Can we talk about bank fees?

Business/Operations Expenses
1

I don’t know about everyone else, but since I’ve opened a coworking office, one of the most mysterious and difficult-to-wrap-my-head-around concepts has been why the hell am I getting charged so much for accepting credit cards and where is it all going. In our scramble to get open in time, we signed on with First Data, Wells Fargo recommended them so what could go wrong? This month, we billed $1435 through first data, from that, we were charged a $48.55 bankcard discount fee, a $23.87 Bankcard interchange fee, and a 53.89 Bankcard Fee. First data is incredibly unhelpful, but I’ve managed to figure out that the discount fee is just what they charge us, the interchange fee is what the credit card charges us, but what the hell is the Bankcard fee? Also, most beguilingly of all, It’s been slowly going down while our other two fees have been going up.

I knew it would be a little pricy, but it seems absolutely insane that we’re paying nearly 10% of our revenue out to these companies. It’s going to cost us $500 to break the contract and I’m totally on board with doing it, but is there a much better solution?

2

Oh wow, your fees are way too high. Kill that contract!

“Standard” fees are closer to 2.9% + 25-30 cents per transaction. Even when you factor in all of the tools to work with a decent processor like Stripe or Braintree, the max you’re gonna pay is 5%ish. Even PayPal (which sucks for lots of other reasons and I would not recommend using) is 2.9%.

The biggest additional benefit to using Stripe is that your account is portable. It also manages recurring subscriptions and, when you get a bit bigger, plug into awesome business analytics tools like Baremetrics.io and FirstOfficer.io that are built JUST for stripe.

For actually managing memberships and subscriptions, do some googling around for “stripe membership subscriptions” and see which option fits your needs. You can get things that are “out of the box” like Memberful, or things that are super duper customizable like GravityForms for Wordpress + the 3rd party Gravity Forms stripe plugin (that’s what we do. It’s not perfect but it gives us the control we wanted).

Do some homework before choosing again, but you’re DEFINITELY overpaying now!

-Alex

···

The #1 mistake in community building is doing it by yourself.

Join the list: http://coworkingweekly.com

Listen to the podcast: http://listen.coworkingweekly.com

On Tuesday, Dec 23, 2014 at 10:19 AM, Jensen Yancey [email protected], wrote:

I don’t know about everyone else, but since I’ve opened a coworking office, one of the most mysterious and difficult-to-wrap-my-head-around concepts has been why the hell am I getting charged so much for accepting credit cards and where is it all going. In our scramble to get open in time, we signed on with First Data, Wells Fargo recommended them so what could go wrong? This month, we billed $1435 through first data, from that, we were charged a $48.55 bankcard discount fee, a $23.87 Bankcard interchange fee, and a 53.89 Bankcard Fee. First data is incredibly unhelpful, but I’ve managed to figure out that the discount fee is just what they charge us, the interchange fee is what the credit card charges us, but what the hell is the Bankcard fee? Also, most beguilingly of all, It’s been slowly going down while our other two fees have been going up.

I knew it would be a little pricy, but it seems absolutely insane that we’re paying nearly 10% of our revenue out to these companies. It’s going to cost us $500 to break the contract and I’m totally on board with doing it, but is there a much better solution?

–

Visit this forum on the web at http://discuss.coworking.com

You received this message because you are subscribed to the Google Groups “Coworking” group.

To unsubscribe from this group and stop receiving emails from it, send an email to [email protected].

For more options, visit https://groups.google.com/d/optout.

3

Yeah that seems high. On $1500 I’d expect $50-75 in fees. We currently use USAePay+ACCPC+CheckGateway and it’s about 2.1%. When you process more and you’ve been around longer, the rates go down. Your services probably give you more then you are asking for… some funky “feature” they think warrants the added fees. They should at least throw in a Christmas turkey.

But yes, it’s all kinda crazy. The reason for it is that there are a lot of middle-men taking a cut along the way. I could dig in to the details but it would make your head spin even more. I’m currently exploring the idea of starting our own payment gateway where all the proceeds go towards coliving and coworking movements. If we can add a layer where our members are voting with their payments then we have a revenue stream, a communication channel, and direction. Combine this with something like Copass and things get really interesting really fast.

