Why We Stopped Accepting Credit Cards | Hacker News Reader

Why We Stopped Accepting Credit Cards

dirwiz.com

19 pointsdirwiz22 comments

While I understand and respect your motives for moving away from credit cards for a B2B company that does not do a high volume of transactions, your other reasons are, for lack of a better term, uneducated.

1. Development effort - there are many off-the-shelf carts available. And, even easier, is a processor like Stripe that offers the ability to simply create a "Buy Now" button that is placed on your page and they handle the rest. Shoot, even PayPal is easy and will allow you to accept credit cards.

2. Security - you don't have to store numbers. Stripe, Braintree, etc... all handle this for you. In fact, the credit card number and financial details should never even touch your server. In fact most processors handle this for you.

3. Service fees - true, debit and ACH can be done a lot cheaper.

Finally, you bring up development effort as an issue, yet the second to last paragraph touts a processor like Dwolla. Dwolla is a great service and I have helped clients in the past get hooked up with them. But there is a development effort there as well, so you sort of contradict yourself.

No offense, by the title of the article I thought you were going to give me some never heard before advice on why accepting credit cards is bad for business. Instead you simply told me that transaction fees are high and your company is no longer accepting credit cards.

I'm confused. So they stopped accepting credit cards, but partnered with a credit card payment processor. So what payment methods do they accept if not credit card? Are businesses supposed to send them cash? Wire transfer? It says they stopped accepting credit cards but didn't say what they now accept other than naming the company they're partnered with, which is a credit card processor.

Also:

> It baffles us why a larger sale should cost more than a smaller sale. The storage and transfer of an digit or two on a computer is negligible.

Represents a massive misunderstanding of what a credit card company charges for. A larger payment represents a larger risk if the payment is never received or is received fraudulently. It's one thing if $5 is fraud. It's another if $5000 is fraud and needs to be returned. You're not paying someone to move bits around, you're paying someone to take the risk that someone could issue a chargeback and demand their money returned.

> You're not paying someone to move bits around, you're paying someone to take the risk that someone could issue a chargeback and demand their money returned.

I don't follow. The merchant pays the credit card fees AND is on the hook for fraud. The card processors even charge you a $15 or more fuck-you fee on top of clawing back the money when a customer does a chargeback on you.

I would argue that the merchant is pretty much on the hook for fraud, or even borderline chargeback situations, but where the credit processors add some proportional value is in loosening the purse strings generally. They are taking their bite out of the value side, not strictly the cost side. It's harder for a lot of customers to turn over $2,000 in hard cash than it is to swipe and pay $200 a month for a year.

Payment fees are high and plentiful because banks are a state-maintained cartel everywhere.

For example, it's outrageous that they charge us something like $30 - $60 for a wire transfer, but that's what happens when they can charge just about whatever the fuck they want, because there is no competition!

> but partnered with a credit card payment processor.

And then stopped partnering with them, because they took a big cut and also required dev overhead.

Direct deposits are one way businesses pay each other electronically without credit cards.

> We would have to store credit card numbers!

Haven't they heard of Stripe? It's really easy to use Stripe. They should just use that. I'm not sure they looked at all the available solutions out there for processing payments.

If they have high dollar value deals that are just as easily paid via low-cost bank debit, Stripe's 2.9% can be expensive. A $5,000 invoice paid through Stripe (at default rates) is $145.30. If you are billing a recurring $50/mo for a service, the fee makes sense. But one-time PO payments may not over a certain $$ figure.

If they're storing credit cards they're doing something wrong.

Don't you need to keep the card number for processing refunds?

Nope. You just save a token for that transaction, and tell your processor you'd like to refund that transaction. They have the associated card on file, not you.

The short answer is "because we don't sell to consumers, and credit cards aren't necessary or even particularly desirable for business customers."

Okay, that's nice, but... not sure there's really a larger takeaway.

Sure there is: "Don't support credit cards unless there's a reason to do so". People do a lot of things by default without thinking it through first.

there clearly isnt one. this is a bad post.

It really depends on your target customer. If you're selling one off to businesses with POs/invoices like directory wizards apparently is, your customers don't want long payment terms, and your invoices values are high (> $x000) then credit cards probably don't make sense.

It's silly to pretend checks, wire transfers, and dwolla don't have costs. You're asking the customer to pay a month or two earlier than they would credit cards - many businesses will then ask for net 30 terms (or 60 or 90!). If you're providing terms, you have to run an accounts receivable department and make sure customers pay on time. You're also now in the position of tying up your own working capital providing vendor financing. With credit cards, these things are included in the price.

This seems like a very short-sighted post that mainly serves as a dig on the credit card industry for an ideological reason.

They can use systems like Authorize.net and the fees are very reasonable. There are LOTS of reasons that credit card companies charge you fees based off the transaction: fraud protection costs scale, as do the "cashback bonuses" that they give to customers as an incentive to use credit (can you imagine how many billions are spent on credit that people cant afford on debit??), etc, etc.

The most obvious reason, as they say, is because they mainly work with B2B customers who prefer to pay another way. They just wanted an opportunity to rag on credit cards.

One of this accounts only comments is on the thread "Business Credit Card for Startup".

They wrote:

"Can't recommend AMEX highly enough. Did the online application and got the card fedex'ed to me the next morning. Never an issue and points tie to Amazon directly. Best decision I've ever made."

And they wonder why there are fees...

I'd switch to this solution in a heartbeat if it were available in Canada. Stripe is great, be we deal mostly with businesses that would rather use their bank accounts as funding sources.

I wonder if on-demand apps, like Uber, will ever switch to this method of payment. Wouldn't they save a lot of cc fees?

Companies which do higher volumes pay significantly less. It's not uncommon for very high volume merchants to get very close to 1%, some even less.

I don't see how you make money charging less than 1% when the cashback/rewards alone is 1%. You can make free money fall from the sky making bogus charges to your own credit cards and pocketing the difference.

how would "on-demand"aspect have a unique effect on the potential savings?

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