Mike, No I haven't, since I'm happy with what I'm using. I just write the % off as a business expense (like my bank fees, advertising,etc.). I have proof in each month's statements (for the dreadful IRS)
As it turned out, my renter didn't want to give anyone her credit card info unless she could do it in person. Must have had a bad experience somewhere. I hope she'll find another nice place to stay.
I would like to find a way to accept Echecks, but everyone I've talked with charges VERY high fees unless you have a very high volumn.
Just a quick word concerning accepting payment from international guests...My rental property is in France, where direct bank transfers are quite commonplace. I charge 2500 euros/week, plus 500 euros deposit, and ask for payment in one or two installments, due 30 days before arrival. The apartment only sleeps 2 couples, so my clients tend to be well-heeled and the money doesn't bother them, as it would large families or large group rentals.
I have had it with credit card fees and the fact that the merchant is not protected in the event of a dispute, have been caught in a PayPal scam here in Europe, and international checks are infinitely more trouble than the direct bank transfers, so I am sticking with this method. The client pays approximately a $40 transaction fee, and I do the same when refunding deposits, with this cost built into the rental fee. The exchange rate is taken into account automatically at the time of the transfer, with the bank doing all the calculations, so there is no worry on either end about having to convert funds from dollars to euros. The two banks do all the work, and there is no middle man and zero possibility of fraud or scam. There is only a 48 hour delay from transfer to receipt of funds. I notify my guests by email as soon as I receive their transfers, which serves as their receipt and becomes a part of my records.
I realize that some people continue to equate direct bank transfers to those scams from third world countries, and this is a shame. After all, many of you (if not most) pay your bills by automatic withdrawal - it is the exact same thing! I am quite put out with VRBO and HomeAway for continuing to imply that this is not a legitimate method of collecting rental payments. Some clients have expressed concern, having read stories to this effect. However, when I invite them to Google me personally, exchange phone calls, etc., all is fine.
Not every method works for everyone, and there are definitely scams out there. However, if you as an owner are looking for alternative methods for accepting international payments, you should make an appointment with your bank and ask for this information. There is a very simple form to fill out, and any bank branch can provide it.
I am just saying that this method works well for many of us who cater to international clients, and it should not be written off lightly.
Is that what you meant? I believe the wording above would be OK. But ... I'm not sure what you mean about the discount "not" being a percentage. Do gas stations NOT offer a percentage discount for cash / checks? Maybe they offer a flat discount rate, like $5.00 off your purchase? I guess they'd have to require a minimum purchase, if they wanted to give a discount like that. To tell you the truth, I don't have a car so I rarely buy gas and wouldn't know. And indeed, gas stations are the example that the Merchant Circle people use in their explanations.
Lately I've been getting concerned not so much with the credit card fees, but more with the idea of chargebacks. I really like the idea that if someone pays me with a personal check, there is no possibility for chargebacks ... for example, if someone cancels less than 30 days prior to arrival, or if they decided to depart early. If they paid with personal check, they would have to sue me to get the money back, wouldn't they??? And who would go to that kind of trouble? Even if they did sue me, I would have all the documentation that the guest agreed to, including the cancellation policy which clearly states "NO REFUNDS FOR CANCELLATIONS LESS THAN 30 DAYS PRIOR TO ARRIVAL and NO REFUNDS for early departure." So hopefully I would win if they ever sued me. But I'm afraid that in the case of credit card chargebacks, I might lose the money, no matter how clearly my cancellation policy was stated.
From the things people have posted in the online community here, it seems like things are heavily skewed toward refunding the money ot the cardholder. Any thoughts on this?
And by the way, the possibility of a chargeback dispute is part of the reason why I haven't risked doing any "funny business" in terms of upcharging the customers for credit cards. While I have dreamed and schemed lots of ways to "bend the rules" and find a loophole way to upcharge for credit cards.... because I'd LOVE to do it, it makes so much sense ... I have not implemented any of these schemes. Because ... I'm afraid that if there ever is a chargeback, the credit company willl see that there was some processing fee added to the total bill, which was ONLY for people paying credit cards. Then they could say I wasn't following their rules, and that the transaction was invalid, yadda yadda. I'm pretty sure that would mean I would lose the battle.
So right now my main tactic has been to explain to the guests that I get charged for the credit card fees, and to ask them if they wouldn't mind sending their payment via personal check instead of credit card. Thank goodness it works sometimes!
