Charge For Credit Cards

Charge For Credit Cards

CC Swipe
Tens of thousands of home inspector dollars are siphoned off each years as credit card “swipe” fees.

Inspection businesses paying as much as $23,000 a year in credit card charges are among PLI alums. Quite a few are in the $5,000+/yr range. They include solo inspectors and groups. They range from northern Kentucky to the major metros to national franchisees.

That’s serious cash in any home inspection business.

Now, all home inspectors can get that money back.
Sellers can pass those fees along to credit cards users from now on, under a settlement reached last week in litigation with Visa and MasterCard Inc.

That was against the rules of every credit card contract, until now. Contracts required charging the same price for credit card sales as any other sale, even though credit card companies raked off a percentage cut of each sale.

The settlement also includes $6.05 billion to split among millions of merchants. On top of the cash, it provides another about eight months worth of reduced fees for merchants who make claims, once the deal gets final court approval.

So how should home inspectors handle credit cards now?

Two or three ways to pick up the extra costs of credit cards are the main topics today. Any solution also has to coordinate the settlement terms with state law and sound business practices. So here are the leading options:
At the state law level, the way to cover credit card costs will be up to the home inspector.

Fortunately, Kentucky is NOT one of the 10 states that have laws prohibiting surcharges. (Texas, California, Florida and New York do.)

“Our legal counsel looked .. and found no Kentucky statute or regulation that prohibits a merchant from passing along such fees to consumers,” the Kentucky Department of Financial Institutions told PLI Thursday.

“There is no prohibition in the Kentucky’s Consumer Protection Act” either, DFI said. (DFI does not regulate merchants, just financial institutions, like banks, but practically all credit card contracts are with banks and lenders.)

For most home inspectors, discounts for cash or checks are simpler to use than adding a surcharge.

Under terms of the settlement, you can offer discounts to clients paying with cash or checks. Kroger, for example, says it’s thinking of a shelf price that includes credit card charges and a checkout discount for cash.

Alternatively, you can charge more – they call it a “surcharge” – when people pay with credit cards.

Surcharges seem less popular. Several restaurants say they seem “petty” and will not use them.

Surcharges also are cumbersome. The settlement requires merchants to post notices of surcharges. It seems to have in mind giving notice at all the places a store gives notice that it accepts credit cards, such as on the door (with the Visa/MC card logos) and at cash registers. Customer receipts are supposed to show any surcharge.
Finally, surcharges are limited to roughly the cost of swipe fees, under the settlement agreement. For a low-average inspection fee of $300, that averages about $12 at the low end. It may not sound like much, but do the math. An inspector knocking out 200 inspections this year – a low-side number for full-timers – ends up with an extra $2,400 in cash.

For every $100,000 in gross fees, that saves something like $4,000 to $6,000 for most home inspectors. That is based on credit card costs from 4% to 6% of the inspection fee, the actual range for total charges paid by many home inspection. (It will be a little less for home inspectors who follow PLI’s earlier news and advice on using cell phone swipe devices, like Square. Still it will be thousands of dollars in many home inspectors pockets.)

Lawyers who put the settlement together say that one of its biggest benefits will the ability to negotiate fees with credit card networks and banks. We hope they’re right.
We doubt solo home inspectors will get far at negotiating card fees. The Kentucky Board of Home Inspectors (KBHI) could help, or it could join with others, like the Kentucky Real Estate Commission, to negotiate a group rate. Don’t hold your breath. Another option will be to shift to other groups that actually do succeed in negotiating a group discount. Look for banks and groups offering lower transaction fees. Costco, for example, already has announced discounted card fees below 2% for small business members.
You will be able to do both. Join a card processing outfit with fee savings, and then pass along the extra expense of credit cards, whatever it is.

Whatever credit card outfits charge, the real news for home inspectors is that the client can pay the extra expense for that type of payment now.

In this business, every dime counts.
For more:
http://bottomline.msnbc.msn.com/_news/2012/07/13/12728092-visa-mastercard-in-73-billion-settlement-over-credit-card-fees?lite

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