The caveat behind Pair Payments

[Marc]

Got an Email from Pair Payments.  I first saw them at the ASHI conference in New Orleans last January, offering inspectors a merchant account for free, no charges at all. Couldn't figure how.  They weren't forthcoming.

Just came to find out, from today's Email solicitation, that these sneaky folks charge $19.95 to every client of yours that uses their credit card to pay for the inspection, hence the 'free' service provided to you.

Smells to stinkin'  high heaven of Nicky.  I wonder if he's not behind this. Bleeds my guts to be deceived. Ran my business straight forward since 03' and now I'm standing shoulder to shoulder with...how did Kurt put it...smelly piles?

End of rant.

[Jim Katen]

The $19.95 doesn't all go to Pair. 

When I asked them about it at the conference, they told me that their system automatically adds 4% to every charge. About 3% of that goes to the credit card company and 1% goes to Pair. 

Several other companies do the same thing. 

The credit card companies used to prohibit you from doing this, but a Supreme Court ruling several years back determined that they could't stop you from adding an extra charge for taking credit cards. Since then, it's starting to become the norm. 

I must admit that I don't appreciate paying for my customers' airline miles. With our fees, the average credit card bite is $20-$30 per transaction. That adds up to some serious pocket change over time. 

[Jim Katen]

I just added up my numbers for July. I actively discourage clients from paying by card, but they sometimes insist, so I accommodate them. In July, 9 of them succeeded in getting me to accept their cards. The fees on those 9 transactions added up to $265. It might not seem like much, but it comes straight out of my wallet and I resent giving $265 to the pig/dog credit card company so that my clients can get a small bump in airline miles. 

[Erby]

I got some pushback for adding a processing fee.  I stopped.

I raised my prices 5% across the broad and consider credit card processing fees a cost of doing business, kind of like buying gas for the van.

Though, like Jim, I actively discourage it.

[Jim Katen]

13 hours ago, Erby said:

I got some pushback for adding a processing fee.  I stopped.

How long ago was that? For the past several months, clients are surprised when I tell them that I don't charge a processing fee. It's becoming common enough that people are starting to expect it. 

I just found out that one of my partners has been adding a surcharge for years. When it came time to pay, he'd tell the customers that he would add a 3% fee to the bill. When they balked, he said, "that's fine, just pay with a check and there's no fee," then he handed them an invoice and a self-addressed stamped envelope. He said that in years past it worked great because basically no one would pay by card, but lately people are fine with it and willing to pay the fee. 

13 hours ago, Erby said:

I raised my prices 5% across the broad

And she didn't mind? 

13 hours ago, Erby said:

I raised my prices 5% across the broad and consider credit card processing fees a cost of doing business, kind of like buying gas for the van.

The difference is that you don't use the van only with certain customers who desire it. Would you accommodate customers who ask you to drive a special rented van to their inspection? Raise your prices across the board to cover it? Or would you say, that's fine, but it costs extra for me to show up in the special rented van? 

 

 

[Erby]

Well, no Jim, she didn't mind a bit! 😎😎😎

What do you think all those stores that take cards do with their processing fees.  They just raise the prices on everyone.

So did I.

[Jim Katen]

2 hours ago, Erby said:

What do you think all those stores that take cards do with their processing fees.  They just raise the prices on everyone.

Which is exactly why I object to it. 

[Erby]

Well Jim, the nice thing about this is we all get to do it "our" way.  Of course, there's some of the "our" way I object to also but to each their own.

You get to choose if you want to eat the processing fees or not.

The credit card company has expenses they have to meet also so they gotta make something on the deal.  You get to choose whether you pay for it out of your profits or which of your customers pay.

[Jerry Simon]

4 hours ago, Erby said:

The credit card company has expenses they have to meet also so they gotta make something on the deal.  

Maybe they should just charge exorbitant interest rates.  Oh, wait. . .

[Jim Katen]

13 hours ago, Erby said:

The credit card company has expenses they have to meet also so they gotta make something on the deal.  You get to choose whether you pay for it out of your profits or which of your customers pay.

I don't mind paying well for a good service or product and I'm happy, even eager, to pay even more for services or products that are local to me. Doing so boosts the economy and helps make our little financial world spin. The problem that I have with credit card companies is that they charge what amounts to an exorbitant rate (thank you Jerry) for a service that costs them nearly nothing. Like the lilies of the valley they toil not neither do they spin. Instead of boosting the economy, they're a drag on it, making everything more expensive. 

[Tom Raymond]

I don't rent my receivables. Cash or check. No one complains. There are enough "costs of doing business" without having to pay to accept payment. 

[John Ghent]

Years ago, I'm talking mid 80's, we worked on an invoice system and at any given time during the year we carried a 50k accounts receivable.  The company started in 1956 and the policy always was to invoice anyone who didn't have payment at the inspection.  We didn't have many no pays but did have to spend time with collection reminders.  We made a decision to go to a laundry accounting system.  No payment, no laundry.  We made it clear that payment was due at the time of the inspection.  Cash, check or money order. No credit cards.  We lost no business, found that we didn't need to chase anyone because if they showed up without payment we would hold the report till paid.  Worked like a charm.  I realize CC's are the thing today, but if the client can make time to get to an inspection he can stop at a cash machine before he gets there.  If he cannot be at the inspection the realtor can have him send a check for the inspection fee.  Or, you can just advertise that if they pay with a CC there will be a ($) up-charge.  

[Jim Katen]

3 hours ago, Tom Raymond said:

There are enough "costs of doing business" without having to pay to accept payment. 

You summed it up better than I did. 

[Jim Katen]

1 hour ago, John Ghent said:

Years ago, I'm talking mid 80's, we worked on an invoice system and at any given time during the year we carried a 50k accounts receivable.  The company started in 1956 and the policy always was to invoice anyone who didn't have payment at the inspection.  We didn't have many no pays but did have to spend time with collection reminders.  

It was the same for me in the '90s. Since I was a one-man shop, my AR occasionally spiked up to $12,000, which was a lot for a small operation like mine. Chasing down those payments took a lot of time. 

1 hour ago, John Ghent said:

We made a decision to go to a laundry accounting system.  No payment, no laundry.  We made it clear that payment was due at the time of the inspection.  Cash, check or money order. No credit cards.  We lost no business, found that we didn't need to chase anyone because if they showed up without payment we would hold the report till paid.  Worked like a charm.

I tried that, and it worked pretty well, but there was always that Sad Sack with a hard-luck story that I'd fall for. 

1 hour ago, John Ghent said:

I realize CC's are the thing today, but if the client can make time to get to an inspection he can stop at a cash machine before he gets there.  If he cannot be at the inspection the realtor can have him send a check for the inspection fee.  Or, you can just advertise that if they pay with a CC there will be a ($) up-charge.

I agree, and that's pretty much where I'm at today. I'm just trying to decide whether to let Pair handle the upcharge for me or whether to just build it into the billing directly somehow. I understand that ISN now offers such a feature, so I'll be following up with them. I'd rather that the upcharge only cover the actual CC costs and not a Pair cost over and above it. 

[TimK]

I've found what feels like a pretty good approach. I quote an amount that includes a 4% CC processing fee, rounded to the nearest $5.00, and offer a discount if they pay by check or cash. The people who pay by cash (rare) or check appreciate it. 

Edited September 6, 2020 by TimK