Here is an update to my initial post regarding a chargeback through Paypal for an AmEx charge. I just received notification from Paypal that the dispute was settled in my favor and the funds would be remitted to my Paypal account in 7 days. I did have lots of documentation, including an emaill from the guest indicating that the dispute had been withdrawn with a confirm number, plus a signed lease. So consider me pleasantly surprised. However, it will be a long time before I take another credit card payment...
I use Intuit, maker of Quick Books, Quicken & Turbo Tax software for e-check for my rentals. The fee is only 50 cents per transaction and my renters love the online convenicence! And I do too!
Sfvacationhut - Whenever (and it hasn't been recently) I have seen discounted prices, it has been listed as a flat price, not a percentage. Actually, now that I stop to think about it, what I have seen is one price - and limited to cash or non-credit purchases. I am not sure if the credit card price was actually shown. Also, didn't I read in one of these posts that it is illegal to discount a rental by the amount of the upcharge percentage? If so, I would think that giving a percentage would open one up to possible problems. I am somewhat perplexed why everyone is complaining about paying 2.5 or 2.9%, when they are saving at least 33-1/3% in management fees. Once I am out from under this management fold, I look forward to paying only 2.9% (which is PayPal's charge, according to them). Since our cabin is rented primarily last minute for short-term rentals, checks are not a viable way of collecting. If I had a 30-day window, I would love to take checks.
Hmm .... I have NOT seen anything that said we are NOT allowed to provide a discount equal to the processing fee amount. In fact ... my understanding is ... we can provide as BIG or as SMALL of a DISCOUNT (compared to the advertised price) as we want, for cash / check customers. We can do whatever we want, when it comes to discounts, I think. What we cannot do is advertise a certain price and then tell the credit card customers that they are paying a surcharge ON TOP OF the advertised price.
Bottom line ... upcharging is (generally) against the credit card companies' rules ... but DISCOUNTS are not.
It might seem like there's not much difference, but there is.
EXAMPLE OF UPCHARGING
Let's say an item is advertised for $1000, and you go up to buy it. When you get there, the guy behind the counter says, "Oh, it's actually $1040.00 if you pay with credit card. The advertised price is actually just for cash / check transactions only." You might say, "Really? I have to pay an extra 40 bucks to use my credit card? Dang, I was planning on only paying $1000.00. Okay, I guess I'll pay with cash or check instead." Or .... if you had no other option besides credit card, and you really wanted that particular item .. then you'd go ahead and pay the extra $40 so you could get it. But ... the people who have an option to not use the card ... they will probably find another method of payment. If they had a choice in the matter, most people would choose to save themselves 40 bucks.
The above is what the credit cards DO NOT ALLOW.
EXAMPLE OF DISCOUNT
The same item is advertised for $1040.00. First of all, you (as the customer) might not even CONSIDER this item now ... because the competitors are charging only $1000.00. At $1040, this item might be out of your price range. So ... by advertising a higher price, the owner of the business is getting fewer customers. Now let's say you're a customer who is inquiring and looking at that item ... this means you're likely willing to pay $1040. And then you read the fine print ... which says there's a discount of $40 if you pay by cash or check. So you say, "COOL! I'll pay with cash or check." But .... in this case, the owner is not really doing himself any favor because ... the person inquiring into the item advertised for $1040.00 was in fact willing to pay $1040. It is likely that the customer would have even paid $1040 via cash or check if that was the preferred method. Now, upon giving the discount, the owner realizes that he has just succeeded in cheating himself out of $40.00, for nothing. On top of that, he's getting fewer inquiries, because his prices are higher than everyone else's.
The DISCOUNT is what is allowed by the credit card companies.
The upcharge is what is not (generally).
I say generally because ... if you decide to ONLY accept Discover, or ONLY accept VISA, then actually ... a surcharge would be easy to do. I believe Discover requires that the surcharge be a set / fixed percentage, which is no higher than your processing fees ... so for example, let's assume your processing fees were 2.5%. You could set the surcharge equal to 2.4%. BY CONTRAST, I believe VISA requires that the surcharge be a FLAT FEE for all transactions. So with VISA you could charge a flat $50.00 fee (as an example).
