Credit Card Fee’s Explained.
Did I Pay More because I used plastic? NO
The explanation of credit card processing fees added to your invoice and how you DID NOT pay $1 more than before.
Its all about transparency and honesty here at Phillips Automotive.
Like most companies, we could just jack up our labor rate and parts rate 4% to compensate for the Net Loss of people using plastic to pay for everything these days. Then when people pay with cash, we could double dip and make a real profit. All instead of throwing 4% of our profits in the trash because let’s face it, everyone pays with plastic. It’s a total loss to the business owner. 4% of everything ran through the credit card machine is given directly to the processing company. Yes, this also includes the 6% PA sales tax on every invoice which is not our money. Its Pennsylvania’s money that we collect and hold for them for free. Then we have to do all the filing and payment for them every month, for Free. The Credit card fee is on the total dollar amount ran, not the total Minus PA’s money. So not only does the business owner have to throw away 4% of their total Gross but also has to throw away 4% of the tax money collected which is not even ours. Some businesses do the honest thing and offer a cash discount to those who don’t use plastic. This is to have a clear conscious to not double dipping to the jacked-up prices they have due to the credit card fees.
Is any of this fair to anyone? The consumer or the business owner? NO
So, here is how we do things and why… Because it is the fairest to everyone involved. Consumers should know where their money is going. Parts, Labor, CC Fees and sales tax all broken down into their correct amounts and nothing “jacked-up” to hide fees.
When using plastic to pay for your invoice at Phillips Automotive you will see your credit card print out has a line that says “Non cash Adj” followed by a dollar amount that is equal to 4% of your bill. This Number is added to the line above which is equal to your invoice amount and that total is the amount charged to your card. For example. Your Invoice was $100.00. Non cash Adj $4.00 Amount ran on your card $104.00
So how did I not Pay More???
That’s Simple to explain.
When our processing company changed over to forwarding the processing fee to the consumer instead of taking it from our profits, we decided to do the right thing and discount our parts and labor by -4%. Over the years with ever increasing card fees and more consumers using cards to pay we constantly had to increase our rates to compensate for the massive loss every year. Instead of forwarding the fees to the consumer and keeping our rates the same and double dipping for a big profit. We used to offer a “Cash Discount” to the consumers who used cash or check to pay their bills. We never double dipped on anyone. We take pride in always being honest and running a very family oriented and personalized shop.
So the long and the short of this story is you DO NOT pay $1 more then before. We have discounted our parts and labor rate by -4% to compensate for the 4% added to your invoice at time of payment when using a card to pay.
“But If I knew you charged 4% then I would have brought cash!” That’s great but before your bill would have been 4% higher with the fees factored into the parts and labor and we would have given you a cash discount at the counter at time of payment. So, its all the Same in the end. Cash no longer gives you a Discount because the base price is no longer Increased from the start.
This way the consumer knows 100% where every cent was spent. Isnt that Fair? No fees hidden between the lines. The parts are all broken down individually and the labor is also broken down for each operation. CC fees and sales tax all broken down. You should know where your money is going.
If this does not make sense to you, I am sorry. Its simple math. If the average Auto Repair shop invoices out $1,000,000.00 per year, that means they throw $40,000.00 in the trash just because people pay with plastic. If you don’t like “seeing” the line ‘non cash Adj’ we can just go back to how the rest of the world does it… Mark everything up to “Hide the fees” and none will be the wiser. Its business as usual. Business owners of all sizes are not going to burn 4% of their money because consumers want to pay with plastic. They Increase their prices to cover the overhead. CC fees are absolutely factored into that overhead.
We are doing the right thing by lowering our prices back to the correct amount before fees and allowing the consumer to know what $ is spent where. If the consumer wants the convenience of ‘paying later’ or “financing” their bill with the credit card company, or Not having to ‘carry cash’ then that is their right. It is also their right to know what $ was spent on what item. It is also not fair for the business owner to have to eat 4% because the consumer wants to use plastic. It is also not fair for the business owner to “jack-up” their prices and penalize every customer to compensate for the loss.
As small businesses continue to struggle and disappear, consumers will find this Non Cash adj becomes more main stream.
Many States are changing the laws and allowing this to happen because let’s face it… It makes sense.