Hello folks,

 

As you all know, CC fees take a substantial chunk out of what you net when you have lots of small transactions.  Has anyone here had success (or failure) with a cash-only format? Beyond this, for those that do take plastic, how do you set CC policy at your shop: do you suggest or require a minimum amount for a CC transaction? Do you stick to it? Do you have many complaints? and what percentage of your business ends up being cash?

 

There are a few food establishments in my area that are cash-only, and they have trained their customers to work within this practice. I'm speaking from experience--I know that if I go to restaurant X, I need to stop off at the ATM. Not that big of a deal. Is this doable in a shop, given that a customer generally would not go to an ATM and pay a $2 fee in order to get five bucks to buy a couple of coffees? (On the other hand, shops rely on regulars who are in a better position to adjust/prepare.) And what are the potential drawbacks, aside from lost customers: employee theft? crime (burglars and--yikes--robbers)?

 

 

 

 

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I realize you're talking about cafe only, but keep in mind that if you have any plans of doing internet sales, you'll need some way to process CC's.

But Square can be using in lieu of POS systems like Selby and CSM, offering you an operational savings in the thousands.

 

And if you're really just doing simple transactions, without complexities like inventory tracking, staff hourly tracking and more, then Square might be the better solution.

Should you go the cash only route...it's all about the setup. Make sure that you give your customers every opportunity to know that you are a cash-only venue. There is one shop nearby where I live that is cash only, however, there was never signage introduced and the barista looked at me as if I had three heads; not knowing the policy and all. He then concluded to tell me that he did not accept the mark of the beast at his store because of how it effects the boom of big business and increases debt for consumers. He went on and on about the evils of credit cards and credit card companies. Needless to say, I turned around...walked out...and have not been back since. 

 

I say go for it if you can manage the loss of sales opportunity. Just set it up right and don't be elitist about it. Be honest with your customers and listen to them.

It's not illegal to charge an extra fee to the customer for processing the card is it?  I think most people, when they want a coffee and want it now, would rather pay .50 to cover your processing fee than pay the bank 2.00 or more.  And here in 2011 people can usually assume that they will be able to pay with a card for whatever they want, so when they come to your shop, and then have to leave to find an atm to get a cup of coffee, that's going to be a negative experience that they remember.  I worked at a shop that charged .50 for transactions under $5.00 I'm not sure how legal that is, but the point is, I don't remember anyone complaining.  I think it's because you're giving people a choice: You can pay a little extra for the convenience, or you can go find some cash.  Rather than "sorry, I only take paper money, even though almost everyone else in America takes credit."   People don't really understand that.

just put an atm in your shop.

 

also, you can not legally have a cc minimum. you can, however, charge a service fee for anything below your desired amount.

Thanks for the responses so far. I know that legally you cannot have a cc minimum, but I still see them posted in various places all the time.

 

I would also assume that the use of plastic could result increased spending on the part of customers greater than the 3% loss in fees, as no real money changes hands. Swiping a card seems less real than handing over a five or ten.

 

I'm also curious as to how tipping for baristas is affected by cc/dc use, as most charges in a shop do not require a signature.

 

 

True, for us cc/debit transactions do not require a signature. Doesn't matter have them sign anyway so they can add a tip if they choose. At a location we acquired their cc system was setup without a tip line. A couple months ago I added a tip line, my baristas are grateful, their tips up over 40%. Yeah, they have no problem having the customer sign the slip now when they didn't have to before.

Matt B said:

I'm also curious as to how tipping for baristas is affected by cc/dc use, as most charges in a shop do not require a signature.

 

 

If that's really the concern, why not simply increase your prices by 5% across the board?  This, of course, assumes that your cc fees will "balance out" to about 4% of your transactions.  Then you don't have to worry about an additional fee.

