A month has passed since we asked you about the discount you have to pay credit-card companies when you accept a card as payment on goods. "For LBM dealers, profits and revenues may be up, but when a card company takes 2% of a sale, the costs pile up," we wrote then. "And the problems mount if you already give a discount for paying by the 10th of the month."
The question has generated a discussion on ProSales' LinkedIn group. "We were just talking about the extra cost of taking credit cards," noted Dwight Boespflug of Homestead Doors. "We are thinking of charging a small fee to cover some of the costs." At other operations, policies vary rapidly. Here's what others said:
- Westeck Windows & Doors of British Columbia changed its policy last year to allow checks only for all orders requiring a 50% deposit. Credit cards are allowed on COD sales and when paying the balance due. "For term accounts we do not allow [credit cards]--period," CEO Casey Kerkhoff wrote. "Our charge card fees are reduced by 60%!"
- Keith Reimer, owner of Forest Lumber in Country Club Hills, Ill., said his company imposes a 1% fee when in-house accounts are paid for with a credit card, but not on purchases at the sales counter with a credit card. In addition, the COD discount on charge accounts is reduced by 1% when a credit card is used.
- But Daryl Lucien of B&B Distributors in Elyria, Ohio,, warned there may be problems with Reimer's approach. "Both Visa and Mastercard agreements prohibit any 'fee' being passed to a customer in the form of up front minimum order requirements for card use, cash discount, or percent of sale," he wrote. "Some cards do now allow for a cash payment discount vs. credit card sale. That said, the settlement from 2012-2013 grants merchants permission to charge customers a surcharge for paying with a credit card under certain circumstances. Ten states still prohibit surcharging, and surcharges are still not allowed on signature and pin debit transactions. There's a maze of rules and exceptions. States have laws to navigate to ensure you stay compliant with the terms of your merchant processing agreement. The four main card have differing language in their merchant agreements, so what 'can do' with one may not apply to another."
- On the other hand, Mike Momb, technical director at Hansen Pole Buildings, Browns Valley, Minn., said new laws permit dealers to add a surcharge for taking payment by credit card. "For years we have offered a discount to people who pay via ACH (electronic check) or check rather than by credit card," he wrote. "I can't say it has hurt business, and it allows everyone the option of choice."
- Davis Boland, sales manager at Boland Maloney Lumber, Louisville, Ky., said his company concluded there was no way around accepting credit cards for retail clients. "So we factor that into our pricing upfront," he wrote. "Nobody carries cash anymore and our customers want the extra time and points to pay for the material anyway. I would rather the credit card companies carry them then me. For our builder accounts, we require them to come in so that we can run the actual card through the machine. That helps us with our fees and we get them into the store more often instead of just calling in."
- Another dealer executive, John Holmes of Holmes Building Materials, Baton Rouge, La., said his company doesn't charge a fee if material is paid by card before the delivery is made. "On house charge accounts we charge 3% fee for the use of a card and balances must be paid on or before due date for account," he wrote.
What do YOU do? Keep the conversation going—tell us your views in the comments section below.