- Personal Finance
How To Accept Credit Cards for Fundraisers and Events
Card Readers for Mobile Phones from Square and PhoneSwipe
Swiping Cards for Schools, Charities and Non-Profits
The ability to swipe credit and check / debit cards at a fundraiser dramatically impacts the ability of that fundraiser to make higher profits. Yet many organizations do not accept credit cards because of the high cost of a merchant account with a credit card processing company or traditional bank. Renting mobile terminals and setting up one-time processing service for an event is also excessively expensive. There is an easy, effective and secure option for accepting card payments at events which will not eat away the profits, and it can be affordable even when the items for sale are inexpensive. By processing through a smart phone or tablet computer, rather than a traditional terminal, many of the expenses associated with traditional processing are bypassed. A growing number of services are available, but only a handful are truly going to offer the combination of savings, security and quick deposits that most organizations and individuals will want.
The top contenders are PhoneSwipe (aka Pay Anywhere) from North American Bancard, Go Payments from Intuit, PayPal Here from PayPal, Payment Jack from Total Merchant Services and Square from SquareUp. Of these, only three tie into actual merchant services providers (PhoneSwipe, Go Payments and Payment Jack) which offer live support, 48 hour deposits into your own bank checking account (even at high volume), and PCI compliant encrypted transactions. PayPal Here offers an encrypted transaction and same day deposits into your PayPal account, but with up to four days before transfers can be received into a checking account.
Pros and Cons of Square
Square is one of the most popular services for accepting credit cards on a smart phone or tablet. It is consistently inexpensive with the vast majority of cards going through at a total cost of 2.75% per transaction. This makes SquareUp's service especially appropriate for vendors who sell low ticket items, because the addition of a transaction fee would effectively increase the percentage cost of an inexpensive sale by a dramatic amount. Imagine being charged an additional $0.25 for every $3 cup of coffee being sold. That can cut way into profits. Square has also improved its service with regard to depositing funds from swiped cards, promising to "initiate" deposits from all swiped transactions within 36 hours. This does not mean that all deposits will clear into a merchant's bank account within 36 hours, as some charges may still show as "pending" after the deposits are initiated because of various bank rules, which might hold the funds up for an extra day or two.
On the other hand, Square is notorious for its lack of customer support. There is no live phone number to call if there is a problem with the software or service. Help can only be found through email or Twitter and can take on occasion several days or even weeks to resolve issues. The card reader, though more compatible than some others on the market, is not securely encrypted. And manually entered transactions over $1000 per week are subject to holding periods of 30 days. Some of these issues are able to be worked around with Square's initiative to develop larger businesses, but for fundraisers or small merchants there is little help.
Pros and Cons of PayPal Here
The PayPal app to accept swiped cards on a smart phone is still quite new. (Still in beta testing as of June 2012.) The main advantages of using PayPal here are that all swiped charges are 2.7% and that funds are available in the user's PayPal account within hours. This is good news for existing PayPal users, especially those who use PayPal as their primary means of making payments. However, for most merchants who need their funds in a checking account, PayPal actually takes an additional three or four days for deposits to clear.
Manually entered transactions with PayPal Here are 3.5% plus $0.15, the same cost as Square. PayPal appears to release manually entered funds as quickly as swiped funds, but since the service is so new it is too early to see how these transactions will be handled once the service is fully operational.
Go Payments Vs PhoneSwipe: Pay As You Go From Real Merchant Services Providers
Both Intuit and North American Bancard provide two classes of processing with their smartphone products. There is the option to tie into an existing traditional account (usually with a multi-year contract) for brick and mortar, online or mail/phone order businesses or use their product with a contractual commitment and lower rates (complete with monthly fees, annual PCI compliance, etc.). There is also the option to use the product in the Pay-Per-Use manner being compared here. Both companies provide essentially the same service at fairly comparable rates. Both are slightly less expensive than Square or PayPal Here for their qualified rates. And Intuit's Go Payments does tie in nicely with their accounting products such as QuickBooks, which is really the only reason to prefer their product.
