Credit Card Article by Coin Op Laundry Assoc Staff

[mjwalsh]

Fellow self service car wash coin operators,

I just happened very recently ... to come across this based on truth article in the free section of the "Business Management" section of the Coin Laundry Association Website. It was written by the staff of their Planet Laundry Trade Journal. I have been thinking about sharing this with this forum for while ... just for a bit of "BALANCE" to some of the gushing about credit card acceptance. No ... it does not mean I have some ulterior bad motivation "agenda". Yes, for some operations & locations ... it could be a wise choice ... especially if the dollar coin does not come roaring back ... which I believe could happen better than ever ... if we aren't discouraging the possibility of a coin & currency update too much.

mike walsh king koin of bismarck

 

[pitzerwm]

You forgot to add the link

 

[mjwalsh]

You forgot to add the link

Here the forgotten link: http://www.planetlaundry.com/news/2012/credit-card-swipe-fee-settlement-still-unacceptable

mike

 

[Earl Weiss]

AFAIAC this still ignores the elephant in the room, (to an extent).

As merchants in this society becoming more and more cashless we are forced to accept CC. As the article puts it the card companies are a virtual cartel.

At least now some rertailers are speaking out against it.

But the elephant that's really miossing is that the merchant gets more net revenue from the cash customer than the CC customer. IS this offset somewhat by the lower cost of not handling cash? Perhaps higher revenues from the CC user? Perhaps in some cases. But, the fact remains that the cash customer incurs lower cost for the merchant and subsidizes the CC user.

In a fair system the customer causing higher cost pays more.

In a fair system each would shoulder their respective share of the cost. If CC transactions added the cost to the user we would then see competitive forces at work as consumers who wanted lower costs gravitated to the lowest cost per use card.
It's a simple solution.

Replacing the Federal income tax with a National sales tax is another simple solution to a huge problem as well. I can dream can't I?

 

[pitzerwm]

The only problem with a National Sales tax (VAT in other countries) is that it just keeps going up. In parts of Europe its 27%, most are 19-21%. Government won't quit spending, so you will continue to finance it, one tax or another.

In most states, you can't charge more for card use, but you can raise your price and discount for cash.

 

[Earl Weiss]

No plan is perfect. The National Sales tax could be different than VAT which in some cases ads layer upon layer to a single item. A National Sales tax would only apply to items bought by the ultimate consumer. You could exempt Medicine and Groceries and certain limits or different rates on personal automobiles and primary residence.

The advanteages are numerous including eliminating financial burdens on businesses of dealing with witholding and capturing untaxed income for illegal activities and undocumented workers (They still need to spend what they earn.)

While some states do not have a state sales tax the Fed in large part could piggyback onto the states collection procedures. Even let the states collect the tax and keep a % of collections for their trouble. That way the states audit the retailers and the Fed only needs to audit the States.

 

[bighead]

I'm still going to make the argument that the CC in the SS bays will bring found money to the business, even with the additional CC fees. I charge $2 startup cash, and $4 startup CC, but i give more time per dollar on the CC. I still have more $ spent per user on the CC, enough to cover the fees and put enough money in my pocket to justify the installation.

The other day I saw a state vehicle in my wash washing off some mud and it occurred to me that I am picking up more government and B2B business with people using their expense cards. I know if I were them I wouldn't pay cash and go through the hassle of reimbursement. I'd be more likely to let the car go dirty.

 

[robert roman]

If the cost of going to a Laundromat for a family of four averaging two loads a day is $165 per month (60 loads at $2.75) or $1,980 annually, then a swipe fee of 2 percent would be $40.

The article stated swipe fees cost each household an average of $250 annually.

How important is $40 a year to lower income households when they can now rent-to-own and operate a washer and dryer in their homes for as low as $110 per month or $1,320? Thus, a savings of $660 annually, plus transportation cost.

If credit cards are repugnant to you, I believe there are smart card systems available in the Laundromat industry?

 

[PaulLovesJamie]

...a swipe fee of 2 percent would be $40.
The article stated swipe fees cost each household an average of $250 annually

The $250 per household was for retail cc swipes, not limited to laundry.

Also I missed the part where somebody said credit cards were repugnant, could you link to that comment, I'd like to read it.

 

[MEP001]

How important is $40 a year to lower income households when they can now rent-to-own and operate a washer and dryer in their homes for as low as $110 per month or $1,320?

I didn't see where the issue is transferring the per-swipe costs to the card holder. Also, "rent to own" is typically 18 months, which means a washer/dryer that you can pick up at Sam's for about $600 would end up closer to $2,000 at the end of the contract.

 

[robert roman]

“The $250 per household was for retail cc swipes, not limited to laundry.”

Correct, the “$40” is included in the $250.

“Also I missed the part where somebody said credit cards were repugnant, could you link to that comment, I'd like to read it.”

You didn’t miss anything because it was not in the article - it was something I said “If credit cards are repugnant….”

“Also, "rent to own" is typically 18 months, which means a washer/dryer that you can pick up at Sam's for about $600 would end up closer to $2,000 at the end of the contract.”

Step into the shoes of a low income household living pay to pay.

The household cannot afford to buy a new car or pay cash for used (i.e. $600 for a washer/dryer). So, if the household needs a car/mobility it buys at buy-here/pay-here lot and incurs high interest rate.

Matters not about interest paid as long as household obtains “mobility” that fits within its pay-to-pay cash flow.

Consider the coffee industry. As retail prices for gourmet coffee have increased at places like Starbucks, the variety of gourmet coffee makers for home use has increased and the price has come way down.

