Why do businesses turn away custom?

borders_dude

Norfolk_Jim wrote: »

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?

What it comes down to is that the retailer can pick and choose who it conducts business with. They can also decide whether or not toa accept credit cards.

It is absaultly right and proper that retailers have this freedom to make such choices.

I think its a case of like it or lump it!

zorber

Norfolk_Jim wrote: »

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?

Give the example of what you are trying to purchase!!

lisyloo

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.

Agreed but that's THEIR decision isn't it.
Perhaps when all their costs are taken into account, it isn't worth getting out of bed for £375, because after VAT, wages, NI, rent, utilities etc. it's not worth opening the business.

You are not in a posistion to judge their decision without knowing all of their costs.

chattychappy

lisyloo wrote: »

Agreed but that's THEIR decision isn't it.
Perhaps when all their costs are taken into account, it isn't worth getting out of bed for £375, because after VAT, wages, NI, rent, utilities etc. it's not worth opening the business.

You are not in a posistion to judge their decision without knowing all of their costs.

Yes. Another issue just the whole customer-supplier relationship. Through a friend I had some involvement in the printing business. The staff there quickly got the idea of who was going to be a "trouble customer". In a real service business (especially B2B) you need a good understanding on both sides. The idea that the "customer is king" is just rubbish. Both sides have to give and take, and cooperate.

It is so easy to produce stuff that is OK, but has a minor defect. If rejected, the company needed 10 jobs more to get the profit back. So they were always careful about who they take on and who they gave discounts too.

A new customer marching up and dictating terms is just told where to go. Because even if they CAN afford to do the deal at that price, it's usually an indication that there will be more trouble ahead... rejected jobs, free delivery demanded, etc etc.

Norfolk_Jim

I'm not trying to buy anything at the moment - I just wonder why it is that in this cut throat world of business, a business would choose to decline business due to payment being offered by credit card unless the customer pays the credit card fee.

I can understand not being able to because of miniscule margins. Consumers are constantly being encouraged to haggle, and surely a haggler will cost a business more than 2.5-3% on a sale?

I was recently looking to buy a cooker and found one I liked but the salesman said there would be an extra fee if I paid on my credit card.
I didn't want to stump up the extra - so no sale.

Its not like cash doesn't cost the seller anything to process - I know the bank charge for taking money over the counter and apply business charges etc, so I always sort of suspected the extra charge was a bit of a scam.

I know small traders get charged wickedly on their CC transactions so I have more sympathy for them, but also their margins are maybe a bit less wafer thin than some.

Yes it is about competition. I'm not advocating the charge be hidden in the price but I'll bet in a lot of cases, it is.

Norfolk_Jim

Any business that cant be bothered to get out of bed for 375.00 has no business being uppity about a few percent charge

Moneymaker

As someone who runs a business I can tell you the answers.

1. Card fees vary from typically 2.5% or less to 5% for American Express.
2. Profit margins have been getting tighter so on some items we actually make a loss on the selling price and make up for it with a tiny profit on the carriage.
3. Since some customers pay by debit card, some are overseas and pay no VAT, and some pay less postage than others, we quote exclusive prices. No point in making our prices look higher by adding fees that not all customers pay. The "shopping cart" calculates the total before demanding any details whatsoever, so prospective customers get a no-obligation quote before they buy.
4. The price has to include sufficient profit to cover an anticipated 1 in 100 (say) warranty claim.*
5. A person who quibbles about a relatively small charge is, in my experience, someone who will cause trouble and we don't want to deal with him. Life's too short to get involved with energy sinks.

*I guess that, if I were selling used cars, £375 wouldn't be enough to cover a warranty claim on a used car that might amount to thousands on every tenth car.

CLAPTON

it's the wonder of a reasonably free market economy

some customers are perfectly happy to pay by debit card/cash and get a discount on the credit card price
some customers think it outrageous to be charged less for a debit card compared to a credit card

some suppliers are happy to charge everyone more but have only one price
and some aren't

wonderful; both customers and suppliers have a choice about how and where they do business

WhiteHorse

Norfolk_Jim wrote: »

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?

As others have said, there are a variety of reasons.

I would add one more ... they still think that they are in the boom times. Reality has yet to sink in to an awful lot of businesses.

British businessmen seem to have a peculiar brand of arrogance and inflexibility that I've never found anywhere else. Some echo of Empire perhaps. I'd rather do a deal with the Far East anytime - because I can do a deal.

chattychappy

WhiteHorse wrote: »

British businessmen seem to have a peculiar brand of arrogance and inflexibility that I've never found anywhere else.

Ditto British consumers?

WhiteHorse wrote: »

I'd rather do a deal with the Far East anytime - because I can do a deal.

Glad to hear you can "do a deal with the Far East".

I've lived in the "Far East" and exported to the UK and other places as well as imported from the "Far East".

Don't think it's so simple. It's quite an eye-opener to see how sales staff in the "Far East" are really treated and how the business is really done. I'm not convinced it's a superior way of doing business. Sure whilst you're in a good bargaining position you will be treated like a king. Position reversed, you're totally screwed. Increasingly the UK is seen as a has-been country as exporters focus on other markets.

With all the bribery and corruption that goes on, the extraterritorial effects of the Bribery Act 2010 (if it ever comes into force) will be an interesting challenge for UK businessmen doing business here.