My Credit Card Use Results

[Dcalhoun]

The topic of credit card (cc) acceptance continues to be popular among us. I installed Cryptopay in one of our self serve (ss) bays and our dog wash in Feb, 2013. At that time I promised to keep you all updated on my experience. Having reported results from the first year it is now time for the 2nd year. Bottom line is there has been no change in revenue despite the hype and conventional wisdom that customers would spend more because they weren't worried about the timer and putting in quarters etc.

We have just 2 ss bays so comparison and analysis is pretty easy and straight forward. We installed Cryptopay in only one bay and that situation remains today.

Total credit card use in ss has risen from 24% of revenue to 28% year 1 to year 2. So, a few more people are using them.
Total overall ss revenue has remained flat (just a slight increase of a few $100)
Cash remains king - cc has gone from 39% to 48% of the bay revenue year to year. (only in 2 months of 2014 did cc exceed cash) (Interesting note: our in bay automatic gets 63% credit, 37% cash)
Revenue among the bays has moved. Bay without cc generated 61% of the total revenue before cc, now generates only 52%. (Still more than the bay with cc.)
End result is we lose some profit since we have moved our cash customers to cc and now pay VISA, MC etc 3%

As far as our dog wash - same result, flat revenue (with just a slight increase) and cc use has gone from 21% to 31% year to year.

These are our actual results, not anecdotal numbers. While we have not seen an increase in revenue as everyone promised, I still think cc acceptance is a requirement for us. No increase for our wash but we didn't have a decline either. A necessary evil?

 

[A.Milton]

Very interesting. I am surprised at the results . I'm contemplating adding crypto pay.....c/c ready coin boxes in dogwash and was going to add it I one of the s/s bays to start. I was told the same, people wash longer, no one carries cash anymore.

 

[mjwalsh]

Dcalhoun,

An alternative for us has proven to be to have a $5 bill dispensing ATM for almost 4 years now. Time will tell ... as to if we can hold on to or even increase our net income while our competition has gone down the CC - NFC path. I do know that I can honestly say that by making the golden colored dollar coins extra available to our customers via two Standard Changemakers ... that our regular customers appreciate that convenience over just quarters & 1,5,10 paper bills.

Like PaulLovesJamie previously posted ... it seems to tend to be a rural vs city as to how necessary CC &/ NFC is for self service bays. I am not sure on the automatic bays on how critical it is for those bays ... even in rural areas.

mike walsh www.kingkoin.com

 

[Earl Weiss]

I think the total revenue % and increase or decrease in CC sales are less telling because sales fluctuate due to market conditions and weather which will affect total sales.

. I think most telling is the 9% shift in sales between the bays.

Whether your competition offers CC is meaningful as well.

Also. if I read correctly a 4& increase was $100.00 or $25 per 1% so anual CC sales were $2500.00?

Percentage changes have little meaning with small numbers since just a few customers, or even 1 or 2 over a year will skew the results.

At the end of the day only your results matter. Started with 4 busiest bays using Cryptopay about 3 years ago. Within a year added the other 4. Cost is about 5.5% all in.

 

[Jeff_L]

You provided a new way for customers to pay, and also increased your cost to get their business. Did you by chance increase your price to pay by cc? I'm $1.75 to start via cash, but for cc I'm a minimum of $3. No complaints from anyone as most are used to small businesses requiring a minimum purchase for a cc payment. Of course I'm the same time per quarter, just different minimums. This helps cover the extra cost for accepting cc, and customers are happy to have this payment method.

 

[cdreed06]

I agree with Earl on whether or not your competition accepts cards or not. I have many customers that just don't carry cash anymore. MJ- we are rural and our automatic revenue is half credit and half cash. Almost even every day. When we have had CC reader problems with the automatic our sales drop drastically. In my opinion if you don't accept CC then you lose customers.

 

[pgrzes]

I just installed new selector doors. We now have bill acceptors and Cryptopay in or bays. Time will tell, very few of the people that have used the credit card used only the $3 minimum. I am $2 to start with cash and $3 for credit card. One thing I know for sure watching my cameras in my automatic when my CC reader is down I see a lot of people drive off. I do almost 50% cc in my automatic. I just felt its something that sets me apart from my competition, more choices, good product delivery and constantly making positive changes keeps people happy. Ive done tons of upgrades the last 2 years and business has been better then ever.

 

[cdreed06]

I just installed new selector doors. We now have bill acceptors and Cryptopay in or bays. Time will tell, very few of the people that have used the credit card used only the $3 minimum. I am $2 to start with cash and $3 for credit card. One thing I know for sure watching my cameras in my automatic when my CC reader is down I see a lot of people drive off. I do almost 50% cc in my automatic. I just felt its something that sets me apart from my competition, more choices, good product delivery and constantly making positive changes keeps people happy. Ive done tons of upgrades the last 2 years and business has been better then ever.

