Why do businesses turn away custom?

Norfolk_Jim

Why is a business, faced with a sale / order, prepared to let that business walk out the door for the sake of a credit card fee?

When faced with paying a surcharge for using my credit card as payment, I usualy refuse and go give the business to someone else who doesnt.

Yet times are tough and businesses need all the custom they can get - why oh why let money go out the door rather than waive the fee?

KingElvis

Because the margin on the product is probably less than the CC fee.

lisyloo

Every business has a bottom line and it sounds like you are finding it.

There is a point where it simply isn't worth them doing the business.
If you are finding their bottom line then you are doing very well for yourself as you're getting the best deal possible to the point where it isn't worth them trading with you for less.

Of course it could be that it's a matter of policy and in individual cases it seems silly, but they have a blanket policy.

platterfish

I used to work in holiday and flight sales, people would often ask why the credit card fee was applied - the majority of the time, particularly on flight only sales the amount of margin being made is less than what the credit card company charge them for you using your card. Therefore if they did waive the fee, they would be selling at a loss - which makes no business sense - or if not a loss, very very little margin which isn't worth having the responsibility of looking after the booking.

chattychappy

Yes. Either:

1) Not enough margin to cover the fee, as suggested or
2) Most people will pay up. So no need to make exceptions - else sales staff will start giving the exception to everyone (depends on the nature of the business).

They might ask why YOU are prepared to walk away from the business for the sake of a small fee.

opinions4u

Here's an example.

Second hand car £5,000.

Profit for dealer £500.

Credit card cost to dealer £125.

Sell to credit card customer - make £375 profit.
Sell to non-credit card customer - make £500 profit.

Does that explain it?

YorkshireBoy

opinions4u wrote: »

Here's an example.

Second hand car £5,000.

Profit for dealer £500.

Credit card cost to dealer £125.

Sell to credit card customer - make £375 profit.
Sell to non-credit card customer - make £500 profit.

Does that explain it?

Or to look at it another way...

Will make £375 profit today.

Might make £500 profit tomorrow/next week/next month/sometime soon (hopefully)/well, as long as it comes in before the wage bill is due/VAT becomes payable.

They're gambling someone will walk in with a debit card or need finance.

Obviously the fact it's a depreciating (in this example) asset and/or any cashflow requirement will play a part in their decision as to whether to cut and run. A bird in the hand and all that.

opinions4u

YorkshireBoy wrote: »

Or to look at it another way...

Will make £375 profit today.

Might make £500 profit tomorrow/next week/next month/sometime soon (hopefully)/well, as long as it comes in before the wage bill is due/VAT becomes payable.

They're gambling someone will walk in with a debit card or need finance.

Obviously the fact it's a depreciating (in this example) asset and/or any cashflow requirement will play a part in their decision as to whether to cut and run. A bird in the hand and all that.

Quite agree. I think I'd run my business on a "take the first sale" basis and I hate being charged to use a credit card - it actively makes me take my business elsewhere.

So I do appreciate the OP's position.

choc_mouse

Another case study: Expedia.co.uk have no credit card fees but Lastminute.co.uk does. However, Lastminute sometimes works out cheaper for the same hotels/flights but usually only by a few pounds (excluding super special promotions).

Also by adding the "fee" later on (like Ryanair) they can advertise what seems like lower prices than their competitors.

Norfolk_Jim

Mmmm... Interesting. But then, if their margin is THAT tight, why not just add the CC fee to the price? Then I would not even realise I was being charged a fee for my credit card - I might even think I was getting a great deal NOT having to pay an extra fee.

Why would I walk out from the business for the sake of a small fee? - I'm the buyer! Unless its something I absolutely have to have then and there its not going to be a big negative for me. Traders on the other hand are there to sell things. Traders exist to sell things but I dont exist to buy things (though there are people out there who clearly do think they exist to buy things).

zppp

Norfolk_Jim wrote: »

Why would I walk out from the business for the sake of a small fee? - I'm the buyer! Unless its something I absolutely have to have then and there its not going to be a big negative for me. Traders on the other hand are there to sell things. Traders exist to sell things but I dont exist to buy things (though there are people out there who clearly do think they exist to buy things).

Then they will be deemed less competitive, and also they would put the price up for everyone irrespective of the payment method.