But if you want to accept both VISA and Discover, you have to follow both rules at the same time, and you cannot charge a higher fee or a different fee for one card versus the other. Therefore, if you do the math, you realize that the maximum allowable surcharge becomes a flat rate which is less than 2.4% of the smallest transaction you will accept via credit card. This becomes a very small fee!
For example, let's assume that the smallest transaction you anticipate someone paying via credit card, is $100. According to Discover, your upcharge fee can be no more than 2.5% of $100 (assuming 2.5% is your processing fee). According to Visa, you must charge a flat rate for all transactions, and it cannot violate the rules set forth by Discover, if you are also accepting Discover. Therefore, your maximum allowable "upcharge" for all transactions (even if the transaction is $10,000) becomes a flat rate of $2.50. Geez. Two dollars and fifty cents. That's hardly worth bothering your guests about.
Now, if you had a $1000 minimum for credit card transactions .... you could have a flat rate of $25.00 (upcharge) for credit card transactions, and this would be allowable if you're accepting Visa and Discover. (This is again assuming your processing fee is 2.5%.) In this case, whether the guest charges $10,000 or $50,000, his or her upcharge would always be the same ... $25.00.
As another wrinkle, you can go back and read the Merchant Circle info yourself, but from my memory, I believe that Master Card only allows discounts ... NO UPCHARGES AT ALL. So ...if you wanted to do something like set a $1000.00 minimum for credit card transactions, and charge a $25.00 fee on all credit card transactions, that would be fine, except .. you would not be able to accept Master Card. I believe that's right, feel free to check it ... I don't have time to go back and look at the Mercant Circle links, at the moment.
From my memory (could be faulty!), discounts for cash transcations are expressly allowed by Master Card, and are not mentioned (therefore, not prohibited) by Discover and Visa.
From what I remember, there aren't really many rules about what kind of discount you can provide. As long as the advertised price (what appears in the search fields for your listings, etc) is the FULL PRICE.
I have no idea what AMEX's rules are. And I probably don't want to know, as no doubt it would be one more complication in the mix!
So ... I guess I just really wanted to clarify one thing, which was that in fact .... Visa and Discover DON'T prohibit upcharges ... they actually do allow you to do an upcharge, but they don't allow you to do it in the natural, simple way that you would want to do it .... UNLESS you accept ONLY ONE KIND OF CARD. And who wants to accept just one kind of card????
To emphasize ... even though Visa and Discover allow upcharges, the upcharges cannot be done in a way that would be useful and meaningful for most people, at least not if you accept both types of cards.
Thanks for reminding us about the bank transfers! I have a friend who is a banker, and she keeps telling me that this is a very secure way of processing international payments. I will check this out, next opportunity. And I think it eliminates the problems of chargebacks, right?
And Mooreva ... yes, I agree with you, now that the rates have gone down to just 2.5%, the credit card fees are not so bad. The reason I'm able to write AD NAUSEUM about this stuff now ... is because I put a great deal of thought into it, back in November / December 2010, when I first started accepting credit cards and when the rates were much higher. Back then I was all "up in arms" about it. Now that the rates have gone down, I am not as concerned about the fees themselves anymore. I agree with you, the fees have become almost nominal.
Right now my main concern is with chargebacks. I would like to set up my policies to encourage cash / check transactions as much as possible, so that I am not at risk for chargebacks. I hate the idea that someone could cancel at the last minute and get all their money back due to a chargeback. So ... here are some ideas for DISCOURAGING credit card usage .... what do you think??
1) An upcharge (if we could find a way to do it) ....
2) How about requiring full payment up front, for credit card transactions ... meanwhile offering a flexible installment plan for cash / check transactions?
3) What about charging a $100 cancellation fee (or 5% cancellation fee, etc) for guests who paid with credit card, and WAIVING this cancellation fee for guests who agree to pay with cash / check? (Of course you have to tell them up front that you would waive the cancellation fee for them, if they pay with cash / check. This way, it will help to influence their decision about what time of payment to make.)
4) Sometimes we simply explain to our guests that we are charged fees for the credit card transaction, and we're just a small business, so .... would they mind sending payment via cash or check instead? Sometimes it works.
Any other ideas?
Wow mle! Good for you! I haven't had time recently to keep up with the latest on this thread, but this kind of news is BIG! I know exactly how relieved you must feel. I had that same feeling in my dreams of winning our case, which, of course, was not to be. But big congrats to you! You have proven that you can fight City Hall and win!!
All the best to you. Now go take a vacation! LOL!