EXACTLY!! New and constantly improved. Convenience is King in our business. Of course we must ensure everything is top notch as far as equipment and chemicals.

 

[mjwalsh]

Sometimes I think when it comes to CC & NFC, it also comes down to how much are we willing to incur extra expenses just for those customers who insist on CC & NFC. If it proves that the customers are more willing to allow a slight up-charge &/or a higher minimum because of the CC & NFC dependencies that we create for ourselves, then I see how it could be eventually helpful for some net incomes of some self service washes.

I see a drawback with some of us with tandem self service bays. Higher minimums, CC & NFC could make it less likely the car drives forward to the next bay to finish ... letting the person waiting in line on a busy (perfect weather) day to get started with his or her eventual thorough wash. The point is that CC & NFC dependencies are not as good of a fit for some of us as for others.

As far as creating a bunch of false shame & hype in the direction of exaggerating percentages of credit card only people ... this shows evidence to the contrary: http://www.forbes.com/sites/tjmccue/2013/08/16/why-dont-more-small-businesses-accept-credit-cards/

mike walsh www.kingkoin.com

 

[cantbreak80]

I was an early adopter of in-bay credit card acceptance. Although I was somewhat disappointed in the initial customer acceptance, I did not expect revenue increases…it was just another way to pay.

14 years later, credit card sales indicate a stronger move to cashless transactions in general with 50.48% of the annual bay revenue being credit/debit. A recent price structure change, combined with “perfect” car wash weather has had an impact on those numbers...credit sales during this time are averaging 54.43% of bay revenue.

Anecdotally, this matches my observations from my other “cash business”, twice weekly golf tournaments. Younger participants tend to carry little to no cash. They purchase their greens fees, cart rental, merchandise, bar/restaurant food and beverage with credit/debit card…even paying the “Cart Girl” for their on-course refreshment. They then line up at the ATM to obtain the needed cash for the tournament entry fee…frequently, for the exact amount! Rarely do I witness members of my and near generations whip out the plastic…like me, they generally have significant amounts of cash in their pockets. How else do you pay off lost bets? (Although, I readily admit that, with my banker’s encouragement, I’ve recently discovered the positives of the zero-fee debit card.)

Back at the car wash, this month’s card customers are spending an average of $7.23, helping to convince me that credit card users do tend to spend more money, do a more thorough job of washing, and are frequently more relaxed in the process. And, the in-bay card readers just may increase throughput…with no need to stroll to and from the bill changers, card customers start the bay moments after pulling into the bay. Having that money just show up in my bank account reduces my work load (even though I thoroughly audit transactions vs. deposits) and gives me more time to hack up the grass at my favorite links.

On the other hand, cash customers tend to race around their vehicles, chasing the clock so they don’t have to add that extra quarter or $1coin. And, oft times, they return to the bill changer to get those finish-the-job coins. Or, worse, they leave dissatisfied with an incomplete wash?

In 2014:
44 Average daily credit card transactions
29 = lowest daily transactions/month (October)
74 = highest daily transactions/month (February)

2015 YTD:
114 average daily credit card transactions
107 = average daily transactions (January)
121 = average daily transactions (Feb MTD)

After the Dec15, 2014 price restructuring:
Average credit card transaction jumped to $7.23…a 23.86% increase.

$7.23!!! Still less than that Grande Half-Caf Double-Shot Skinny Hazel cappuccino in your cup holder!

Again, I’ve recently enjoyed perfect wash conditions…snow/sun/snow/sun repeat/repeat. I may end up eating my words but increasing my credit card start-up price to $5 has exceeded my expectations…so far!

I believe having all bays available for credit card users is key to successful implementation. Limiting credit cards to a single bay reduces the chances that customers will use and reuse the system. It’s sorta like having an Express Check-out Lane…for 100 items or more.

 

[Earl Weiss]

Perhaps there is a comparison to SS bus amnd the Gas Station Bus.

How many gas stations do not have CC "Pay at the Pump"

Now , as far as cost goes, the other day when it was 10 degres and I was thawing and emptying 4 vaults and 8 Bill acceptors, emptying 3 changers, dumping quarters, sorting bill denominations, and sorting out Bill acceptor coupons, counting $ , making up the deposit, going to the bank, I was thinking 5.5% is not so bad for not having to do that. (Of course it was only the incremental time for the CC receipts I saved. )

 

[Dcalhoun]

I agree the issue of whether competitors offer cc in the ss bay is important. In our case, we have 4 other ss competitors in our town of 35,000 people. We are the only wash offering cc in the ss bay. We continue to advertise this fact on radio as we have done since we installed it. The conventional wisdom was that customers will spend more and we would get more customers because no one carries cash anymore.

Being the only wash offering cc in the hand bay should have resulted in an increase in customers (and revenue) since no one carries cash, etc. But as we have seen our cc use increase slightly we have not seen the anticipated corresponding revenue increase. Really all that has happened is our customers have moved from cash to cc.

