Ferrari Mailing List: Re: Business Banking

[Steve Jenkins (steve]

Sigh...

<Steve, Most of what you wrote makes sense>

Um... ALL of it makes sense, actually. It was written in clear English.

<and I have heard some things here and there about the free market system>

Well THAT'S a relief, since it's the basis of the freaking economy in which
you purport to run multiple businesses! Wikipedia it, dude. It's a decent
read.

<but there are other things to be considered ...>

Buckle up. I can tell it's gonna be a bumpy ride.

<Sometimes businesses are forced to.>

Really? I don't remember the Men in Black showing up when I filed for my
business license and holding a gun to my head forcing me to fill out the
merchant services app. Maybe things are different in Indiana.

<If I had the choice I would not accept credit cards at all.>

Of COURSE you have a choice! Nobody FORCES you to take credit cards. If you
wanted to, you could CHOOSE not to accept them. Whether or not it adversely
affects your business, is a consequence of that choice, but it's still your
choice. You CHOOSE to accept them because even at 3%, it's WORTH it to you!
If it wasn't worth it, you wouldn't do it! Which I believe was my point in
the snippet you quoted.

<However, due to the amount of business I conduct out of state and outside
of the country, it is a necessary evil.>

None of these "outside the country" locations you've been dealing with
happen to be Communist, do they? They know all about being "forced" to make
business decisions. Viva Cuba Libre!

And there is nothing inherently "evil" about credit merchant service
providers. They are neither necessary, nor evil. If your business benefits
from them, then they are a benefit to you. If your business does not benefit
from them, then you may simply CHOOSE (there's that pesky word again!) not
to use them.

<Regardless of my margin, 3% of $500 here and $1,000 there adds up.>

Nothing in business should ever be considered "regardless of margin." Your
business lives or dies by its margin. And of COURSE it adds up! You think
the credit card companies are in it for the fun? Just like you, they are
trying to figure out how to make as MUCH money as possible! If you're
allowed to do that in your business, why aren't they?

<And reducing the cost of doing business is very important,>

At least we agree on something.

<because many times the margin isn't that much and won't increase with the
increase in bank charges, etc.>

Um... Margins will NEVER increase with increases in costs. It's not just
"many times" - it's every time. And if you are dissatisfied with the margins
in your business, then either figure out ways to ameliorate them, or get
into a different line of work with higher margins.

<As I'm sure you know, merchants get charged for having a credit card
terminal in their business or office (whether it is used or not), they are
charged more for a printer, and (as you stated) they are charged a
percentage of every transaction.>

As a matter of fact, I did know that. Companies can charge you a monthly
rental fee on equipment, and require you to pay more if you decide to use
more of that equipment. And that's wrong because.....?

<in my case there is more cost because I have to pay for a dedicated
telephone line just for the cc terminal.>

You "have" to pay for a dedicated line? Sounds like you guys in Indiana HAVE
to do a lot of things. Here in Washington, we get to CHOOSE whether we want
to have our credit card terminals share the main phone line of a business,
or if we want to gain the benefit of not tying up the main phone line by
choosing to use a second phone line for the cc terminal. Heck - we can even
choose to have our fax machines share a phone line with the cc terminal!

<The banks and credit card co's make plenty of money off of all the
transactions>

Yeah... Evil banks and credit card co's making all that money. They should
do it all for free! They should provide EVERYONE with high-availability,
reliable, timely, accurate, and fresh-smelling processing of our credit
cards for nothing! New rule! Used car salesmen should be the only people who
are allowed to make money, unless someone subjectively declares that they
have made "plenty of money," after which they must give away 10 cars for
free before being allowed to make a profit again.

<all of which increases my cost of doing business, and decreases my margin
and greatly increases my possibility of loss due to credit card fraud.>

Then don't do it. Stop accepting cards. Then we'll see whether your bottom
line is hit harder by lost revenue or by merchant service fees.

<In 11 years I have never received counterfeit money, a bad check, nor had
my bank refuse any cash that I deposited.>

Consider yourself lucky to be living in a small town.

