The debate continues every day about credit card processing fees. Newbies want information on who is the “best” processor, when what they really mean is “cheapest”. Someone with something to sell always replies “check my page” or “send me a DM and I’ll help you”. Then my favorite response always comes up: “charge them a fee, that’s what I do.” Comments will also be flooded with “Square” and “Clover” followed by detractors’ complaints with each company.

EVERY, and I mean EVERY, business has complaints about how it operates. Customer service, late/slow deposits, hidden fees, frozen accounts, brokers, different rates, equipment charges, ongoing charges, etc., etc. Square has them, Clover has them, just like every other company. Asking my opinion or anything else in a public forum like Facebook groups will only get a limited response based on extremely limited experience. I have been in this business since 1977 and have taken credit cards since 1990. I started with Square in 2010 and with all that time in food service I have only used a total of 5 different processors. Each with its own problems and benefits.

You should also understand that there are two different types of processing companies. Square (PayPal Here, Intuit ToGo, etc.) are flat-rate aggregators. Which means the fee is exactly the same no matter which card is used and no merchant account it is required. This makes the threshold for getting started much simpler for the average food vendor. Clover (and a bunch of other services) are merchant account processors. Which means they require a merchant account (which some people won’t qualify for) and possibly charge varying fees depending on card type and brand. Comparing the two types of accounts is unfair as they have completely different benefits and application requirements.

For a complete understanding of each processor type and unbiased reviews, visit the Merchant Maverick website and check out their reviews. Choose the processor that meets your financial needs and has rates and fees that your business can afford. Also understand what you need from the hardware they offer. Do you need a simple POS or one with a lot of inventory control, payroll functions, loyalty programs, etc. Or do you only need to process credit cards?

Here’s what you need to know about accepting credit and debit cards. Keeping it simple for peddling.

1. Accepting cards is ESSENTIAL for street vending. Over 80% of ALL payroll is direct deposited. Mobile food vendors need to be convenient not only in location but also in payment options.

2. 80% of consumers prefer to use debit/credit cards when making purchases. On the other hand, only 14% prefer cash. Not accepting cards drives away business.

3. Processing fees are part of doing business as well as buying inventory, paying staff, buying gas, obtaining permits and licenses, and any other expenses in your business.

As a business owner, you have 4 options:

1. They do not accept cards. (Risk driving away businesses)

2. Pass the fees out to your guests as a “convenience fee.” (Seems cheap and small time)

3. Offer a “cash off program.” (It looks like a gas station)

4. Do the math when setting the menu price. (He looks like a professional business person)

Let’s look at each of the options in detail.

They do not accept cards. I hope that from the stats in #1 and #2 above, you understand that taking cards is a necessary evil in peddling and at events. In my 40 years of experience (through observation and real time studies), credit card transactions are significantly faster than counting change. Yes, there may be internet problems, connection problems, etc. that appears from time to time. Cash has its own set of problems, like tearing up a hundred dollar bill first thing in the day, using a fake pen to verify bills, opening new rolls of coins, having to get extra ones or fives, having a lot of cash on hand makes make your business easy. robbery target. Are you already convinced to take cards? Since accepting cards is a MANDATORY for a food vendor, let’s think about the best way to handle those pesky fees.

Pass the fees out to your guests as a “convenience fee.” Seems smart right? Not really. Charging a fee seems petty and cheap from a guest’s point of view and is illegal in 10 states. Where fees are legal, they are capped at 4% as the merchant CANNOT PROFIT by charging a fee. “Convenience fees” get too complicated when presenting a debit card instead of a credit card. Convenience fees are also frowned upon by credit card issuers and each have specific policies AGAINST these fees in most circumstances. Setting a minimum purchase also complicates things. Debit cards have different rules than credit cards. It is also against credit card issuer rules to set a minimum fee for debit cards. OK, OK, without charging additional fees, what is a provider to consider?

Offer a cash discount program (CDP). This type of program is allowed and is actually detailed in the card issuer’s policies. A cash discount policy means that a supplier must list TWO different prices for each product. Just like a gas station that offers a cash discount does. The pump will display a price marked as “Credit” and a price marked as “Cash”. Of course, the price of the credit is higher considering the processing fees. There are a number of companies that offer CDP processing, all of which use some promise of “free” (for you) processing. The bottom line for a legal CDP is to have a menu that clearly explains both cash and credit pricing, as well as other notices that explain and/or alert your guests to the two-tier pricing system. The problem with this system is guest confusion and overly complicated pricing structures. Street or event sales are very limited in time. The faster you take and complete orders, the more money you’ll earn. But with CDP, the order taking process is slowed down due to lengthy explanations of a two-tier pricing system. As well as the complaints of having to pay more because the guest does not have cash available. In food service, every roadblock you place to a smooth order-taking process is magnified into a negative review, bad word of mouth, or non-return customers when another food or service-related issue arises.

The simplest is:

Do the math when setting menu prices. What a concept! Just like pricing your menu to account for the price of food and propane, just price your menu assuming EVERYONE is going to use a card. What?! Can it really be that easy? Yes, yes you can.

Let’s look at a product that scared everyone when Square raised fees to 10¢ + 2.6%. Soda.

Canned soft drinks are available at Sam’s Club for 32.05¢ each. Most people sell it for a dollar. When Square increased its price, people panicked and complained about the increase in a percentage basis for the least expensive product they sell, a soft drink. That makes selling a soda only cost the vendor 44.65¢ when using a card. I can’t tell how many posts complained 13% charges, bla bla bla. However, if the soft drink company raised the price to 45 cents, the seller would either absorb the increase or raise its own prices.

When I put a price on a menu, take over the whole world will use a card. When Square added that 10¢ transaction fee, I only added 25¢ to some of my higher-cost grocery items to make up for it. So the dollar soda became a $1.25 soda. Still cheaper than a convenience store and much cheaper than a vending machine.

Gross profit (which is sales minus cost of goods) would look like this:

Before: $1.00 – $0.3205 – $0.0275 = $0.6520 big win

After: $1.25 – $0.3205 – $0.10 – $0.0260 = $0.8035 profit

See what happens when someone pays in cash.

Cash: $1.25 – $0.3205 = $0.9295

Does it make any sense to use a cash discount program? Does it make any sense to add a markup (which is legally capped at 4% and you can’t show a profit from that charge)? Does it make financial sense to simply refuse to accept cards?

If you are stumped, the answers are “NO”, “NO” and “NO”.

I can hear someone say, “I don’t deal with change, it holds me back.” Food service is a nickel and dime business. Charging even dollars ended with the turn of the century. The only people who charge even dollar are hobbyists or mathematically challenged. Maybe it’s time to break out the addition and subtraction cards from grade school and learn how to run our nickel and dime business. Practice makes perfect and the more you practice the faster you’ll get it done.