Reducing credit card transaction fees

[Hostels]

Credit card processing fees are expensive. In order to reduce the credit card fees, I used to train the front desk to ask for payment something like this:
"The total is $xx.xx -- are you able to pay by cash?"

Sometimes guests don't know how they want to pay. It doesn't make any difference to them. The idea was just to suggest to the indecisive people that cash is slightly preferable (without any pressure). I didn't measure stats on it, but I think it was effective.

Does anyone have ways to encourage payment by cash?

[Plakian]

Originally Posted by Hostels

Does anyone have ways to encourage payment by cash?

Yes, by not accepting credit cards in the first place! To the guest I put the blame on the fact that there is no bank in town but in reality it is the Greek system that is the problem. If someone pays when they leave I would have to find till receipts for every beer or plate of eggs they consumed to attach to the credit card counterfoil.

[HostelOffice]

We have noticed this year that every guest has asked if it is OK to pay by Credit Card. Then others state that they know it is better for the hostel if they pay by cash. You should put up a 5% charge added on top of price if paid for by credit card. This will help the education process.

[Hostels]

Originally Posted by HostelOffice

You should put up a 5% charge added on top of price if paid for by credit card. This will help the education process.

As far as I know, credit card companies typically don't allow businesses to increase the price for credit card transactions, though they allow businesses to offer a discount for paying by cash. Otherwise every business would create fees for paying with credit cards and consumers would be deterred from using credit cards.

(I believe that is how it works in the US - check the fine print of the agreement to be sure.)

[Jacko623]

For all you guys that are currently maintaing a hostel, or who have other business experience - can you please elaborate on the exact fees?

For example, Visa charges $x/transaction between $1-$50, $y/transaction between $51-$100. Is there a yearly service charge?

[Irishdon]

In Sicily I ran a hostel where the charge by the credit card companies on all card transactions was 3% of the total, and then there were the bank fees on top of that.

I see that one hostel in Sicily adds 5% onto the total of the bill for all rooms paid with credit card.

[Jacko623]

Yes, I was thinking it was somethign like that. From my research it seems that Visa is the least expensive, whereas Discover or AmEX are considerably more expensive.

I've also seen a variety of businesses (hostels included) which charge a dollar or two more for the use of credit cards. It's not allowed by the credit companies, but it's essentially unenforceable - Note the gas stations in your area which charge a significant discount for the use of cash.

Thank you all for your responses!

[crhostel]

we use Paypal to take reservations, and their virtual terminal to run cards for people at the hostel. We pay 2.9% plus $.30 per transaction, which is much less than the local 7%.

It works great for us because less cash on hand means less chance of theft. Our private rooms must be paid 100% in advance, so we rarely get a no-show, and because people have paid, if they can't make it they will cancel, instead of just leaving you hanging and wondering if they're going to show or not.

We charge $1 for a credit card transaction, and very rarely do people have a problem with that.

If you could get an ATM machine in Costa Rica, we would do that and make money off the fees, but it seems only banks have ATM's at the moment.

[Phillip]

Originally Posted by Irishdon

I see that one hostel in Sicily adds 5% onto the total of the bill for all rooms paid with credit card.

The small B&B's in Sicily we stayed at also has a 5% charge on top of the standard room charge. To us it was quite common as the room charges were very cheap so therefore the 5% charge was acceptable.

[Irishdon]

Quote : The small B&B's in Sicily we stayed at also has a 5% charge on top of the standard room charge

Was this 5% charge for credit card payments? Was this advertised in advance?