If anyone is interested in exploring this with me, please let me know. But sorry Jensen none of this would be ready in time for your needs. Switch to stripe and move on. You’ll recoup the $500 soon enough.

Jacob

···

On Tue, Dec 23, 2014 at 7:42 AM, Alex Hillman [email protected] wrote:

Oh wow, your fees are way too high. Kill that contract!

“Standard” fees are closer to 2.9% + 25-30 cents per transaction. Even when you factor in all of the tools to work with a decent processor like Stripe or Braintree, the max you’re gonna pay is 5%ish. Even PayPal (which sucks for lots of other reasons and I would not recommend using) is 2.9%.

The biggest additional benefit to using Stripe is that your account is portable. It also manages recurring subscriptions and, when you get a bit bigger, plug into awesome business analytics tools like Baremetrics.io and FirstOfficer.io that are built JUST for stripe.

For actually managing memberships and subscriptions, do some googling around for “stripe membership subscriptions” and see which option fits your needs. You can get things that are “out of the box” like Memberful, or things that are super duper customizable like GravityForms for Wordpress + the 3rd party Gravity Forms stripe plugin (that’s what we do. It’s not perfect but it gives us the control we wanted).

Do some homework before choosing again, but you’re DEFINITELY overpaying now!

-Alex

The #1 mistake in community building is doing it by yourself.

Join the list: http://coworkingweekly.com

Listen to the podcast: http://listen.coworkingweekly.com

On Tuesday, Dec 23, 2014 at 10:19 AM, Jensen Yancey [email protected], wrote:

I don’t know about everyone else, but since I’ve opened a coworking office, one of the most mysterious and difficult-to-wrap-my-head-around concepts has been why the hell am I getting charged so much for accepting credit cards and where is it all going. In our scramble to get open in time, we signed on with First Data, Wells Fargo recommended them so what could go wrong? This month, we billed $1435 through first data, from that, we were charged a $48.55 bankcard discount fee, a $23.87 Bankcard interchange fee, and a 53.89 Bankcard Fee. First data is incredibly unhelpful, but I’ve managed to figure out that the discount fee is just what they charge us, the interchange fee is what the credit card charges us, but what the hell is the Bankcard fee? Also, most beguilingly of all, It’s been slowly going down while our other two fees have been going up.

I knew it would be a little pricy, but it seems absolutely insane that we’re paying nearly 10% of our revenue out to these companies. It’s going to cost us $500 to break the contract and I’m totally on board with doing it, but is there a much better solution?

–

Visit this forum on the web at http://discuss.coworking.com

You received this message because you are subscribed to the Google Groups “Coworking” group.

To unsubscribe from this group and stop receiving emails from it, send an email to [email protected].

For more options, visit https://groups.google.com/d/optout.

–

Visit this forum on the web at http://discuss.coworking.com

You received this message because you are subscribed to the Google Groups “Coworking” group.

To unsubscribe from this group and stop receiving emails from it, send an email to [email protected].

For more options, visit https://groups.google.com/d/optout.

4

Hi all and merry Christmas :slight_smile:

like everyone else said here, the fees are way to high. Kill the contract. I like to share my knowledge from cobot as we deal with a lot of gateways and in general its a blood sucking industry that is mostly way behind the internet age.

If you have a low monthly revenue (< 20k) just go with stripe, easy setup, no monthly fees, all int. cards included.

As for Braintree, if you use them, keep in mind that you give your money to PayPal, because its the same company.

For bigger revenue it starts to make sense to have a deal with a payment processor like authorize.net because you get lower percentage, around 2,1% per transaction but have to pay monthly fixed fees and for certain payment types.

