Art Fair Insiders

Call for Artists, Making Money at Juried Art Fairs, Craft Shows and Festivals

I've had it with (my) Credit Card Processing!

Well maybe not entirely but I would like to relate an experience that I had with my credit card merchant account. A few years ago I decided that it was probably in my best interest, and in the interest and convenience for people that wanted to purchase my work, to finally break down and sign up for a credit card merchant account. Up till then I was doing no more than 5 and maybe up to 10 shows a year. I didn't have any problems with sales not involving a credit card as people came to the shows either with cash or a handy checkbook and an ATM, at least at the shows I was doing then, was always nearby. It wasn't an inconvenience as people understood when I explained why I didn't take credit cards; not enough shows to warrant it at the time.

Fast forward a few years and I felt it would be in my best interest to up my game and begin to accept credit cards. I did what I felt was thorough, though not exhaustive, research on the different companies that were willing to support a weekend warrior/artist. The costs just for monthly statements ranged from $7 on up. The discount rates, as we all know, varied greatly as well. I called 1st National Processing and was given what I felt at the time was a reasonable program. They sent me a Nurit 8000 set up with a "store-and-forward" program. My statements were only $7 at the time and the discount rates were among the lowest as well.

November of that same year rolls by and I'm hit with $129 for a PCI fee! What the heck is that!? I call 1st National and am told that it is the annual indemnity fee for my account. Didn't know about that one! Basically, if someone gets hold of my account and finds credit card numbers stored on my machine, which it was set to delete anyway, I would be liable for any problems associated with it. I didn't want that! Water under the bridge, life goes on, lesson learned, I suck it up.

Soon I noticed that my $7 a month Merchant Account Statement had grown another fee. An additional $4 "Regulatory Fee" was being appropriated from my check book per month. "Enough of this", I thought. Besides which I was beginning to experiment with Square and was thinking of migrating over to them anyway. The "Store-and-Forward" system was beginning to make me nervous. What if something went wrong and I lost an entire days receipts? Before I tossed the whole previous system out however I saw the ad (like the one blinking at me now from the sidebar) for  "FREE" Credit Card Processing. I called them up and was satisfied with what I was told. Indeed, they said, there would be no fees accept those associated with the cards that I processed.  Seemed like a good idea, that way I could migrate over to Square and have this other system as a back up if it were ever needed (By-the-way, don't leave your iPhone in the sun!). They canceled my old account and gave me a new account with a new number (and a new account provider). Given the caveat as previously described I did use the "back-up" and was charged for the transactions as described in the plan. No problem.

The end of the year rolls around, no other fees as yet as advertised, yet now I'm seeing $16.95 being charged against this account for PCI fees again. Wait a minute, if you look long enough at the flashing ad, it says "NO PCI fees"! (or upfront fees or recurring fees, etc.) I call up 1st National explain the situation and indeed they concur, no fees. The money goes back into the bank account.

January of this year rolls around and I receive a letter which states that "due to escalating costs" I would be "assessed an incremental fee based upon the difference between $10 and (my) transaction processing fees." They also reminded me about the PCI fee (again!) What's this all about, I thought my account was "FREE". I called mid January and was told by Jason that he would have to research this (stalling tactic?). What? The bank representative doesn't even know what's going on? He dutifully took down my phone number and assured me that he would get back to me. I didn't hear from him so out-of-sight, out-of-mind.

March 1st rolls around and much to my chagrin I receive a "Merchant Statement" (I haven't seen one of these since the problem with the second round of PCI fees being charged). I call Merchant Services and Jared apologizes profusely for Jason not having gotten back to me and explains there is nothing he can do to reverse the charge. I will have to call the sales office at 1st National Processing. It is a few days before I can call 1st National. When I do I am greeted by what at first I thought might have been "Dog The Bounty Hunter" or at least someone who just finished charm school at a collection agency. He was gruff, as though I had just taken him away from an episode of Storage Wars and didn't appreciate it. I was, to say the least, taken aback by his attitude for, in their defense, any time I had contacted them previously they have always been pleasant, patient and attentive to my questions or concerns. I explained the situation one more time to him and he basically told me that due to the fact that they (the bank) had "escalating costs" they had to charge the $10 a month fee and that they (1st National) couldn't do any thing about it because the banks could do whatever they wanted to and that if I wanted he could cancel the account effective the same afternoon. I did!

