Payment Methods

A recent question:

I receive a request like this one every month:

“Hello! this is Kenneth, I want to know if you are available for full House remodel service and do you accept credit cards?”

I have been told several times that accepting a CC for remodeling services is dangerous because the customer can cancel a payment months after it has been run.

But, in looking about, I see that there are a lot of people suggesting that taking cash and checks, which has been a norm for years, is really “old fashioned” and may even drive some clients away that would prefer to use a different payment method.

Also, there’s that thing about the Bank service fees that can exceed 4% of a single charge. How do we recoup this? Some states make it illegal to add that percentage onto the invoice.

Anyway, it seems like if it hasn’t been covered before, it could be a good subject for one of the weekly emails that you send out.

Thank you again, for all that you do!

I asked a few of our kids if they had a checkbook. One said they have a checkbook but haven’t used it since they moved to autopay for rent. Another, a homeowner, has a checkbook but “it’s literally only for people that work on the house. Never use it for anything else.” Another doesn’t even have a checkbook. She’s also a homeowner and pays for everything with cash or cards.

Someday soon, a young person will ask, “Why is it called a checking account? What are they checking?”

I don’t think writing a check is old fashioned, but there are so many advantages to using a credit or debit card that it’s become the preferred payment method for many.

The risk of losing the funds in a chargeback is low if you take precautions. The biggest concern is fraud, someone using a card without permission. So only accept credit card payments in person, not over the phone. Ask for ID to insure that the person signing is one who owns the card, and require a signature.

If you receive a chargeback from the bank, the bank will take back the funds from you until the chargeback is resolved. You’ll be given the opportunity to contest the chargeback. That’s when you explain the work you performed and the precautions you took, and send a copy of the signed contract or agreement. It’s also smart to take a several photos of the work you completed so you can send them as well.

The process can take 3-4 months, which isn’t pretty if it’s a large amount, but again, your risk is low if you’re careful. It’s probably true that in a dispute, the banks favor the customer over the business owner. However our experience has been that almost every chargeback we’ve had over the past twenty years has resolved in our favor.

The simplest way to get started is to sign up with a payment processors like Stripe, Square, and PayPal. You’ll need an app installed on your smartphone (Android or iPhone) and an inexpensive card reader, a tool that’s either inserted into the phone’s headphone jack or connected via bluetooth, and used to swipe the card.

Don’t add the fee onto the invoice; include it in your markup. Once you start offering credit card payments, you might find many clients prefer it. The fee is another cost of doing business.

Most credit card fees are around 3% of the total charge. For example, if you project an annual sales volume of $100,000 and expect half of your clients will pay with credit, add $1,500 (half of 3 percent of $100K) in credit card fees (or whatever rate you’re charged) to your overhead when you calculate your markup. If you want to be safe, add $3,000 to your overhead.

One daughter told us she’s used both PayPal and Zelle to transfer funds in the past. That’s actually transferring funds from her account to someone else’s, not paying by credit card. She’s also used Venmo, “but I’ve never seen anyone over 35 with it.” I’ll admit, Zelle and Venmo are new to me but if you can accept payment with them as a business account, they’re worth investigating.

There’s a basic rule of business: when someone offers you money, take it. Find a way to make it easy.