A way to save on fees is to get payed by Automated Clearing House (ACH) which uses direct debit and not credit cards. This is very common in europe because vendors don’t like to pay credit card fees :slight_smile:

There is also some room for negotiations with payment processors like Adyen or Authorize.net if you are/have a able and
patient person to deal with very slow and inflexible institutions. Fraud risk in coworking is very low because people have to be on site to
use the service, which is a strong argument to ask for fee reductions.

We really would have loved to offer discounted rates through cobot to all spaces that are using us but after months of talking we reached nothing. Really happy if somebody else can offer a angle here.

@Jacob really love to here more about your plans.

Cheers and merry Christmas

···

On Tuesday, December 23, 2014 4:18:54 PM UTC+1, Jensen Yancey wrote:

I knew it would be a little pricy, but it seems absolutely insane that we’re paying nearly 10% of our revenue out to these companies. It’s going to cost us $500 to break the contract and I’m totally on board with doing it, but is there a much better solution?

I don’t know about everyone else, but since I’ve opened a coworking office, one of the most mysterious and difficult-to-wrap-my-head-around concepts has been why the hell am I getting charged so much for accepting credit cards and where is it all going. In our scramble to get open in time, we signed on with First Data, Wells Fargo recommended them so what could go wrong? This month, we billed $1435 through first data, from that, we were charged a $48.55 bankcard discount fee, a $23.87 Bankcard interchange fee, and a 53.89 Bankcard Fee. First data is incredibly unhelpful, but I’ve managed to figure out that the discount fee is just what they charge us, the interchange fee is what the credit card charges us, but what the hell is the Bankcard fee? Also, most beguilingly of all, It’s been slowly going down while our other two fees have been going up.

5

Hi Jensen,
We had this same issue at first. (But 10%???) And it also turned out that our bank “owned” our data! Took over a year to get out from under them. We are now paying about 1.9% TOTAL for bankcard processing, and we’re happy to recommend our service to anyone. Take all your costs of credit card processing (discount fee, interchange fee, bankcard fees, etc.) – don’t worry about breaking them apart. Look at the total gross that you processed through the credit card company, the total net into your pocket. Take the difference and divide by the gross. That’s the true cost of credit card processing for you and the only important number.

There are a number of entities involved in this. Don’t get suckered into believing that a company that does all of this for you is going to save you money. They all cost more. The entities in a credit card transaction are:

  1. The online gateway. This will typically be Authorize.net or an expensive all-in-one like Stripe. (Authorize charges $10/mo. for this.)
  2. Your credit card processor. This is the entity you may have the most contact with and the one that probably sold you the service. Or the one that gives you no service but charges you a lot anyway. They take a small, but significant, nick off every transaction. This is typically where the variability in your costs comes from.
  3. The processor’s bank. Yep, they’re there, too. (But their fees may be hidden from you and show up in #2.)
  4. The credit card vault. This holds securely all of your member credit cards. You may use Authorize, which charges another $10/mo. for this. With our management software (DeskWorks), we use Spreedly because they make it easy to draw on the card to go into different accounts, and we don’t charge for the vault service (we pay for it).
  5. Don’t forget the credit card companies. If someone has a card with points or miles or other benefits, you’re paying for it in a higher percentage.
  6. Your bank. They may not take a visible percentage, but they’re probably taking the “float”. Meaning they hold your money for an extra day.

When you add all of this up, you should be able to be under 2.5% total cost, dropping as you get bigger and have more track record with your processor. And you should have a processor that is always instantly available to you and helpful. Holler if you want the recommendation to the one we’re using.

Barbara

···

On Tuesday, December 23, 2014 3:18:54 PM UTC, Jensen Yancey wrote:

I knew it would be a little pricy, but it seems absolutely insane that we’re paying nearly 10% of our revenue out to these companies. It’s going to cost us $500 to break the contract and I’m totally on board with doing it, but is there a much better solution?

