Credit Card Usage Update

[mjwalsh]

Link to new article on cash usage. Something to consider!

We installed Cryptopay credit card system in one self serve bay and our dog wash a little over a year ago (Feb 2013). I thought it might be helpful to share my results for the first year. Some pertinent facts: Our city population is about 35,000, we are the only car wash with CC acceptance in ss bay among 5 IBA/SS washes in town, we did promote CC acceptance on radio and on site.

Revenue for both the ss bays and the dog wash was flat year to year. SS customers migrated slightly from bay without CC to the bay with. Overall, about 25% of sales are CC. (Compared to 60% cc at automatic bay) Final result: Visa gets richer, I give up profit to them. In the end, we have not seen any increase in time being spent in the bay or dog wash. So, 25% of my cash customers have converted to CC but it has not resulted in greater income for me.

Basically, all the conventional wisdom has not come to pass at our wash in central Illinois concerning how we need to add credit card acceptance.

Food for thought. Happy washing everyone!

Dcalhoun,

Thank you very much for the "just the facts" sharing based on your specific experience. It is good that our friends who have had a wonderful experience with converting to credit cards that they also share based on their specific experiences.

Your experience of lower usage could be a blessing in disguise if the upgrades to the EMV Chip-Pin receptacles are not as waterproof as your existing cc receptacles. I notice there has been a resurgence of more intense advertising lately encouraging people to upgrade their cards to 5% cash back reward credit cards. Based on that I am not sure about the uncertainty of the level of merchant fees.

So to help provide some balance to the responses by those whose specific experience have been different than ours: I would like to also be helpful in sharing a 3 day old article that I just read: http://www.coretrac.com/even-in-digital-economy-cash-has-staying-power

I just can't get over how much more convenient it is for both our customers & ourselves to just pluck $5 & $10s in our self service car n dog wash bays that they received from our ATM (if needed by them anyway) & from us breaking 20s into 5s & 10s for them. Because they have a handful of dollar coins in their pockets from us directly &/or from our changers ... makes it also so much more convenient for them than just "quarters only".

mike walsh http://kingkoin.com/USA_Deficit_Reduction.html

 

[cdreed06]

We started with CC in one bay, it worked out well for us so we went with CC in all bays. I see it as a convenience for our customers. We are in the midwest (Missouri) and it really has taken off for us. Any way we can make it more convenient for customers to pay is a good thing. Maybe ATMs in the bays? LOL. Let it ride longer and see if you get better results.

 

[mjwalsh]

Any way we can make it more convenient for customers to pay is a good thing. Maybe ATMs in the bays? LOL.

For the record ....

We have found that customers coming in our "not as wet of an area" to use our changers &/or "just as quick" ATM process has a lot of pluses. Among them are getting them in closer proximity of our vending machines etc. They also see we have a rest room which for a percentage of customers ... could be a greater tipping scale for customers choosing us over a self service car wash that does not have a rest room. The net income gained from no merchant fees & the paid for itself about 3 times over in the 3 years of our ATM installation ... helps take care of the rest room amenity expense & more man-hours (cleaner bays etc.) Ideally, there would be some of you helping me lobby the ATM industry to make more ATMs that have the ability to dispense a choice of a denomination of bill ($5s in our case) & the more convenient to use $1 coins (vs quarters). Don't just take my word for it when it comes to valid data on long term cash use (especially for smaller transactions): http://www.coretrac.com/even-in-digital-economy-cash-has-staying-power

mike walsh http://kingkoin.com/USA_Deficit_Reduction.html

 

[cleaning up mud]

Im ready to put crypto pay in our truck bay and WSII because the cc reader is so hard for our customers to use in the ac. but now reading this I want put them in the other bays. Thanks.

 

[cdreed06]

MJWalsh, I'm glad the ATMs work out for you. I woke up feeling extra spry yesterday and should not have said that. In our place it would not work out.

 

[bigleo48]

I have and ATM, credit card acceptances in all bays/pet tubs, dollar coins, twin changers and thinking about a bill breaker. All work well and people can pay me anyway they want and I'm happy to take it.

 

[mjwalsh]

A Healthy Portion in Coin is Not a Bad Idea!

I have and ATM, credit card acceptances in all bays/pet tubs, dollar coins, twin changers and thinking about a bill breaker. All work well and people can pay me anyway they want and I'm happy to take it.

BigLeo,

Great to hear that higher denomination coins that reflect the reality of inflation verses just the "quarters only" mindset has been & remains a part of your repertoire of payment methods. Of course Canada has gone through the transition of dollar coins being the new workhorse when it comes specifically to coins vs just quarters. Since Canada has proven beyond a shadow of a doubt that the coins are also better for their taxpayers than the alternative one dollar bills ... you can feel good about that also. I'll bet that your currency carrying customers tend to use $5, $10 & $20 bills which also is helpful to your bottom line net profit vs a car n dog wash here in the USA that believes too much in the $1 paper notes & have customers with too many of those $1 paper notes on them vs $5, $10s & $20 bills.

