credit cards

[V T]

Interesting and important subject, the credit card
business.  I used to have a merchant account for my
business (which is not piano related), but no longer
do.  Here is my story:

>From time to time, I would get an order for a product
from any of the various branches of the military. 
There is a long list of them that I have experience
with, and I can truly say that some generalizing is
justified.

In 20 years of doing business with them, no branch of
the military that I have dealt with has ever paid a
bill on time.  Never.  The most annoying calls I ever
had to make in all the years of being in business were
to places like the Naval Research Lab in Washington
D.C.

At some point during the 1990s, they issued credit
cards to their employees and those became the standard
way of doing business for purchases under $2500. 
That's when I opened a merchant account, basically to
stop the annoying problem with late payments from the
military.

Here is what I didn't like about the merchant account.
 

- The credit card company wants unlimited access into
your bank account.  Not just to deposit funds, but
also to take money out if they want to.

- You have to keep all the paperwork for every credit
card sale for at least 3 years, possibly longer.

- There was a monthly charge of $25, even if I didn't
have a single credit card order in that month.

- You have all heard how the consumer isn't liable for
anything over $50 in case of fraud.  Guess who picks
up the tab if a someone buys merchandise with a stolen
card?  Yes, it's the merchant - not the credit card
company.  Getting the sale approved by swiping the
card or using the telephone system does not make the
card company responsible for a loss due to fraud. 
It's just a "nice gesture" they extend to merchants.

- Government cards have been classified as "high risk"
by the credit card companies, so I had to pay almost
5% in fees on the sales amount.

- It was, according to them, not legal to charge the
customer for this additional expense.  However, I
found out that many businesses got around that by
offering a "cash discount".  In other words,
surcharges were not legal, but they couldn't stop you
from offering a cash discount.  What an ugly way to
run a business!

- If there is a request from the credit card company
for some paper records for a sale that happened 2 or 3
years ago, you are given 72 hours to fax them all that
old paperwork.  If you don't, they have the right to
take the money out of your account.  Let's say you are
on vacation, and such a request comes in.  You could
come back to an empty bank account.  You might even
get charged for overdrawing your account, etc.

- The fee structure changed every few months, no fee
was ever lowered.  They gave you 30 days notice.

- Most of the credit card companies want to be very
invasive about reviewing your tax and business records
before they open the account.  In comparison, getting
a card is trivial.  The reason is, if someone buys
merchandise with a stolen card the problem belongs to
the merchant.  The merchant bears the loss.  However,
if a merchant creates a scam and takes money from a
customer and then vanishes, the credit card company
has to reimburse the buyer.

I didn't need the military business, so I closed the
account (which took almost 5 months to do!).

I have also noticed that various branches of the
government accept payment of taxes, fees, parking
tickets, etc. by credit card and they charge a $10-15
(or so) "processing fee".  That tells me that it is
possible to charge a fee to cover your costs for
processing credit card orders, but it may be a special
deal the government negotiated with the credit card
companies.

This may not be how it's nowadays, but 7 or 8 years
ago that was the norm.  Maybe it's better now, but I
doubt it.

For piano work, I would look into Paypal, that looks
like it could be a cleaner solution.

Vladan

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