I don’t know about everyone else, but since I’ve opened a coworking office, one of the most mysterious and difficult-to-wrap-my-head-around concepts has been why the hell am I getting charged so much for accepting credit cards and where is it all going. In our scramble to get open in time, we signed on with First Data, Wells Fargo recommended them so what could go wrong? This month, we billed $1435 through first data, from that, we were charged a $48.55 bankcard discount fee, a $23.87 Bankcard interchange fee, and a 53.89 Bankcard Fee. First data is incredibly unhelpful, but I’ve managed to figure out that the discount fee is just what they charge us, the interchange fee is what the credit card charges us, but what the hell is the Bankcard fee? Also, most beguilingly of all, It’s been slowly going down while our other two fees have been going up.

6

Thilo, Barbara, you two run cards using your service, correct? Do you integrate with Copass?

···

On Fri, Dec 26, 2014 at 3:12 AM, Barbara Sprenger [email protected] wrote:

Hi Jensen,
We had this same issue at first. (But 10%???) And it also turned out that our bank “owned” our data! Took over a year to get out from under them. We are now paying about 1.9% TOTAL for bankcard processing, and we’re happy to recommend our service to anyone. Take all your costs of credit card processing (discount fee, interchange fee, bankcard fees, etc.) – don’t worry about breaking them apart. Look at the total gross that you processed through the credit card company, the total net into your pocket. Take the difference and divide by the gross. That’s the true cost of credit card processing for you and the only important number.

There are a number of entities involved in this. Don’t get suckered into believing that a company that does all of this for you is going to save you money. They all cost more. The entities in a credit card transaction are:

  1. The online gateway. This will typically be Authorize.net or an expensive all-in-one like Stripe. (Authorize charges $10/mo. for this.)
  2. Your credit card processor. This is the entity you may have the most contact with and the one that probably sold you the service. Or the one that gives you no service but charges you a lot anyway. They take a small, but significant, nick off every transaction. This is typically where the variability in your costs comes from.
  3. The processor’s bank. Yep, they’re there, too. (But their fees may be hidden from you and show up in #2.)
  4. The credit card vault. This holds securely all of your member credit cards. You may use Authorize, which charges another $10/mo. for this. With our management software (DeskWorks), we use Spreedly because they make it easy to draw on the card to go into different accounts, and we don’t charge for the vault service (we pay for it).
  5. Don’t forget the credit card companies. If someone has a card with points or miles or other benefits, you’re paying for it in a higher percentage.
  6. Your bank. They may not take a visible percentage, but they’re probably taking the “float”. Meaning they hold your money for an extra day.

When you add all of this up, you should be able to be under 2.5% total cost, dropping as you get bigger and have more track record with your processor. And you should have a processor that is always instantly available to you and helpful. Holler if you want the recommendation to the one we’re using.

Barbara

On Tuesday, December 23, 2014 3:18:54 PM UTC, Jensen Yancey wrote:

I don’t know about everyone else, but since I’ve opened a coworking office, one of the most mysterious and difficult-to-wrap-my-head-around concepts has been why the hell am I getting charged so much for accepting credit cards and where is it all going. In our scramble to get open in time, we signed on with First Data, Wells Fargo recommended them so what could go wrong? This month, we billed $1435 through first data, from that, we were charged a $48.55 bankcard discount fee, a $23.87 Bankcard interchange fee, and a 53.89 Bankcard Fee. First data is incredibly unhelpful, but I’ve managed to figure out that the discount fee is just what they charge us, the interchange fee is what the credit card charges us, but what the hell is the Bankcard fee? Also, most beguilingly of all, It’s been slowly going down while our other two fees have been going up.

I knew it would be a little pricy, but it seems absolutely insane that we’re paying nearly 10% of our revenue out to these companies. It’s going to cost us $500 to break the contract and I’m totally on board with doing it, but is there a much better solution?

–

Visit this forum on the web at http://discuss.coworking.com

You received this message because you are subscribed to the Google Groups “Coworking” group.

To unsubscribe from this group and stop receiving emails from it, send an email to [email protected].

For more options, visit https://groups.google.com/d/optout.

7

Hi Jacob.

yes. we use stripe with cobot, ist just so much easier with them to get paid and resolve issues like refunds and chargebacks that the extra share they take pays of by the time we save so far.

For co.up we also use adyen because they do direct debit for europe.

