Thread: Accept credit cards vs using PayPal

After digging around in this forum and others on the subject of credit cards, I have a few comments, possibly verging on a rant.

I'm actually in favor of accepting credit cards for payment for my work. In my view, the benefits of doing so outweigh some of the negatives if you're careful about getting the right merchant services. With all of the "Rewards" programs out there, many people prefer using a credit card for almost all of their purchases just to take advantage of those benefits. I also firmly believe that it puts a more professional "this is a real business" face on your operation. The perception is that if you don't take credit cards you must be pretty small time and not very professional. "A real business accepts credit cards, a hobby business can't really afford to." While this may not be true, as the saying goes perception is reality in many peoples eyes.

If you are contemplating accepting credit cards and setting up a merchant account, you really, really need to do your due diligence. There are a lot of scams out there that will cost you dearly. Unfortunately, I didn't really research it sufficiently and have paid the price.

Currently, I actually have three merchant accounts. One, with a company called TSYS (formerly called PayFuse and promoted by Home Inspector Pro Web hosting) has turned out to be a real dog. Huge monthly fees, in the range of $40 a month on average, a lock-in to a one-year contract with a $400 early termination fee that is not pro-rated and transaction fees a bit on the high end since the card numbers are "keyed in" as opposed to being swiped. At least my one-year contract ends this month and that dog is going to be euthanized immediately!

The first actual merchant account I set up was with Intuit GoPay that would run on my Android smartphone. That little game was not without its pitfalls as well. I originally signed up because there was supposed to be no monthly fees and no contract AND they were going to provide me with a dongle for my phone for swiping cards that would assure me the lowest possible discount rate. Looked good on paper but the reality was that I was charged $12.50 a month "service fees" and they played bait and switch with their clearly stated online offer of a free card swiper and failed to send me one, thereby assuring I would have to key in all the credit card numbers, thereby incurring the highest discount rate. Although I contacted customer service several times about this and was promised the free card swiper dongle, I have yet to see it. I've had this account for over a year.

Only recently, thanks to a post by Brian, I stumbled across Square. This one also had no monthly fees, no contract and a reasonable discount rate AND they sent the promised card swipe or dongle for my phone. I've been running the Squarer application on my phone, using the card swiper for about a month now. All is well and the other two are getting kicked to the curb. Note: They also accept AMEX without a higher discount fee that most others charge.

I found that the TSYS service was just a drain on my bank account since no one ever actually used it to run a card on the site. Total waste of money! Unfortunately I had to sleep with this dog for a year due to a contract amendment and an insane $400 "early termination fee". (Dominic, if you happen to read this you should really find somebody else to offer this service for your web hosting clients) These guys are a huge ripoff.

Let's talk about PayPal. I also have a premium PayPal account for other reasons not related to my inspection business. I rarely have used it to collect and inspection fee.

Recent news articles have brought to light the darker side of the PayPal system.

This is an excerpt of an article I recently read about "Credit Card Ripoffs". PayPal also offers a credit card and this is why it was included in this article.

"Most of us know PayPal as that thing that we use to buy stuff on eBay with, and also probably the expensive way to get money on or off the Internet (as opposed to, oh I don’t know, an actual credit card). For those who are fans of redundancy, PayPal also offers a credit card. To online retailers and freelance workers, PayPal can be a convenient way to move money around the Internet with relative speed and convenience, and some people like the idea of keeping these accounts separate from their bank or “real” credit cards. The problem arises not with the card itself, but when you try to get access to the money in your PayPal account to pay off your balance. Funny enough, PayPal is not legally considered a bank, meaning it’s not subject to the reams of laws and consumer protections that banks are. While this makes sense because PayPal actually holds on to your money (instead of lending it out as banks do), that means you’re dealing with a private company with their own policies about how you get to your money, and we all know that customer support is a real joy to deal with when you’re trying to transfer funds to pay your bills on time or avoid a ten percent jump in interest rates on your credit card.
What does this mean for the average PayPal user? It means that, “for whatever reason at any time because we want to, so now go **** yourselves, that’s why”, PayPal can freeze your account and redistribute funds as it sees fit. This happens especially often to online merchants, and pretty much all the time during informal charity events. In one case, more than $30,000 raised for victims of Hurricane Katrina had to be returned. Why? No reason, just because PayPal thought it looked “suspicious”. And while every other credit card company on the planet will inevitably try to suck a few extra fees and interest rate hikes out of you, at the very least they let you spend your own money."