 

 

 



christopher myers said:

It's not illegal to charge an extra fee to the customer for processing the card is it?  I think most people, when they want a coffee and want it now, would rather pay .50 to cover your processing fee than pay the bank 2.00 or more.  And here in 2011 people can usually assume that they will be able to pay with a card for whatever they want, so when they come to your shop, and then have to leave to find an atm to get a cup of coffee, that's going to be a negative experience that they remember.  I worked at a shop that charged .50 for transactions under $5.00 I'm not sure how legal that is, but the point is, I don't remember anyone complaining.  I think it's because you're giving people a choice: You can pay a little extra for the convenience, or you can go find some cash.  Rather than "sorry, I only take paper money, even though almost everyone else in America takes credit."   People don't really understand that.

i agree with Jay.  increase your prices.  these days, who carries cash anyway?

you know?

our business increased substantially after we introduced cc. i cant imagine not offering it these days- however, i understand, some business models are surviving as cash only, though i wonder how much business they are losing from not accepting cc.

 

personally, i dont carry cash. rarely do i have a dollar in my pocket, but i have plenty in the bank and stopping off at the ATM every time i want to make a purchase would be a PITA.

 

also, read the fine print!!  it is illegal to limit the $ amount of any transaction....and it may be the same for charging transaction fees.  seriously, look at the fine print.  the CC companies look at that as penalizing the consumer for using their (the cc co.) card, of which they have given the consumer full rights to use. same with requiring ID for purchase....again, read the fine print. 

you, the merchant could be fined big $$.

 

This is a great question.

I would 1) ask myself, what are my demographics first and foremost.

2) can I afford to ask my 400 loyal customers to not support the CC companies? (Yes)!

3) I would offer gift cards in the amount of $10 for the customer that does not want to shell out

$32 for the normal X americano, or Latte per week.  It's always nice to give one comp beverage when you sell the prepaid card.  This way we receive a transaction over 2.75 and no upset customer. 

4)if I were in NY, SF, or a heavily traveled location being cash only I would not be concerned at all.  I would just point out the obvious and take not from all of the Pho joints.

that is my saving two cents from the CC monsters

PS

I also use square :-)

 

Actually, due to the changes brought forth in the Credit CARD Act of 2009, merchants may now impose a minimum purchase amount of up to $10 on credit card transactions.  It isn't "illegal" to impose a higher minimum purchase amount, but you would be in violation of your merchant agreement and could lose the ability to accept credit cards.

 

Also, merchants have always been able to offer discounts for cash payments, but cannot charge an additional fee for a credit card transaction.  It's basically semantics, but you have to position the fee correctly or, again, risk being in violation of your merchant agreement.

 

 


Matt B said:

Thanks for the responses so far. I know that legally you cannot have a cc minimum, but I still see them posted in various places all the time.

 

I would also assume that the use of plastic could result increased spending on the part of customers greater than the 3% loss in fees, as no real money changes hands. Swiping a card seems less real than handing over a five or ten.

 

I'm also curious as to how tipping for baristas is affected by cc/dc use, as most charges in a shop do not require a signature.

 

 

Gigi is correct.

We've required $2.50 minimum purchase to use a card for years and never had a problem — in fact, it has been beneficial to our business, as it has pushed regulars who don't carry cash to buy $10 or $20 gift certificates with their cards, rather than us pay swipe and percentage on a $1.70 cup of coffee every time.

Jack Groot said:

CCs bring a substantial amount of revenues to a business and not taking them cuts off a large chuck of potential revenue. Our CC revenues (which now includes a large number of debit transactions) have grown to over 30% of total sales. We'd lose most of that if we didn't do CC transactions. If you research well you can probably get CC fees down to around 4% of sales, so the gain is worth it. 

 

You are not allowed to limit transaction fees. Visa, MC and Discover may take away your processing rights if they find out you limit transaction size. I personally think it is stupid to make it harder for customers to pay me. To "train them" and make them go to an ATM is ridiculous - many/most people will get sick of that...unless they are cash only type folk, which is in my opinion the minority.

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