PhoneSwipe now offers compatibility with QuickBooks and the rates edge out the competition, offering the lowest of the swiped transaction costs in the Pay-Per-Use category at 2.69% with no swipe fee on Qualified transactions. GoPayments offers a Qualified rate of 2.7% with no swipe fee. But here is the fine print from Intuit's web site:
1. Card-swiped rate applies to qualified swiped Visa/MC/Discover network transactions and requires the GoPayment card reader. Most rewards, corporate and special card types are not considered qualified.
2. "Key-Entered Rate" will be charged on all qualified manually keyed Visa/MC/Discover Network transactions that have verified addresses. All Visa/MC/Discover network transactions that do not meet the requirements for card-swiped and or key entered rates will be charged a non-qualified rate of 3.7%.
Users who don't read the tiny print at the bottom will miss the important fact that with GoPayments, it is likely that a large percentage of swiped charges will go through at 3.7%, which is the highest of all the options compared here.
PhoneSwipe also has two tiers for swiped transactions, though the downgraded cost of manually entered or corporate cards is 3.49% plus $0.19, which is the lowest cost from among these options. Additionally, PhoneSwipe has the ability to be set up so that rewards cards go through at the lower rate. Most sales agents will avoid doing this because it is more profitable to push rewards cards through at the non-qualified level, so be sure to work with a representative who is willing to keep Rewards Cards at the Qualified Rate. Because Rewards Cards are continuing to increase in popularity, it is likely that they will make up a significant percentage of swiped cards. With this adjustment in place, PhoneSwipe offers the most stable, secure and cost effective combination of customer support, low rates and timely service.
Another consideration may be the support of Blackberry phones. Intuit has discontinued their limited support of the Blackberry platform, while PhoneSwipe has just released an update to the software for Blackberry for a wider range of supported devices.
Payment Jack: The Best Month-To-Month Option
Sometimes the Pay-As-You-Go style of processing is the best bet and sometimes it is better to pay a small monthly fee for the benefit of lower percentages. Both GoPayments and PhoneSwipe are available for plans with monthly fees and lower percentages, although the rates offered for GoPayments are not comparable to those offered to standard retailers, with only a split rate of 1.7% and 2.7% along with their $12.95 monthly fee and ultimately the cost of PCI compliance. PhoneSwipe is $14.95 per month but with customized rates that can be done as Interchange Plus pricing, potentially lowering the percentage and transaction fees much more than any of the competition; however working with a knowledgeable sales agent is essential for setting this type of account up correctly. The bottom line is, if there are not at least $2,000 in transactions being made every month, this type of account is probably not going to be the best solution because monthly fees and the cost of PCI compliance will push the true cost of processing into a higher percentage of total sales than the Pay-As-You-Go or Pay-Per-Use plans offer. These other versions of the service usually also require multi-year contracts which can be expensive to break, so check with a sales agent about that information as well.
There is one month-to-month contract that offers a terrific combination of pricing and flexibility. Payment Jack from Total Merchant Services is only about $5 per month, with rates customized to the merchant on three or four tiers (Qualified, Mid- and Non-Qualified levels with the option to do check cards at a lower rate) rather than two. It does cost $0.25 per transaction, making it inappropriate for really small ticket sales (like coffee), but the potential savings will offset this for merchants who process higher amounts every month. PCI costs are absorbed by the company for the first year and pro-rated monthly after that at under $5, which ranks it among the least expensive PCI compliance in the industry.
Mobile Processing Platforms
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Adventures In Merchant Services
For more information on the processing industry, visit Adventures in Merchant Services. This blog contains insight, hints and generally helpful information about all things related to processing bank cards. It is designed for merchants as well as those working (or thinking about working) in the industry as sales reps.
Check out my hub comparing these mobile processing options in more detail. I also have a hub explaining Interchange Rates and Fees for those interested in better understanding the pricing behind credit card acceptance.
I have worked as an agent for a number of processing companies and their various products for several years, testing them from both a sales rep and user perspective. My interest and main objective has remained focused on supplying merchants with the best products and fairest pricing to suit the needs of the business or individual in spite of an industry that often seems more interested in quick profits than honest solutions. I can be reached directly via email for anyone interested in discussing their own processing needs or simply looking for direction or ideas to compare.