What kind of "escalating" costs could they possibly have? From my perspective a "FREE" account is a win-win for both the bank and the vendor. The bank wins because they can charge their "discount" rates for swiped or keyed cards, they continue to make money. The vendor wins because they (were) not charged unless they actually used the machine. So basically they are telling me that if I'm not using the thing it is going to cost me $10 a month no matter what. So much for "FREE". If I were using the machine on a regular basis however, and my processing fees were $10 or more, than it would be "FREE" but there are times I'm not doing shows at all and don't want to be assessed the $10 per month! I guess they just can't stuff it into their pockets fast enough!

This past year I've been pretty much using Square exclusively anyway without a hitch, except maybe for the incident described above. Their on-line statements are much more useful to me with a breakdown of fees charged, tax paid, etc. then the other merchant statements ever were. (By the way Square charges their 2.75% on the tax as well! Can't figure a work-around for that one) All that glitters is not gold, so do your own due diligence when shopping credit card vendors.


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Comment by Cindy Ketchersid on April 15, 2013 at 10:22pm

I use Costco Merchant Services through Elavon for many years.  Even with my cc machine I still pay less percent than with the Square. There are no hidden charges with settlements.  I just ordered a reader for my phone, like Square, but only paying less than 2% and if I DON'T use it there will be a $5.00 mthly charge.   They have a live tech, called on a Sunday during a show with an issue. Their terms with MC/Visa/Discover are negotiated with Costco.  This is the rep. I recently talked to and answered all my questions. Very personable and knowledgeable.  Just a thought.....

Kimberly Clugston|Account Executive|Business Solution Sales

Elavon|Global Acquiring Solutions| Costco Program

Two Concourse Parkway |Suite 800 | Atlanta, GA 30328

T: 866-448-3676 Ext. 4803 US| 800-226-9332 Ext. 4803 Canada

Fax: 678-731-3397|


Comment by AL NEWLIN on March 21, 2013 at 11:09pm

When so many artists have been outrageously shafted by this company, why does this website still carry their ads. It is inexcusable.

Comment by Robert Wallis on March 21, 2013 at 10:26pm

Here's a possible fix on this; see if you can go to seasonal service. If you can, make it for the shortest term possible, probably at least one month or two. The fees will drop to a bare minimum in most cases, and it may be cheaper to do that rather than cancel out. If the fees go low enough that way, you might be money ahead to do that and get the Square anyway.

I had been with NPC for many years, starting out as Old Kent State and going through various acquisitions until it was finally NPC. When I wanted a more modern terminal after my Tranz 420 and analog bag phone become too undependable, the sales guy at NPC claimed I had to have another merchant contract to get a Way Systems unit. My original merchant contract didn't have a cancellation clause, the new one did. When I decided to dump them after seeing a 5-6x increase in fees, they told the same thing that my account had self-renewed and I would owe them a considerable cancellation fee. At that point I sent in the letter cancelling the service, and also telling them I was going out of business, and ripped them a new one for shady sales practices and questioning the legality of the required new contract, and the excessively high fees. They cancelled the contract and didn't charge me the cancellation fee. I had been with them for about 20 years, and the last 3 years I was shafted pretty badly by them.

Comment by david addario on March 21, 2013 at 9:45pm

After reading this blog I decided it was time to change to a square. However to much of my surprise, when I called to cancel my account I was informed that my merchant so convieniently renewed my contract for another 3 years. I never received  notification or a warning that this was going to happen, nor did i resign for a renewal,  so Im stuck for another three years. Im sure somewhere in the small (very small) fine print this is explained but I dont understand how companies can get away with this.

Comment by Michael Reimer on March 19, 2013 at 2:15pm

The question about paying a monthly fee for the credit card processor versus the monthly fee for a phone and do we factor that in, I do not.  The monthly fee for the credit card processor does nothing for me outside of the credit card processing.  On the flip side, the monthly fee for the phone gets me a whole world of benefits.  I may have initially gotten my iPhone because I wanted a Square, but I use my iPhone for way more than the Square now.  I'm pretty sure you get no added benefits for that monthly statement fee, or monthly minimum transaction fee or yearly PCI compliance fee, etc...

Also, with regards to Square charging the 2.75% on the sales tax you collect, are you saying some credit card processors do not collect their fees on the full amount the customer pays?  I can't imagine that.  My old processor did, so I didn't even think that Square wouldn't.