We don’t integrate with copass yet, why do you ask?

Cheers
Thilo

···

On Wednesday, December 31, 2014 12:49:25 AM UTC+1, Jacob Sayles wrote:

Thilo, Barbara, you two run cards using your service, correct? Do you integrate with Copass?

On Fri, Dec 26, 2014 at 3:12 AM, Barbara Sprenger [email protected] wrote:

Hi Jensen,
We had this same issue at first. (But 10%???) And it also turned out that our bank “owned” our data! Took over a year to get out from under them. We are now paying about 1.9% TOTAL for bankcard processing, and we’re happy to recommend our service to anyone. Take all your costs of credit card processing (discount fee, interchange fee, bankcard fees, etc.) – don’t worry about breaking them apart. Look at the total gross that you processed through the credit card company, the total net into your pocket. Take the difference and divide by the gross. That’s the true cost of credit card processing for you and the only important number.

There are a number of entities involved in this. Don’t get suckered into believing that a company that does all of this for you is going to save you money. They all cost more. The entities in a credit card transaction are:

  1. The online gateway. This will typically be Authorize.net or an expensive all-in-one like Stripe. (Authorize charges $10/mo. for this.)
  2. Your credit card processor. This is the entity you may have the most contact with and the one that probably sold you the service. Or the one that gives you no service but charges you a lot anyway. They take a small, but significant, nick off every transaction. This is typically where the variability in your costs comes from.
  3. The processor’s bank. Yep, they’re there, too. (But their fees may be hidden from you and show up in #2.)
  4. The credit card vault. This holds securely all of your member credit cards. You may use Authorize, which charges another $10/mo. for this. With our management software (DeskWorks), we use Spreedly because they make it easy to draw on the card to go into different accounts, and we don’t charge for the vault service (we pay for it).
  5. Don’t forget the credit card companies. If someone has a card with points or miles or other benefits, you’re paying for it in a higher percentage.
  6. Your bank. They may not take a visible percentage, but they’re probably taking the “float”. Meaning they hold your money for an extra day.

When you add all of this up, you should be able to be under 2.5% total cost, dropping as you get bigger and have more track record with your processor. And you should have a processor that is always instantly available to you and helpful. Holler if you want the recommendation to the one we’re using.

Barbara

On Tuesday, December 23, 2014 3:18:54 PM UTC, Jensen Yancey wrote:

I knew it would be a little pricy, but it seems absolutely insane that we’re paying nearly 10% of our revenue out to these companies. It’s going to cost us $500 to break the contract and I’m totally on board with doing it, but is there a much better solution?

I don’t know about everyone else, but since I’ve opened a coworking office, one of the most mysterious and difficult-to-wrap-my-head-around concepts has been why the hell am I getting charged so much for accepting credit cards and where is it all going. In our scramble to get open in time, we signed on with First Data, Wells Fargo recommended them so what could go wrong? This month, we billed $1435 through first data, from that, we were charged a $48.55 bankcard discount fee, a $23.87 Bankcard interchange fee, and a 53.89 Bankcard Fee. First data is incredibly unhelpful, but I’ve managed to figure out that the discount fee is just what they charge us, the interchange fee is what the credit card charges us, but what the hell is the Bankcard fee? Also, most beguilingly of all, It’s been slowly going down while our other two fees have been going up.

–

Visit this forum on the web at http://discuss.coworking.com

You received this message because you are subscribed to the Google Groups “Coworking” group.

To unsubscribe from this group and stop receiving emails from it, send an email to [email protected].

For more options, visit https://groups.google.com/d/optout.

8

I’ve been looking at Copass more lately and I like what I’ve been seeing. I can see them having a very positive impact on coworking (and coliving) communities. I have a few conflated “big” ideas on where this intersects with payments, and a “co” focused, stripe-like service… but I’m just waking up so I’ll try to avoid getting lost in the details before my first cup of coffee.

