Paypal ? about taking credit cards

[disneysteve]

I have an unusual question. A very small business wants to accept credit cards at their store and is considering doing it through Paypal. There is a monthly fee of $20 plus the transaction fees. To avoid the fees on little transactions, they want to only take credit for $50 or more. I know with regular credit card vendors, you can't set a limit. Does anyone know how that works with Paypal? Can you set a minimum purchase like that or do you have to take credit for all purchases if you accept it for any?

 

[rflorek]

I thought that the Paypal merchant pricing for the fees worked on a sliding scale based on your monthly sales. If higher monthly sales lead to lower fees, I would think you'd want to include all sales & not set a minimum limit.

I'm not even sure if you can set a minimum or if it's like a personal account where if you advertise that you accept Paypal on eBay you have to accept credit cards for all sales.

 

[Green Tea]

Costco has good prices for merchant processing. I think it is VISA's rule that there can be no limit on the transactions.

 

[jtoast]

I have an unusual question. A very small business wants to accept credit cards at their store and is considering doing it through Paypal. There is a monthly fee of $20 plus the transaction fees. To avoid the fees on little transactions, they want to only take credit for $50 or more. I know with regular credit card vendors, you can't set a limit. Does anyone know how that works with Paypal? Can you set a minimum purchase like that or do you have to take credit for all purchases if you accept it for any?

Paypal will not be their problem...it will be MC and Visa.

As part of their merchant agreement you are not allowed to set a minimum purchase, charge more for using their cards than you would for another form of payment such as cash, or ask for ID if the back of the card is signed. Violate those and you risk having your merchant agreement voided which means no more taking credit cards for purchases.

I know this because I have reported merchants to Visa for violating each and every one of those things and the requirement disappeared within a week. Either you take CC's or you don't.

 

[graygables]

Paypal will not be their problem...it will be MC and Visa.

As part of their merchant agreement you are not allowed to set a minimum purchase, charge more for using their cards than you would for another form of payment such as cash, or ask for ID if the back of the card is signed. Violate those and you risk having your merchant agreement voided which means no more taking credit cards for purchases.

I know this because I have reported merchants to Visa for violating each and every one of those things and the requirement disappeared within a week. Either you take CC's or you don't.

Yep. Have they looked into ProPay? I don't remember what the deal was, but it was better than PayPal for processing CCs. CC fees are simply the cost of doing business these days and they need to adjust their pricing accordingly. I just had one give me a CC for $3+, the fees wound up being 13%. UGH. I was in a shop once that had a sign: "CCs are gladly accepted, but please consider using another form of payment for smaller purchases to help keep our prices lower."

 

[disneysteve]

ask for ID if the back of the card is signed

I knew of the other rules but I've never heard of this one. I thought the whole point was to verify that the signature is legitimate. Otherwise, anybody could steal a credit card from my mailbox, sign it themselves and use it freely. If, however, they have to show photo ID, they wouldn't be able to.

I'll let them know they can't have a minimum. I didn't think they could.

I'll also mention ProPay as another option. Thanks all.

 

[jtoast]

I knew of the other rules but I've never heard of this one. I thought the whole point was to verify that the signature is legitimate. Otherwise, anybody could steal a credit card from my mailbox, sign it themselves and use it freely. If, however, they have to show photo ID, they wouldn't be able to.

As a cardholder, you are required to sign your card upon receipt. The merchant is then allowed to compare the signature on the back of the card against the credit card receipt.

If he/she feels suspicious, they have 2 options:

1) Decline the transaction

2) Call the 800# that is set up for that purpose.

As to someone stealing a card from your mailbox, think of it like this:

How often do you get a new card..maybe once..twice a year? Heck, for the sake of argument lets say 10 times a year! Thats a grand total of 10 opportunities for someone to steal your identity.

Now, how often do you use your credit card? By showing your drivers license (Which has your name, date of birth, address, even your SSN in some states) each time you make a purchase how many opportunites are you allowing? Several hundred a year? Several thousand?

Printing "See ID" on the back of your card and handing all of your information over to the minimum wage person working at Wal-Mart (or wherever you shop) each and every time you make a purchase is just begging for a problem.

EDIT:
And even if the do get your card during one of those 10 windows of opportunity how much are you liable for? Yep..thats right...zero(Ok..up to $50.00 in some circumstances.) Just report the card as never received/stolen and dispute the purchases.

The reason merchants ask for ID is NOT to protect you, its to protect themselves. If they let a fraudulent purchase through they know that the CC company will debit their merchant account(this is called a chargeback) and then they have to go through the hassle of filing the police report and attempt to recover the funds.

They would much rather put you at risk from one of their potentially dishonest employees (employee theft is the largest single cause of lost inventory or "shrinkage" in retail) than take that risk themselves.

 

[disneysteve]

The merchant is then allowed to compare the signature on the back of the card against the credit card receipt.

Very interesting. I mentioned this to DW who was in retail management for many years and she was surprised. She said her company policy was to ask for ID to verify the signature. That makes perfect sense to me because if the thief is the one who signed the card, the signature on the receipt would match just fine. The problem is the ID would be in a different name. Just matching the card signature to the receipt signature really proves nothing except that the same person signed both. It doesn't mean that the customer is the person named on the card, though.

So what happens if a cashier asks for ID and I refuse. I'm asked for ID very frequently when using my card. I have no problem providing it because as far as I'm concerned, it is for my own protection.

 

[jtoast]

You and the merchant have 2 choices each.

Merchant
1) The merchant can obey the policy and allow the purchase

2) The merchant can refuse the purchase.

You

1) Show ID even though, as I believe I have proven above, you are taking a much greater risk

2) Refuse the merchandise/use an alternate form of payment.


I always choose option 2 and then report the merchant to Visa/MC so they can contact the merchant and explain the policy. If they do not change their policy after a week or 2, I don't shop there anymore as they obviously care more about their chargeback percentage than the safety of my information.

By showing ID you are making one key assumption...that that the person "verifying" your information is actually honest..and that's a very very dangerous assumption to make in this day and age.

EDIT:
Oh, and keep in mind also that just because the employee happens to be honest, the guy behind you looking over your shoulder and writing down your information probably isnt.

 

[Green Tea]

Just for comparioson, the small business fees for Costco's credit card processing for Exec. member is 1.64% + $0.20 per swiped transaction. (no monthly fee) Have no idea how it compares to the others.

 

[disneysteve]

By showing ID you are making one key assumption...that that the person "verifying" your information is actually honest

All I've ever seen a cashier do is take a quick glance at the photo and back at me. I never hand them my license. I just flash it from the flap in my wallet. My SSN isn't on there. And there wouldn't be anyone but the cashier who could see it that way.

Very interesting though. I don't think I'll stop showing ID but I may start pointing out that they aren't actually allowed to ask for it.

On a separate note, with more and more stores using the electronic pads where you sign on the screen, the signature never looks anything like my actual signature anyway, so matching those is worthless. Then there are places like Home Depot where I generally go through the self-checkout lane and there is no cashier. Just swipe the card and go. So if anyone wants to use a stolen card, there are plenty of ways to do it and not get caught.

 

[jtoast]

All I've ever seen a cashier do is take a quick glance at the photo and back at me.

hehe yea that sounds like they are really trying to protect you.