Hopefully, I do not come across as being too much against electronic payment ... credit card or otherwise. It just seems like too much dependency on electronic payments such as credit cards (even for the smallest of transactions) can be a potential problem at some point in the future. For sure it should not be the conglomerate (oligarchies) who profit the most from increasingly higher merchant fees deciding the availability of the higher denomination coins. One of my insider friends at the big mega bank that we use ... just convinced me to go much more paperless & updated the more than one credit card (including an employee credit card) that I need to the type that are much more generous with the rewards. Obviously, i am a bit of a hypocrite to choose the 5% cash back to some extent. Since laundromat owners have been known to be some of the biggest bargain hunters around (just ask Randy Nix) ... I have to confess that I will still be looking for the best value regardless of the specific merchant's payment methods. The business to business (B to B) credit card business that we do with our phones' dongles allows us to cover the merchant fees via an extra service charge ... they are clearly OK with the minuscule 3% that I tell them beforehand it will cost via that payment method. That pertains to the $3 & $7 paper tokens that they buy in quantity from us. They happily & graciously recognize that they still are getting a better value & better service than most of the credit card accepting car washes in our area. For one thing, our tandem truck bay accommodate their higher 3/4 to 2 ton trucks etc. better, also the other car washes are not as attended as ours & do not have a nice free refreshing cold water drinking fountain next to a rest room.

Continued on next post ...

mike walsh http://kingkoin.com/USA_Deficit_Reduction.html

 

[mjwalsh]

Considerations Continued

... continued from previous post.

When I was in Houston, Texas back in February of 2013, I had rented a Chevy Sonic & stopped at a few self service car washes both credit card & none credit card to learn in general about their operations. The car wash I was most impressed with was the one that was located just east of central downtown Houston ... not too far from Rice University. It had great ingress egress off of a very well traveled street ... so location was great. The manager befriended me immediately & was very much a "Charlie Hustle" sort of a guy totally on top of anything that could go wrong. He even gave me a great tip on what to watch out for if I have someone else install (at that time my proposed upgrade) of our 1987 self serve blo drys. There is no question that for his clientele .. credit cards were working very well for that specific car wash & I have no doubt that the extra payment choice made it so he had gained another competitive edge over the even larger car wash about a mile further east on the same road. I had posted a pic on an earlier post of how the same car wash had a nifty very attractive large rotary switch located between multiple Laurel Electronic Drop Shelf vendors ... controlling them all from one payment area & switch etc.

For many laundromat - car wash combo owners to go to the uncertainty of often more than 100 card swipes to gain the convenience of CC on all of our equipment ... does not seem to be a wise choice. If the credit card companies see that there is a still healthy alternative with cash... in my opinion ... they are more likely to not get quite as carried away with the merchant fees ... especially for smaller transactions. Plain & simple ... many locations will no longer be viable &/or long term sustainable if they can no longer afford to offer smaller transaction access for their limited number of pieces of equipment.* ---- * A friend of mine who was selling ads for our local mainstream newspaper joked to me while he was selling that the TV prime time ads were much more limited in quantity sold vs the "just print more pages" to accommodate the increased number of ads. I think there is some truth in the analogy applying to us considering the current cost of real estate & building costs for excessive bay building.

mike walsh http://kingkoin.com/USA_Deficit_Reduction.html

 

[bigleo48]

Since Canada has proven beyond a shadow of a doubt that the coins are also better for their taxpayers than the alternative one dollar bills ... you can feel good about that also. I'll bet that your currency carrying customers tend to use $5, $10 & $20 bills which also is helpful to your bottom line net profit vs a car n dog wash here in the USA that believes too much in the $1 paper notes & have customers with too many of those $1 paper notes on them vs $5, $10s & $20 bills.l

In the past decade or so, Canada has introduced the $1 & $2 coin. Last year the dropped the pennies and gone to all polymer bills. Why so much change so fast? Because tangible coins and notes are a nightmare and costing the taxpayer billions. The government here would be more than happy to drop all coins and notes if they could.

You seem to draw conclusions that between clean washrooms and not accepting credit. No matter how much you try and sell it, it doesn't compute. Your customers may be happy with your wash and services, but that doesn't mean you can't make it even more convenient with credit card acceptors.

Mike, I have no doubt in my mind that you have picked a fight you already lost.

 

[mjwalsh]

Catering too much to "wants" could put "actual needs" at risk!

The government here would be more than happy to drop all coins and notes if they could.