Comment by sean McDougal on March 19, 2013 at 1:12am

S Brian I agree with your thought. But as has been pointed out in this is that the state of Ill is trying to stop square from operating there. So the reality is that state banking regulations are going to try to squeeze the square. Again driving up costs. So the laws need to catch up with the times. I am sure if the state of ILL gets dime one from square then others will follow.Then they will be in the same boat.I am not defending the banks or processors who are not on the up and up. But the banking industry gives a boatload of money to politicians.So what do you think the outcome will be? Here is an interesting little tid bit. I live in Pa. It is against the law to loan someone money under what the banks are. Who is that protecting? I think the more the square and others like it grow the more regulation there will be on them. Which will increase costs. But I do find it interesting how many people don't think about things like that. Nothing is free in life. As far as the PCI or PMI fee people talked about. What the guy from The processing Co was right.I changed CC 3 years ago. They wanted a photo of my store. I told them I do shows. So I sent them a booth shot. I asked what that was for. They said because of CC fraud and drug dealers getting cc machines. A new regulation. I pay 1% to 1.5% on a swipe.Yes I pay a monthly fee. Square is if I am correct 2.75%.So I guess when I am selling I am making out better. When I am not the square would be.I guess what I am saying is you are going to pay one way or another. But I find it funny how people would even believe something is free. Ask yourself if you would work for free. And lets face it. The banks have way more pull than we do. Hell we have a hard time getting people to go to art fairs and buy. We think polititions and banks care what we say. If you don't believe that then send me some of your fairy dust so I can get to the land of unicorns and rainbows where you live. S Brian thats not to you so you know. Just to the people who think they will get anything for free.

Comment by S Brian Berkun on March 19, 2013 at 12:29am
Re: some of the comments addressed to the issue of a changing business model...If you haven't read the book "Who Moved My Cheese" it deals with the issue of changing business models, etc, and how, if you don't adapt to the changes in your business model you will be left behind. (Now I know that the book has also been used by mean spirited managers to berate their lackies but that is not where i'm going here). Perhaps some business owners haven't read it yet (it came out in 1998).

Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein, (attributed) It IS time that CC processing companies take a look at their business models and update! If they don't there are plenty of others, like Square, that are willing to innovate and offer a better model. Why are so many other companies copying Squares model? "Imitation is the sincerest form of flattery."
Comment by Mark V. Turner on March 18, 2013 at 4:00pm

That is so-not-happening. Those folks have issues with entitlement to operate their business as they want to and expectations that you and I are not interested in value for the dollar. Their services do not improve my experience as a merchant, nor reduce any liabilities I might experience as part of using a credit card processor. I want value for my fee dollar. They are not offering me anything I want with their expensive, data and personal information-intensive, contract restrictive, "services"... 'Artists of the world, shake off your chains' Now where's my Che' poster image??

Comment by Mark V. Turner on March 18, 2013 at 3:29pm

Very aptly said. and nothing in the comments from the card processor previously will dissuade me from using Square.  It is all about value for the dollar and the inability of older players in the game to adapt to the new paradigm. Go ahead, keep your additional fees and contracts and other charges. Your cosmetic attempts to be more like paypal, square, etc are transparent. Your old business is dying and unless you change, you will be gone from the scene unless you can find gullible people to sign on to being ripped-off

Comment by Eric Wolff on March 18, 2013 at 2:31pm

Just a comment on your statement:

By the way Square charges their 2.75% on the tax as well! Can't figure a work-around for that one.

The credit services don't differentiate between sales and tax on the charges because to them, it's all just money they are collecting and passing to you.  The fee covers their costs, plus any liability for bad charges, etc., at their end from the cardholder's financial institution.  It doesn't make a difference to them if any part of it is tax versus merchandise/service.  You have a charge for $100 in goods plus $7 in tax?  (Or whatever the local rate.)  The card processor is just getting you your $107.  The fact that $7 of it is sales tax is between you and the state and local authorities.  To the processor, the $7 cost them the same and has the same liabilities as the $100.

This is just to describe why card processors don't differentiate on merchant fees for sales versus tax.  Why different ones charge what they do, and the whole discussion of all the other added fees are for others to hash out, as is happening above.

One other thing.  The difference between swipe versus keyed-in transactions.  I've heard people complain as to why the credit companies make manual entry transactions cost more.  A charge is a charge, right?  Wrong.  The difference in rates is to cover the company's liability.  A physical swipe means you have the actual card in hand, making the assumption the person handing it to you is the card owner and that you have verified identity, so a lesser chance of fraud.  For a keyed-in transaction, it means you had the card numbers and a few bits of info on the account, but there is a higher level of risk of being a bad charge, so the company takes a higher fee to cover the potential higher liability.  Once more, what the fees actually are and why they differ so much between companies is another discussion.  This just explains why the key-in fee is different and higher than the swipe fee.

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