push it. They might do 10 or 20 transactions without opening the cash drawer.

It's easy for an individual to see cash as better, what's in your wallet is just what it is, nice and simple. But as things scale up the costs of handling cash do too. To a large store, the fees they pay on the credit card transactions are probably cancelled out by a couple of less wages / security guards, not to mention the robbery risks. Yeah I know electronic "money" can still be stolen, but that will be done from a distance with a computer, not via a gun in your clerks face.

True but there is a risk BOTH ways.  How easy would it be for accountants to make changes to an ERP system in the business?  Now days we plaster CFO/Accounting managers online on business webpages.. robbery?  How easy would it be to do it from the inside while holding someones possessions because a website gave you all the information you need?  Throw those people out.. outsource payroll and accounts payable, let someone else skim the top a bit.  Large companies outsource checks/wires for large businesses, how easy would it be to have that check go to an abandon house with a mailbox?  Some dude making minimum wage sees a 30,000 dollar check.. that's tempting.
Local cash is much more secure than digital any day of the week.  Data harvesting is insane... deep fake.. and the access to it is unbelievable.  The worst part is you can do it in a way where no one will notice a thing.  I know a guy that works at paypal and the stuff that goes on its insane.  To do business transaction you will be paying a much higher rate these days because digital security crews are sick of it.

[bannerd]

I like green!!!

I see your point, but you are assuming there is zero cost associated with handling (and securing) cash. Back in the day stores would need security guards to carry takings to the bank, and likewise payroll cash to the business for wages. Tempting target for a robbery. And that's not even considering employee theft, and the staff needed for basic accounting, arranging for supplies of change in the tills etc.   Until recently local supermarkets actually asked if you wanted any "cash out" with your purchase. It worked out cheaper for them to do that than keep the cash and take it to the bank. NZ runs an EFTPOS system that's separate from the CC companies, owned by the banks, and with much lower fees (under 0.5%). Now they don't actively ask, because so few transactions are in cash. They will still do extra cash out with transactions, but don't actively push it. They might do 10 or 20 transactions without opening the cash drawer.

It's easy for an individual to see cash as better, what's in your wallet is just what it is, nice and simple. But as things scale up the costs of handling cash do too. To a large store, the fees they pay on the credit card transactions are probably cancelled out by a couple of less wages / security guards, not to mention the robbery risks. Yeah I know electronic "money" can still be stolen, but that will be done from a distance with a computer, not via a gun in your clerks face.

True but there is a risk BOTH ways.  How easy would it be for accountants to make changes to an ERP system in the business?  Now days we plaster CFO/Accounting managers online on business webpages.. robbery?  How easy would it be to do it from the inside while holding someones possessions because a website gave you all the information you need?  Throw those people out.. outsource payroll and accounts payable, let someone else skim the top a bit.  Large companies outsource checks/wires for large businesses, how easy would it be to have that check go to an abandon house with a mailbox?  Some dude making minimum wage sees a 30,000 dollar check.. that's tempting.  Years ago I did a wire transfer for a ICF company and it was 18,000.. it went to a burner account and thank god they have insurance.  Never heard a thing.. just.. "it happens".


Local cash is much more secure than digital any day of the week.  Data harvesting is insane... deep fake.. and the access to it is unbelievable.  The worst part is you can do it in a way where no one will notice a thing.  I know a guy that works at paypal and the stuff that goes on its insane.  To do business transaction you will be paying a much higher rate these days because digital security crews are sick of it.

[moodnacreek]

When I bought my latest forklift, from the mid west, the seller would only take cash so I had to wire it at my bank and that didn't go so smooth and there was a 3rd bank involved. When they finally acknowledged payment I didn't sleep good for 2 weeks until it showed up. Many small dealers don't take checks or cards from unknowns.