Now that's a real eye opener! I certainly wouldn't want my hard-earned dollars tied up on the whim of some minimum-wage cubicle dweller having a bad day and putting their own spin on some obscure policy. And you have no real recourse. They can lock your account for up to six months and since they are essentially unregulated you got nowhere to go! That majorly sucks!


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Just got Square. My card reader just came yesterday. I can't wait to use it! Like you, after a ton of research and recommendations here, I decided to go with them...had to get a new phone to use it, but that's ok with me! I hated my BlackBerry anyway!

Dana,
Did you use a credit card to pay TSYS or GoPay ?
Reason being that the VISA card would provide you a third party to resolve the dispute terms or not receiving equipment that was part of the service.

Have used the card company in the past to get a supplier's attention. And, oddly enough, not to difficult with supporting documentation.

Originally Posted by Garry Sorrells

Dana,
Did you use a credit card to pay TSYS or GoPay ?
Reason being that the VISA card would provide you a third party to resolve the dispute terms or not receiving equipment that was part of the service.

Have used the card company in the past to get a supplier's attention. And, oddly enough, not to difficult with supporting documentation.

Hi Gary,
I personally rarely use a credit card. I have one card, primarily because I have to have one for things like rental cars etc. if needed. I do most of my financial transactions via ACH and payments directly from my bank account. I actually physically print and send out maybe 2-3 checks a month. Everything is online these days.

In any case, its old news. Live and learn, pay for your mistakes and move on. Both these companies are getting kicked to the curb as soon as I am sure the Square deal (no pun intended) is working properly.

The main point of my post was to alert those that use PayPal that there might be unintended consequences to that decision and to get people to really "look" at the area of credit card merchant accounts in general. It's a very competitive field and there are good deals out there to be had.

Dana,
Live and learn, you are right. The Devil is in the Details.

Any time I want to add an additional level of protection I use a credit card. Having a payment stopped or reversed will get the supplier's attention. I have no love of the credit card industry though I will make them provide as much service as I can extract.

In a side note, accepting a credit card payment will put you in the position that a client may use that card service against you. No idea of frequency or reasons. Would like to hear if there have been disputes and how they were resolved in Home Inspections.

Gary....
Yep, it can be a two edged sword. I have never had a problem though.

Square is the best thing going that I have found. Over the past 15 years I have had 4 processing companies and Square is the best of all.

Square changed a few things and now I have funds in 24 hours or less. Tuesday of this week I had a charge that I processed around 6pm. I received an email at 12:40 am that the funds had been sent to my bank. They were in my account that day.

Originally Posted by peter jhon

Square credit card processing is awesome. You can easily explore our business through it. It accepts credit card payments anywhere with your I-phone, android or i-pad.you need to download square apps for your machine to get started. Apart from this TSYS payment card. TSYS Hybrid provides the flexibility of paying. You can combine credit and checking on a single credit card.
______________________________________________
online credit card processing

My personal experience with TSYS was less than satisfying. Their monthly service charges and onerous non-prorated "early termination" fees were outrageous.
glad I was able to finally kick them to the curb and move to Square.

That is great info. Dana - - - Thanks. Regarding credit cards, they are wonderful tools. If the interest rate concerns you, don't use one because their rates are too high to be borrowing from them. The conumdrum for me is that merchants will not give you the say 2% to 5% off for paying in cash, but they will give it to C/C companies when you use your C/C. So I use C/Cs whenever possible, ( utilities & any providers that will accept them ), for the free perks, ( airline tickets etc. ). Never carry a balance, ( pay off monthly ), put your vendors like Verizon, Comcast, electricity etc. on auto-pay, monitor the billings via computer and fly for free whenever you travel. You get all those benefits because vendors will not give cash discounts, but will give C/C discounts.

I use square myself and for the small charge per transaction its worth it because of no monthly fee.

I do all of my inspections on my iphone and i have an apps called gopayment where i can take payment right on the site just swipe there credit card and bingo done, they charge 2.7% for a swipe 3.3 for a key in transaction.