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07-25-2012, 09:05 AM | #1 (permalink) |
Team TanTalk Join Date: Oct 21 2003 Location: The Fort
Posts: 942
Rep Power: 21 | What are you really paying to take credit cards? When people do the math; most find the same thing. One may think they have a great rate, but the end of the month numbers tell the true story. I don't care what the “per swipe fee” and “%” is, I care about my real total cost. If you are reading this and have yet to do the math, do it right now. Below is an example: The only way to know what you are truly paying is to divide your sales by your merchant charges. Take your net sales* for the month and divide in to the charges/total fees** that your account was deducted** *Net sales = total sales - refunds, credits, adjustments (real money deposited in to your account) **Total charges/fees = the total charge from your processor including ALL fees so... 241.28/9134.92 = 0.02641 (or) 2.64% total cost What are you really paying to process cards?
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08-04-2012, 12:03 PM | #3 (permalink) |
Team TanTalk Join Date: Oct 21 2003 Location: The Fort
Posts: 942
Rep Power: 21 | Re: What are you really paying to take credit cards? The interchange rate is the rate from the card backers; IE: Visa, MC, and Discover. You pay your processor a small fee on top of that: Basis points. There are two ways that processors price their offerings: Tiered plans and Cost-Plus plans. I think you are talking about Cost Plus; this is where you pay a set amount above whatever that card cost the processor to run (the interchange rate). This is the best plan for most everyone in this business. With tiered plans they show you a low "swipe fee" and “percentage”, but that price quoted to you is the lowest level of many levels of charges and since most card holders have points/rewards cards, you are quite often swiping cards that fall in to the more costly tiers and then they kill you on the fee. Whereas Cost-Plus you are agreeing to a set basis above the interchange rate set by Visa, MC, and Discover. Bottom line is… the formula I posted; because even with Cost-Plus some processors will add extra charges like: batch fees, statement fees, compliance fees and so on. So you just have to do the math. You should be able to land a bottom line cost around 2%.
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08-09-2012, 01:07 PM | #6 (permalink) |
Join Date: Feb 3 2007 Location: Tyler, TX
Posts: 5
Rep Power: 0 | Re: What are you really paying to take credit cards? You made those kind of numbers with just spray tans !?? |
08-09-2012, 03:23 PM | #7 (permalink) |
Team TanTalk Join Date: Oct 21 2003 Location: The Fort
Posts: 942
Rep Power: 21 | Re: What are you really paying to take credit cards? That was a CC statement from when I also had an H/P unit (1 spray unit, 1 H/P and retail). I may not be the biggest grossing salon in America, but I am definitely in the top 1% of gross and net per unit. My B.H.A.G. is to gross over $100k in just spray service in 2013 w/ just 1 booth. I follow the manufacturing principles of LEAN. It works well especially for the spray only concept (what I have morphed into). Throughput, Gross Margins and Inventory reduction
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