That is overlooking a ton of issues with credit card payment for the smallest of transactions ... including potentially increasing merchant fee rates. In my humble opinion ... also extremely naive. Ignoring the independent GAO bipartison studies & our CAGW is simply the wrong approach for the USA to do.

Your customers may be happy with your wash and services, but that doesn't mean you can't make it even more convenient with credit card acceptors.

Each operator will have to decide if both the short term & long term costs of being totally dependent on credit card acceptance & if the accompanying costs & potential costs outweigh the slight gain in convenience. Some of us get too hung up on the customers' wants vs the customers' needs. It is nice too to see the car wash customers put in more $5 bills & simply ask for 4 fives instead of any ones more often than not during the last year or so

Mike, I have no doubt in my mind that you have picked a fight you already lost.

Those of who were on the wrong side of the "government tax before expense gross receipt taxes ISSUE" tried the same type of demoralizing tactic on us who were on the more sensible side. Good thing we were as successful as we were. I was not going to take the time to even post on this thread but I felt that DCalhoun needed some support when he just calmly stated his very truthful specific experience,

mike walsh http://kingkoin.com/USA_Deficit_Reduction.html

 

[mmurra]

This issue will not be decided by operators on this board. The customer will decide. At my businesses, the customer continues to migrate to electronic payment. Within a few years I hope to be able to eliminate cash payments in our tanning salon and fitness center (we are almost there now). Our laundry and cawash operations are over 50% debit/credit and growing daily.

A large tanning salon chain based in Florida (zoomtan.com), is one of the fastest growing chains in the country and accepts NO CASH. That is the future. It is not my opinion. It is a fact of life (like death and taxes). Young people (and young at heart), do not use cash/coins for daily transactions. Mark

 

[bigleo48]

This issue will not be decided by operators on this board. The customer will decide. At my businesses, the customer continues to migrate to electronic payment.

Well put. Increasingly I'm seeing the same. The SS side was a little slow to take up as a new payment option, but as habits change, it gets more usage. Before I implemented it, I had never had a request for CC acceptance at the vacs, now its a somewhat common question.

 

[mjwalsh]

Bigleo,

Have you found anything positive about Canada stopping to make the $1 bank notes back in 1989? I really do think that it has relevancy to DCalhoun's truthful observations. For example, I have heard some (not on this board that i know of though) say that if the USA $1 bill is eliminated it will be the "death of all cash".

mike

 

[bigleo48]

Well from carwash standpoint, dollar coins help out by eliminating tokens. People who pay cash via coins don't really track those expenses, so those purchases fly under their radar. Plus it reduces wear and tear on equipment (much fewer coins used if they are $1 or $2 coins, than quarters. The USA is the only major country behind on this subject IMHO.

"Death of all cash" That has not happened in any other major jurisdiction that has introduced the higher denomination coins (think Canada, Euro, etc).

Finally, I do not think it has any relevancy to DCalhoun's observations. Eliminating the penny and introducing larger denomination coins and bills is just a better way to deal with inflation...after all, what does a quarter buy you nowadays?

Credit Cards are simply easier to use, has some benefits and reduces the need to carry cash. Think about it...if you didn't have CCs, you'd need to go to the bank almost daily or carry larger sums. So for starters, it would create a bottleneck to the economy.

Credit Card usage is not going away...but cash is...slowly but surely. Maybe not in our lifetime, but certainly in our kids. My kids do not carry much cash and infrequently visit ATMs. They have bank and credit cards. This is just like the fact that kids don't really wear watches anymore..don't need them when you have a smartphone in your pocket.

 

[Earl Weiss]

>>> Plus it reduces wear and tear on equipment (much fewer coins used if they are $1 or $2 coins, than quarters. .

AFAIAC Pretty much a non issues vis a vis dollar coins vs. quarters since Bill acceptors take $1, $5, and even an occasional $10 Bill.

I estimate coin usage became 50% of revenue once we installed Bill acceptors. Now with credit cards it's a smaller percentage.

 

[PaulLovesJamie]

... The customer will decide.
... A large tanning salon chain ... accepts NO CASH.

I disagree.
I can name at least a half dozen businesses I have patronized in the last 30 days that DO NOT ACCEPT CREDIT.
3 of them in the last 3 days.
This appears to be a growing trend in my area.
In ALL cases, the decision was made by the OWNER, and they make no bones about it.
Many more will look you in the eye when you whip out a card, and ask you if you have cash.

... It is not my opinion.

Out of respect for Mark I hesitate to comment on this but... come on dude, yes it is.

Young people do not use cash/coins for daily transactions.

I disagree.
My sons, their friends, many of my customers, etc: although they are happy to pay with credit (mainly to get the cash back rewards), they all prefer to receive cash and do in fact use cash for many daily transactions, especially smaller transactions.


