A few things you should know about using credit cards (if you don't already).

Posted by Melissa Banks on September 06, 2011

There are many options for businesses to accept credit card payments from their customers, especially now with the invention of the Square, GoPayment, and many other mobile credit card processors.  When I started doing art fairs 13 years ago, I signed up with a processing company and used the old "knuckle-buster" method to imprint a customer's credit card.  Then I'd go home, get online, and enter all the credit card charges manually.  After a successful show, this could take up to 2 hours of my time - the last thing I wanted to do after being exhausted from the weekend.

Then three years ago, I finally entered the modern age and signed up with a new company to get the wireless credit card terminal that would swipe and process charges on the spot at shows.  A representative from the company wooed me, sold me, and signed me up.  The contracts, fine print, and hidden charges that I had to navigate through were confusing and ridiculous, to say the least.  I did my best to negotiate prices and finally felt good about what I had signed up for.  One account for charging customers for wireless purchases, and one account to process my website purchases.

The past year or so has been really, really hectic with the business growing and making changes, moving into a studio, etc, and I found myself getting into the bad habit of throwing my statements from my merchant processor in a pile to the side of my desk.  I just had the feeling I was being ripped off with confusing charges and miscellaneous fees, but the prospect of going through all of those papers and the hours of work and phone calls I needed to make to navigate everything kept those bad habits going.

With all of my friends trying the Square and GoPayment, which have no hidden fees and a pretty standard rate, I decided it was time to hunker down to review my statements.  What I found was pretty infuriating.  I made the call to my company to address how angry/disappointed I was, tried to get some of the money for these ridiculous charges back, and they were only willing to budge a fraction of what I expected with absolutely no desire to keep me as a customer.

I was somewhat relieved to discover that my 3-year contract was over in July, so I was ready to move on.  Today I discovered that my contract had been automatically renewed for another year because I failed to give them 60 days notice to terminate, and the fee to cancel my contract is absurd.  So they have me by the balls for another year, and I sit here feeling completely jacked around.

Also ridiculous is the rate at which they charge us for accepting a customer's payment.  They make this extremely confusing for businesses to navigate and understand.  There are "qualified" and "unqualified" rates, rates for rewards cards, rates for the different credit cards (Visa, Mastercard, Amex, Discover), etc, etc, etc.  So a credit card company will sell a business on their very competitive rate for processing credit cards (usually between 2.5-3.75%), but then fail to mention that those rates go up for certain credit cards, which happen to be the ones that customers use the most.

I do not currently accept American Express at shows.  I have never had a big issue with this because most customers have an alternate form of payment, which I appreciate.  Here's the way it works, folks:  American Express can offer big perks to their customers because they are charging businesses higher rates to process their purchases.  Same with "Rewards" cards.  Those rewards you get aren't coming from a benevolent bank that is just giving you that money for being their loyal customer - those "rewards" are coming out of the pockets of the businesses you purchase from. 

I also know that when the person at the register asks me if I want to use my card as debit or credit, I am making a decision whether I want to take more money from that business for my own "reward" (credit), or if I want to pass up my "reward" and help the business out by letting them keep more of their earnings (debit).  This difference is maybe only one percent, or a fraction of, but over time it can really add up.  

Every month when I go into my neighborhood pet store to get food for the kitten, I always say "debit" when they ask me how to use my card (if I can't pay with cash).  I know they are a small business, the owner is really nice, and I can see every time I go in how much of an appreciated presence they are in the neighborhood.  It's just another small way of supporting them.

Without boring you even more with the vast amount of information there is about how credit cards work, I hope I was able to point out a few things so that consumers can be a little more conscious of how their spending affects the world of business, namely small businesses....and selfishly, how it can affect a hard-working artist out there on the road.  Maybe the next time you buy a beautiful piece of work from your local, friendly artist, you can hand them cash instead of that Rewards or Miles card, or write them a check if they accept it.  That little act can go a long way.


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