···

On Tue, Jan 6, 2015 at 5:50 AM, Thilo Utke [email protected] wrote:

Hi Jacob.

yes. we use stripe with cobot, ist just so much easier with them to get paid and resolve issues like refunds and chargebacks that the extra share they take pays of by the time we save so far.

For co.up we also use adyen because they do direct debit for europe.

We don’t integrate with copass yet, why do you ask?

Cheers
Thilo

On Wednesday, December 31, 2014 12:49:25 AM UTC+1, Jacob Sayles wrote:

Thilo, Barbara, you two run cards using your service, correct? Do you integrate with Copass?

On Fri, Dec 26, 2014 at 3:12 AM, Barbara Sprenger [email protected] wrote:

Hi Jensen,
We had this same issue at first. (But 10%???) And it also turned out that our bank “owned” our data! Took over a year to get out from under them. We are now paying about 1.9% TOTAL for bankcard processing, and we’re happy to recommend our service to anyone. Take all your costs of credit card processing (discount fee, interchange fee, bankcard fees, etc.) – don’t worry about breaking them apart. Look at the total gross that you processed through the credit card company, the total net into your pocket. Take the difference and divide by the gross. That’s the true cost of credit card processing for you and the only important number.

There are a number of entities involved in this. Don’t get suckered into believing that a company that does all of this for you is going to save you money. They all cost more. The entities in a credit card transaction are:

  1. The online gateway. This will typically be Authorize.net or an expensive all-in-one like Stripe. (Authorize charges $10/mo. for this.)
  2. Your credit card processor. This is the entity you may have the most contact with and the one that probably sold you the service. Or the one that gives you no service but charges you a lot anyway. They take a small, but significant, nick off every transaction. This is typically where the variability in your costs comes from.
  3. The processor’s bank. Yep, they’re there, too. (But their fees may be hidden from you and show up in #2.)
  4. The credit card vault. This holds securely all of your member credit cards. You may use Authorize, which charges another $10/mo. for this. With our management software (DeskWorks), we use Spreedly because they make it easy to draw on the card to go into different accounts, and we don’t charge for the vault service (we pay for it).
  5. Don’t forget the credit card companies. If someone has a card with points or miles or other benefits, you’re paying for it in a higher percentage.
  6. Your bank. They may not take a visible percentage, but they’re probably taking the “float”. Meaning they hold your money for an extra day.

When you add all of this up, you should be able to be under 2.5% total cost, dropping as you get bigger and have more track record with your processor. And you should have a processor that is always instantly available to you and helpful. Holler if you want the recommendation to the one we’re using.

Barbara

On Tuesday, December 23, 2014 3:18:54 PM UTC, Jensen Yancey wrote:

I don’t know about everyone else, but since I’ve opened a coworking office, one of the most mysterious and difficult-to-wrap-my-head-around concepts has been why the hell am I getting charged so much for accepting credit cards and where is it all going. In our scramble to get open in time, we signed on with First Data, Wells Fargo recommended them so what could go wrong? This month, we billed $1435 through first data, from that, we were charged a $48.55 bankcard discount fee, a $23.87 Bankcard interchange fee, and a 53.89 Bankcard Fee. First data is incredibly unhelpful, but I’ve managed to figure out that the discount fee is just what they charge us, the interchange fee is what the credit card charges us, but what the hell is the Bankcard fee? Also, most beguilingly of all, It’s been slowly going down while our other two fees have been going up.

I knew it would be a little pricy, but it seems absolutely insane that we’re paying nearly 10% of our revenue out to these companies. It’s going to cost us $500 to break the contract and I’m totally on board with doing it, but is there a much better solution?

–

Visit this forum on the web at http://discuss.coworking.com

You received this message because you are subscribed to the Google Groups “Coworking” group.

To unsubscribe from this group and stop receiving emails from it, send an email to [email protected].

For more options, visit https://groups.google.com/d/optout.

–

Visit this forum on the web at http://discuss.coworking.com

You received this message because you are subscribed to the Google Groups “Coworking” group.

To unsubscribe from this group and stop receiving emails from it, send an email to [email protected].

For more options, visit https://groups.google.com/d/optout.