Offline Credit Card Processing

Discussion in 'Growing and Managing a Business' started by Rosy Queen, Apr 5, 2016.

  1. Rosy Queen

    Rosy Queen
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    Hi everyone.

    I know that most of you guys are running online businesses but I just wanted to check if any of you here have had experience in having a physical store?

    My friends and I are planning to put up an offline business (coffee shop) and wanted to ask if you can recommend a credit card processing company that offers flat rate processing? A cc machine will come quite handy when processing customer payments as most people nowadays no longer pay cash specially for bulk orders. TIA
     
  2. Joseph.Shivell

    Joseph.Shivell
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    Many places now have cash registers that are computerized. The company that provides your cash registers maty have recommendations, or probably already have credit card processing built in, or a company they use to provide it.
     
  3. CorporateViking

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    The Merchant Processing industry is one of the businesses with the shadiest Sales Agents because there is an enormous amount of information needed to make an educated decision. I'll cut to the chase and try and give you the most important information available on both sides.


    Merchant Processing: This is the term for all those credit card processing companies. Almost every Bank has a proccessing company though the biggest are pretty much North American Bancard, First Data, and Wells Fargo. I don't recommend starting out because you're likely to end up with a fee, a percentage, and monthly costs associated. When starting out it's all about bootstrapping and limiting costs.
    POS Devices: These are Point of Sale Devices, which is common with companies like First Data who have their own propriety devices. Examples include massage therapy places, restaurants, Barber Shops, and any company where you have appointment settings. They are multipurpose and are great only if you want to use the multiple services they offer.
    Square: Square will, for free, send you an attachment that plugs into your phone and you just Swipe peoples cards through it. It has an easy to use app that even lets you put items on their for speed. Usually you can expect to pay a 5% fee.
    Rates Associated: There are generally 3 types of rates, Swiped Rates Credit, Debit Card Rates, MOTO Rates. Mail over Telephone Order is any time the card isn't both present and swiped. MOTO rates often end up around 2.5-3% and up do to the risk involved. Swiped can be 1.45-1.55% and debit is usually 0% with a flat transaction fee of 10-25 cents. There are lots of variance in there and most outside salespeople are payed by residuals as you continue to do business over an extended period of time so they want it to be as high as possible.
    Additional Fees: Often with merchant processing you end up with reporting fees, setup fees, and they can raise your rates by simply sending you a notification letter. There's very little you can do. There is often also a Batching fee on Merchant Processing which is at the end of the day, it needs to spend some time reporting all of the cards processed.

    Risk of Offline versus Immediate Processing: If you are not online during the day and you wouldn't know until the batching phase that cards were declined. This only happens if you have it set to do so later otherwise you just won't connect and be able to accept card at all.

    Best idea in my opinion: Use a portal service like Square until you have enough credit/debit card history where you can make a directly educated choice to move to something like less that 1.54% with no transaction fee and debit card 0% 10c fee or interchange rates if you process enough. Square won't make you have to have a minimum amount of business or have a bunch of reporting fees. It's just a flat 5%.
     
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  4. Rosy Queen

    Rosy Queen
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    Thank you so much! Found your comment really helpful and gave me lots of information than I was expecting to get. :)

    I did check out Square's website and turns out they do offer POS software for free -- which I think is great for our start up coffee shop business.

    I'll be partnering with three of my friends and each of them checked other companies as well. One of my friends checked out TySys and she says they offer a flat rate processing plan for start up businesses like ours which includes a cc machine and ApplePay. Another one stumbled upon BluePay but I think she said we'd have to request a quote to find out what it costs. The other one checked out Elavon which in his opinion functions mostly like Square.

    Have you heard of any of these companies before? We could really use some first hand information if you have any. None of us have ever had experience with credit card processing before.
     
    #4 Rosy Queen, Apr 7, 2016
    Last edited: Apr 7, 2016
  5. CorporateViking

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    Tysys is tricky. I'll show you why.

    TySys pricing is bellow. Lets compare it to Square's Fees. I just remembered, paypal is the 5% people, square is
    • 2.75% for swiped magstripe card transactions, chip card transactions, contactless (NFC) payments, and paid Square Invoices
    • 2.9% + 30 cents for Online Store and E-Commerce API sales.
    • 3.5% + 15 cents for manually entered transactions
    Compared to

    2.5%
    swipe rate1
    Includes credit card machine/reader.
    EMV®, NFC, Apple PayTM capable.
    No setup fees.

    • Keyed Rate2
    • 3.5%
    • Transaction Fee
    • $.20
    • Monthly Service Fee
    • $9.95
    • Minimum Card Volume
    • $0
    Tysys implies that it also only has a flat rate when you swipe, however it doesn't as shown in the pricing packages on their site.

    Google says $2.38 is the average price of a cup of coffee.

    That means each swiped transaction from square would be $0.06-$0.07
    $0.059 rounds to $0.06 + $0.20 for a total of $0.26 per cup of average coffee. Making it's numbers almost 5 times higher not to even include that monthly fee that is 38 cups of coffee on their own rate and 165.83 cups of Square's coffee.

    http://tsysmerchantsolutions.com/Assets/TMS/infosheets/Simplified-Pricing-Packages.pdf

    If you already know the average sale at your coffee show we can throw those numbers in and see if anything changes.
     
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  6. CorporateViking

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    I helped opperate a coffee shop in Gainesville, FL (home of University of Florida) for a brief moment, mostly because a friend of mine from South Florida wanted to start her own and I was intrested in a full 360 degree view.

    Bellow are is also a helpful pieces of information that can help you figure out what different aspects SHOULD cost.

    http://smallbusiness.chron.com/coffee-shop-cost-analysis-76311.html
     

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