I am not complaining about installing cc, just saying the results aren't as we anticipated and we still see many at the $2 minimum. I still plan on installing Cryptopay in the other bay, just not as soon as I might have if results were as anticipated.

 

[I.B. Washincars]

no one carries cash anymore.

Buying into that logic is a major problem, because that is simply not true.

 

[soapy]

I have had credit card in SS bays now for 8 years. 3 of my locations use a system that does not have a digital reader display similar to what you see with crypto pay. At one location I have the wash gear system that has a display that people can read and it gives them instructions and shows them a running charge and time of use. The wash gear system gets 3 times the use per bay as my other system that does not have the display.

 

[Earl Weiss]

....................
Revenue among the bays has moved. Bay without cc generated 61% of the total revenue before cc, now generates only 52%. (Still more than the bay with cc.)


End result is we lose some profit since we have moved our cash customers to cc and now pay VISA, MC etc 3%

What ypu have stated is your conclusion. Which may or may not be correct.

Total revenues remained flat.

Cash only bay decreased 9% and CC Bay increased 9% so you conclude the people moved. One could also conclude that without the CC the other bay would have decreased 9% as well due to market factors / weather etc. .

This would lead to the conclusion

Instead of a 9% decrease you had a 9% increase in that bay.

 

[Dcalhoun]

To I. B. Washincars, yes, I agree that is faulty and dangerous logic. It is, as I said, the conventional wisdom.

To Earl Weiss, the comparison of revenue between the bays was relative. The bay which does not have cc has always been the greatly predominant bay of choice by customers. So, the conclusion that business simply shifted from cash to cc is valid. No condition changed in our physical layout that would alter a change in traffic patterns. The only variable which was altered was payment method.

In the case concerning movement of traffic among the bays the comparison is with how much revenue was generated in each bay as a percentage of the whole - relative. Factors such as weather, competitors and other market factors have no bearing on which bay people use. These things do factor in the overall revenue picture, just not in how the revenue was dispersed among the bays. I stand by my assertion that we just have witnessed cash customers becoming credit customers and me paying Visa as a result.

 

[MEP001]

FWIW, I carry some cash just in case, and I've noticed that I don't ever need it except for dropping some for a tip or if I buy just a drink at a store.

 

[Earl Weiss]

To I. B. Washincars, yes, I agree that is faulty and dangerous logic. It is, as I said, the conventional wisdom.

To Earl Weiss, the comparison of revenue between the bays was relative. The bay which does not have cc has always been the greatly predominant bay of choice by customers. So, the conclusion that business simply shifted from cash to cc is valid. No condition changed in our physical layout that would alter a change in traffic patterns. The only variable which was altered was payment method.

In the case concerning movement of traffic among the bays the comparison is with how much revenue was generated in each bay as a percentage of the whole - relative. Factors such as weather, competitors and other market factors have no bearing on which bay people use. These things do factor in the overall revenue picture, just not in how the revenue was dispersed among the bays. I stand by my assertion that we just have witnessed cash customers becoming credit customers and me paying Visa as a result.

Your conclusion is valid. It just MAY not be accurate. Without CC both bays may have dropped (or increased) by equal amounts maintaining the ratio. CC acceptance may have attracted a new market (larger spending one?) which of course can only use the one bay thereby affecting the ratio. I think it's no bigger leap to say CC people would not have come at all then to say they would have otherwise used cash and used the more popular bay.

 

[PaulLovesJamie]

Cash only bay decreased 9% and CC Bay increased 9% so you conclude the people moved. One could also conclude that without the CC the other bay would have decreased 9% as well due to market factors / weather etc.

Earl, thats a good point, it is very difficult to pinpoint cause & effect.
However, I have bay usage records going back 20 years and it appears to me that the customers I have that prefer cc did in fact shift to the 2 bays that had cc.
btw, 20% cc usage, 80% cash. So for those of you who think nobody carries cash, please remove your coin/bill acceptors and post directions to my wash

 

[Earl Weiss]

Earl, thats a good point, it is very difficult to pinpoint cause & effect.
However, I have bay usage records going back 20 years and it appears to me that the customers I have that prefer cc did in fact shift to the 2 bays that had cc.
)

So, as an astute business person you are accomodating your customer's preferences. I would submit that over 20 years preferences have changed.

Frankly I have no way of knowing if CC acceptance has boosted sales. I only know that doing half the bays (4 busiest) convinced me within 6 months to do the other 4 (Same process for bill acceptors).

Also, in January which may have been the best SS month for me ever, saw enough CC useage to recoup the entire cryptopay investment in the one month. Of course that was gross CC receipts, no way of knowing what any increment was but enough useage to convince me of the customer's desires. Yes, still outweighed by cash useage.