Yeah I know, most of you will discount my comments, thats ok. I do enjoy hearing that you guys are making lots more $ by installing credit acceptors, but somebody has to say it: not all markets are the same as yours.
Frankly I also dont understand why so many of you seem to want to get away from cash, and why you think history will be different this time.

 

[bigleo48]

AFAIAC Pretty much a non issues vis a vis dollar coins vs. quarters since Bill acceptors take $1, $5, and even an occasional $10 Bill.

I estimate coin usage became 50% of revenue once we installed Bill acceptors. Now with credit cards it's a smaller percentage.

But then you need to put another type of acceptor. Here in Canada you con't see bill acceptors in SS bays, Petwashes, Vacs, vending, etc. So you save $300 to $400 per station.

 

[bigleo48]

Paul,

Point one...I disagree, customer will choose. There are a few businesses around here that do not accept credit cards. They are typically struggling businesses that IMO are not well managed. I just shake my head at them and walk away. That trend is not growing here as per carwash & convenience store data.

Point 3. Depends on age and size of transactions. But over say 18, they prefer to use credit. Get points, budget and insurance. My daughter (in College) purchased a iPhone5 a couple of weeks ago. She dropped it and cracked the screen. CC insurance paid to have it fixed ($230)! Do you think she'll buy anything cash again...not likely. My son gets gas cards from points of our CC...about $1200/yrs worth...pays for his gas because we run all business purchases through our cards. Yet many still pay cash and will till there's a generation shift.

Why do I want to get rid of cash. Its a pain. Heavy, dirty and costly (coin mechs, change machines, vac it up, bill acceptors, coin changes, sorting machines, safes, security, counterfeit, fraud, etc etc etc). I'd be happy just to collect the cash directly in my bank account. And for me personally, it makes it more difficult to run the carwash remotely for long periods of time.

I help run a Junior Sports Team here. This year we no longer take cash or cheques for registration, camps, etc. All online & all credit card base. Why? Less admin problems, no bounced cheques or delayed payments to deal with. You register and pay online and its done! No many other teams are doing this (as most don't know how easy it is), but its coming.

 

[mmurra]

Bigleo - interesting comment on young people not wearing watches. A speaker at the recent San Diego IHRSA fitness association conference, speaking on future trends in the fitness industry, asked the audience to stand up if you are wearing a watch. The audience of 400+ was primarily young. Only about ten percent of the room stood up (myself included). The speaker said that most folks under 40 do not wear watches because of cell phones make them redundant (same idea for credit card use vs cash). Boy did if feel old! Mark

 

[mjwalsh]

But then you need to put another type of acceptor. Here in Canada you con't see bill acceptors in SS bays, Petwashes, Vacs, vending, etc. So you save $300 to $400 per station.

Bigleo,

That is significant what you say about bill acceptors in Canada because most of us with 75+ pieces of equipment because we also have a laundromat have another reason to not get too enamored by bill acceptors. In that case the 1989 legislation that Canada enacted most certainly proved to be worthwhile & is still relevant. The higher denomination coins have so many more advantages over our soggy & more germ saturated when wet $1 bills! Any high volume car wash operator who has experienced both a top quality coin mech & a top quality bill acceptor in the bay can not with a straight face say that the long term expense of the bill acceptor is not significantly more than the coin acceptor. Our MicroCoin Qls & the Parker Single Coin Acceptors made believers out of us when it comes to that. Also the long term technicians who service both the Cummins Bill Sorter-Counter & the Cummins Coin Sorter-Counter will most certainly vouch for the fact that there is significantly ($$$) more service involved with the bill sorter counter. I am not looking back & regretting putting in the MEI & Vantage bill acceptors in all of my bays & dog wash but had the coin & currency been properly updated by Congress ... it did make it so we had to cut back somewhere else because of the extra initial expense. With proper legislation the extra ongoing maintenance expense part of the equation could change ... if we are accepting many more $5s, $10s, & $20s (overall fewer bills but more $$$) because the $1s would be transitioned out in a 4 year period. Sure the dollar coins are heavier than a stack of $1 paper money but unless "cash has truly been verified as dead" it is a very good & very minor trade-off in my opinion. Since the dollar coins would replace most quarters they would be 1/3 the weight of that almost % of gross of what our friend Earl will have to carry.

I agree with Bigleo & others that CC or similar NFC or whatever mobile phone approach is the best fit for many of us. I also agree with PaulLovesJamie & with http://www.coretrac.com/even-in-digital-economy-cash-has-staying-power that for others who have a different management style away from too much minutia tracking (information overload) etc ... cash is the better fit for our specific self serve smaller transactions.

mike walsh www.kingkoin.com