<However, I have been taken MANY times by stolen or fraudulent credit cards,
and they bank ALWAYS has removed money from my account in the end.>

Then stop accepting cards. Or find a different provider. Or use better
anti-fraud processes. Or consider the fraud part of the cost of doing
business in that manner, and calculate whether or not it's still worth
accepting cards. That's what the rest of us do.

<And I PAY for this "service" every month.>

"Absolutely." If you "want" your merchant "service" provider to "continue"
providing their "service" every "month," then yes, I "suggest" you "pay"
them. Otherwise "they" may "cancel" your "service."

<I can understand the logic behind what you wrote,>

Apparently not.

<but if I went into a business where I couldn't pay a $5.00 check in cash I
wouldn't shop there.>

That's kinda the point of the free market system. Shop elsewhere. It's your
choice, just like it's your choice whether or not to accept credit cards.

<I accrue six figures of points every year on my credit card>

Was that supposed to impress me? I did six figures on my card last month.
But that still doesn't make me think I'm cooler than anyone else. I used to
think my Black AMEX was pimp until I checked into a hotel one morning and
the girl behind the counter said "Hey! This is the third one of these I've
seen... (I smiled proudly, right before she said...) today." Granted, it was
a nice hotel, but still. :)

<without adding 50 cents here and $2.00 there.>

Then you have me there. Kudos. I'm just crazy enough to put everything I can
on my card. It's the utility maximizer in me.

<And in something like a coffee shop I just don't see the logic.>

I'm not surprised.

<Even in our music store we very rarely take cash to the bank. Most of it
goes into a safe and is re-used daily for change in the cash 
register.>

Sounds like a great business. One that never allows the owner to save money.

<Same thing with coins.  We never deposit change (even from soda and snack
machines) as it is always re-used ...>

Try charging MORE for the soda and snacks than is required to replace them.
Now I see why you complained earlier about your margins being so low.

Bottom line: you do not have to accept cards. You choose to. You may not
like the fact that it costs money to do so, but apparently you like the
incremental revenue you receive by virtue of accepting cards more than you
dislike the fact that doing so costs you money.

SteveJ


-----Original Message-----
From: Brian E. Buxton [mailto:BrianBuxton [at] BuxtonMotorsports.com] 
Sent: Sunday, December 03, 2006 10:30 PM
To: Steve Jenkins
Cc: ferrari [at] ferrarilist.com
Subject: Re: [Ferrari] Business Banking


Steve,
Most of what you wrote makes sense, and I have heard some things here 
and there about the free market system, but there are other things to be 
considered ...

<<Any merchant who chooses to accept credit cards must feel that they 
are getting something in return for the percentage they pay, otherwise 
why would they do it? It's a business decision. >>

Sometimes businesses are forced to.  If I had the choice I would not 
accept credit cards at all.  However, due to the amount of business I 
conduct out of state and outside of the country, it is a necessary 
evil.  Regardless of my margin, 3% of $500 here and $1,000 there adds 
up.  And reducing the cost of doing business is very important, because 
many times the margin isn't that much and won't increase with the 
increase in bank charges, etc.  As I'm sure you know, merchants get 
charged for having a credit card terminal in their business or office 
(whether it is used or not), they are charged more for a printer, and 
(as you stated) they are charged a percentage of every transaction.  And 
in my case there is more cost because I have to pay for a dedicated 
telephone line just for the cc terminal.

The banks and credit card co's make plenty of money off of all the 
transactions, all of which increases my cost of doing business, and 
decreases my margin and greatly increases my possibility of loss due to 
credit card fraud.  In 11 years I have never received counterfeit money, 
a bad check, nor had my bank refuse any cash that I deposited.  However, 
I have been taken MANY times by stolen or fraudulent credit cards, and 
they bank ALWAYS has removed money from my account in the end.  And I 
PAY for this "service" every month.  I can understand the logic behind 
what you wrote, but if I went into a business where I couldn't pay a 
$5.00 check in cash I wouldn't shop there.  I accrue six figures of 
points every year on my credit card without adding 50 cents here and 
$2.00 there.  And in something like a coffee shop I just don't see the 
logic.  Even in our music store we very rarely take cash to the bank.  
Most of it goes into a safe and is re-used daily for change in the cash 
register.  Same thing with coins.  We never deposit change (even from 
soda and snack machines) as it is always re-used ...

Brian