RE: Surcharge Paypal users

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http://forums.oscommerce.com/viewtopic.php?p=121326#121326
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[quote="burt"]Hmmn, I'm not understanding as the point is to surcharge people for paying by Credit Card, not any other method...I personally wouldn't/couldn't surcharge as I don't own any Osc shops, but I know some of my people that I admin Osc for would love to surcharge...[/quote]

Probably because a lot of shop owners run a slim margin on their markups on products, then notice after a couple months or so that they are losing 15-25% of their gross due to credit card fees (gateway fees, merchant fees, discount rate, transaction fees, etc - they all add up). 

If a person was selling an item for $100 which they bought for $90 (total cost including shipping, taxes, etc) they "assume" they are making $10. In actuality they are making ([$100 - 3.5%] - $0.35) for the average merchant account (including PayPal). This is $6.15 net (that's already 33% of the profit), from that you need to subtract your monthly hosting fees, gateway fees, merchant fees, misc fees, business costs, wages, etc.  Lots of merchants also don't pay attention to taxes being pilfered by their merchant account - lots of people put through the total amount and get zinged on a % of the tax (which they have to pay in full anyway). Another place to lose money on a sale...

If you are making $100,000.00 net on your products in a year ($1,000,000.00 in sales / 10,000 sales = at $100.00 per sale, $10 gross profit per sale, with $3.85 in credit card fees per transaction), you'd lose $38,500.00 of that to credit card transactions with the above example. That's a lot of money, 38.5% of your net to be exact... You only "take home" $61,500 and you still haven't paid for your web hosting, merchant fees, gateway fees, etc.. Most people don't realise that before they start selling online.

You lose a bit less if your products are smaller $ amounts with smaller final profit values (lets say you sell $10 items and make $4 on each sale - that's $6 cost, 66% mark up) you pay $0.70 credit card fees for each transaction. If you sell 10,000 of these items, you've sold $100,000.00 worth of stuff, and you made $40,000 gross profit, but your credit card transactions cost you $7,000.00 (that's around 17.7% of your net gone out the door to credit card fees). Now from that remaining $33,000 you have to pay all your other business expenses. Makes it seem like an uphill battle to make decent money in online retail doesn't it?  :wink: 

Most buyers don't realise that when you pay with a credit card, it always costs the merchant a % of the total price. Bare minimum is 0.5% + $0.05 at even most large retail stores. Merchants also are not allowed to imply or even tell a customer that they lose money when a person uses a credit card (it's part of the merchant agreement - everywhere but the UK it appears). I always try to pay cash when I buy stuff from local retailers, they give me the best price they can do, I give them best profit margin on their minimal markup - better for me, better for them. :)

Thats my take on the whole deal anyway. Without the merchant account I wouldn't be able to make any sales in online retail - but you need to go into it with eyes wide open or you'll be out of business in no time wondering where all your profit went.