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Reducing credit card transaction fees

Front Desk Operations

Josh started this discussion 15 years 6 months ago

Credit card processing fees are expensive. In order to reduce the credit card fees, I used to train the front desk to ask for payment something like this:
"The total is $xx.xx -- are you able to pay by cash?"

Sometimes guests don't know how they want to pay. It doesn't make any difference to them. The idea was just to suggest to the indecisive people that cash is slightly preferable (without any pressure). I didn't measure stats on it, but I think it was effective.

Does anyone have ways to encourage payment by cash?

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hosteltraveler

15 years

Costs for credit card processing can be elusive, and add up very quickly. If you are a hostel that maintains your own credit card merchant account, then costs are fragmented and billed in little pieces. Consider these costs: merchant and credit application fees, discount fees, address verification fees, payment gateway fees, monthly reporting fees, setup fees, monthly service fees, pci compliance fees, etc. And yes, you will be charged most if not all of these fee categories for credit card processing. This is not to mention the complex process of handling cardholder disputes, and a chargeback fee (about $25-$30 or more) for every disputed transaction.

So, for some a cost of 5% may be achievable. But, if you take the time to add up the costs, you may be surprised to arrive at a total costs of 10% or more of charge volume.

Paypal is ok, but is still not available in many locations, and they don't offer much in terms of integration with websites, booking engines, etc.

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Ronny@SleepyLion

15 years

In case you offer credit card payment you should calculate it in your rates for the beds.

Charging on top, at least in countries where cc payment is common, is not really customer friendly, in cities with lot of competiton even not possible.

We are dealing with cc payments for nearly ten years now.
Started with 3.5 % commission for VISA and MC, after always checking new offers and changing the cc supplier, we now only pay 1.65 % for VISA and less more for Mastercard.

Monthly fees for this little machine which we feed with the cards is about 15 EUR.
Next year we will buy one and reduce these costs to about 5 EUR/ month.

For any transaction we pay, i think 9 ct.

But in no way, we reach 10 or even 5 % costs per cc payment, as HostelTraveler would like to make us think.

We do not take Amex anymore, because they still try to charge the merchant more than 3 % and even have a lousy service. If some ´d like to pay with Amex, it´s most likely that he has also an alternative card.

In the last years here in Germany, where still more is paid by cash than cc or debit cards, there is an increasing competiton in companies providing cc payments. Which is good for the prices...but prices in this sector might decrease everywhere...

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