So what happens, as the cost of using a Laundromat continues to rise, which it is?

 

[mac]

Come on guys. I now see cc acceptance at tire inflator stand alone machines all over the place. The way I sold my last card system was by asking the owner if he could find ANY other business within 10 miles of his place that did not accept them.

 

[mmurra]

Credit card fees at my laundry, tanning and carwash range at near 5%, up from just over 3% prior to the recent legislation. The fees now exceed $1,000/mo and keep climbing. Fees should be 2% or less for the value provided.

We are getting ripped off by politicians who care more about donations to the next campaign than to the small frys like us. They TALK about supporting small business but take $$ from the big buys for the next election cycle. That's how it works and it needs to change.

IMO, I need to accept credit cards in order to be competitive

Mark

 

[mjc3333]

“Also, "rent to own" is typically 18 months, which means a washer/dryer that you can pick up at Sam's for about $600 would end up closer to $2,000 at the end of the contract.”

Step into the shoes of a low income household living pay to pay.

The household cannot afford to buy a new car or pay cash for used (i.e. $600 for a washer/dryer). So, if the household needs a car/mobility it buys at buy-here/pay-here lot and incurs high interest rate.

Matters not about interest paid as long as household obtains “mobility” that fits within its pay-to-pay cash flow.

Here is another twist to the whole credit card debacle.

I am not only taking credit cards in my bays and vacs, but I am also in the buy here pay here auto business for the past tens years.

In the beginning, we only accepted cash as do most car washes and or Laundromats, however, over the past 6 or 7 years we started to accept credit card payments for the actual car payments each week / month.

We are probably at 60% credit card payments to 40% cash.

Do we "need" to accept credit cards? No. Think of it, people using a credit card to pay on a high interest loan payment. We get killed in fees every month, but it ends up being a cost of business. Cash payments are "free". Credit Card payments "not so free". One of the first questions asked, "do you take credit cards for payments I am too lazy to pay in person".

Like mac stated, everything "takes" credit cards, McDonalds, Car Washes , Laundromats, even Buy Here Pay Here car lots.............

 

[robert roman]

I could not agree more.

For example, when gasoline prices went through the roof, so did U.S. scooter sales rising from 100,000 units in 2007 to 225,000 units in 2008, and, according to Motorcycle Industry Council, people were buying scooters with their credit cards.

If the average price for a new scooter was $1,500, then the total U.S. market would have a value of $337.5 million.

How many scooter dealers do you think bucked the plastic payment trend?

 

[mjc3333]

I could not agree more.

For example, when gasoline prices went through the roof, so did U.S. scooter sales rising from 100,000 units in 2007 to 225,000 units in 2008, and, according to Motorcycle Industry Council, people were buying scooters with their credit cards.

If the average price for a new scooter was $1,500, then the total U.S. market would have a value of $337.5 million.

How many scooter dealers do you think bucked the plastic payment trend?

Robert,

We even take credit cards when people want to but a cheap car from us outright. More and more people cannot even get a small personal loan for a few thousand dollars.

Mike

 

[robert roman]

Indeed!

If the demand is there, exploit it.

Consider celebrity endorsed credit cards – notorious for outrageous add-on fees.

The Kardashian’s fees were so high their card folded in a month.

On the other hand, there is some rapper/felon whose endorsed card is still trucking.

I kid you not.

 

[mjwalsh]

What about healthy market tension?

Credit card fees at my laundry, tanning and carwash range at near 5%, up from just over 3% prior to the recent legislation. The fees now exceed $1,000/mo and keep climbing. Fees should be 2% or less for the value provided.

We are getting ripped off by politicians who care more about donations to the next campaign than to the small frys like us. They TALK about supporting small business but take $$ from the big buys for the next election cycle. That's how it works and it needs to change.

IMO, I need to accept credit cards in order to be competitive

Mark

Mark,

I am a firm believer in having healthy tension when something needs to be corrected. Some of the other posters who I believe glamorize the credit card acceptance for our smaller transaction businesses a bit too much imply that most laundromats accept credit cards.

My information points towards less than 1% of laundromat owners have credit cards for all their equipment. Over 95% of laundromats are coin. The 4-5% remaining are other exotic payment systems like John Coleman dabbled with for car washes or in house card systems. Complete & thorough credit card acceptance does give some operators like you a gain in perceived convenience ... which ... don't get me wrong can be a good thing!

The point I want to make is that just as Sam's Club puts tension on some cards that get carried away with their merchant fees ... if laundromats & other smaller transaction businesses like the self service & vacuums & air machines for filling tires portion of our car washes ... don't fall head over heels quite as much ... the credit card people will have more of an incentive to possible behave themselves on the rates to us. Of course ... if they are allowed to deliberately screw up the availabilty of proper inflation adjusted coinage & other cash then all bets are off.

mike

 

[MEP001]

What about healthy market tension?

The point I want to make is that just as Sam's Club puts tension on some cards that get carried away with their merchant fees ... if laundromats & other smaller transaction businesses like the self service & vacuums & air machines for filling tires portion of our car washes ... don't fall head over heels quite as much ... the credit card people will have more of an incentive to possible behave themselves on the rates to us. Of course ... if they are allowed to deliberately screw up the availabilty of proper inflation adjusted coinage & other cash then all bets are off.

So what's the point of this whole thread? Are you proposing that all car washes move to cash-only and install ATMs to fight high merchant-end credit card fees?

 

[mmurra]

Hopefully, another payment system, other than V/MC, will emerge. Perhaps related to our cell phones. I will support any effort to move away form high cost clearing of normal, simple, electronic funds transfers like debit and credit card transactions. Mark