justme
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Post by justme on Jan 25, 2015 23:51:50 GMT -5
I think the biggest hurdle is going to give all the protections cc offer.They are why i don't like debit cards along with the unpredictableness of when it hits my checking account. My electric company only allows auto pay direct from your account - it's the only bill I have not on auto pay.
I rent a car with my card and I have extra coverage. An item I bought gets stolen soon after I buy it and my cc replaces it. One even has a price guarantee.
Do I know it's paid through the merchant fees? Yea, but I like all the features.
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Formerly SK
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Post by Formerly SK on Jan 26, 2015 0:16:29 GMT -5
I agree that this sounds great for merchants. So say casheer launches. A store signs up for it to take payments, I walk into the store and am offered a chance to pay with it. Why would I want to? I don't think I would. I want the rewards on my cc. If the store stops taking cc then I'll consider it cash only. Now, way in the future, I can see this being -the- way to pay, the default instead of cc and I would use it. But first casheer has to pry me away from my cc rewards. They need to offer an incentive to get me using them. If they can raise enough cash to buy enough users, for example by offering me cash back like the cc do, they might have a chance. Seems like they'd have to spend a lot of money upfront before this would catch on. And of course, they're going to face a lot of competition. I'm sure ebay and Paypal will do anything they can to beat it online. There's going to have to be a lot of money invested for this to stand a chance. Definitely a big risk big reward deal. You walk into my store and select an item that's $19.99. You bring it to the counter, I ring it up, and tell you your total is $21.69. The other $1.70 is sales tax that I have to collect on behalf of the state/county/city and send to them. If you pull out $25 in cash and hand it over, I give you your change and we're done. The state made $1.70, I get $19.99. If you pull out your plastic instead I still charge you $21.69, the state still gets $1.70, but I also owe my merchant processor 54 cents, so I only get 19.45. I paid 2% plus a ten cent swipe fee so you could use plastic. Your credit card company gives you 22 cents in cash back rewards, which I paid for, and keeps the other 36 cents. If I switch to Casheer we'd have the same transaction, and if you pay me with cash or the casheer app, I charge you $21.69. If you pull out a credit card I charge you $22.23, but you get 22 cents in cash back rewards on your credit card, for a total cost of $22, so consumers realize that credit cards aren't free money. But the competition isn't credit cards it's debit cards. What are your debit card fees? Can Casheer beat that while offering the same consumer protections as regular debit cards? You are always welcome to NOT accept credit cards. No one FORCES you to use them. Fact is, retailers accept them because most people charge stuff and carry balances. You get more revenue (even with the fees) than you would if you didn't accept CC. Casheer doesn't fit that model.
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Formerly SK
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Post by Formerly SK on Jan 26, 2015 0:33:18 GMT -5
OP - in the end I think this thread is really useful as IMO it preps your for what a credible VC would ask. Titillating videos and hyperbolic "CCs are evil" don't really cut it. Hopefully all these challenging questions give you time to prepare answers so you can present yourself more credibly to potential investors. Good luck!
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Formerly SK
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Post by Formerly SK on Jan 26, 2015 0:34:38 GMT -5
1% plus 10 cents per transaction. And how much would your sales decline if you only accepted debit cards?
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Formerly SK
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Post by Formerly SK on Jan 26, 2015 0:35:35 GMT -5
If you put in a chargeback feature where's my protection as a merchant from a customer saying they never got an item in order to steal from me? If I ship the item in good faith, but Fedex loses the package why should I pay for that? I didn't deliver your package to the wrong address, leave it out front to get stolen, etc. Which do you think happens more often, a seller listing items for sale but not sending them, or buyers buying things they can't afford then fraudulently getting a refund while keeping the item? Tracking numbers are your friend.
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Formerly SK
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Post by Formerly SK on Jan 26, 2015 1:05:56 GMT -5
Tracking numbers are your friend. Tracking numbers add shipping cost, and don't matter. If you buy something on Amazon, I ship it to you with tracking, and you contact Amazon to say it never arrived, Amazon gives you a refund anyway. Same deal with signature required packages. If you contact your cc company and ask for a chargeback they won't even contact me to see if it had a tracking number, was sent certified mail, or whatever. They don't care. I'm stuck taking cards anyway, so you're the customer. They want you to keep using the card, even though I'm the one that pays them every time you do. OK, but that's all part of the bullsh*t of accepting credit cards. Presumably, you get more sales/revenue accepting them (even with all the bullsh*t) than you'd get if you didn't accept them. You can always conduct an experiment and not accept them for a period of time and see what happens to your sales. Frankly, I would never buy something off a random website without CC protection, and I'd only buy something via Amazon because I know I'm protected by their clout and reputation. In theory, any random creep can set up a website and take a bunch of money from my debit card and close up shop. In fact, I'm kind of dealing with that right now with an Etsy purchase. Fortunately I only use AMEX for Etsy so I have recourse. It's still a PITA. BUT, that has nothing to do with OP's biz. She seems to be saying you can send money anywhere for free. I'm wondering what perks that has for the consumer. She'll have to address that question if she wants to get tens of thousands of people to fall in love with her product. For merchants it seems obvious. But that's only half the equation.
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mmhmm
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Post by mmhmm on Jan 26, 2015 1:16:16 GMT -5
All this is why I feel the consumer side of this idea needs some polishing. I'm willing to wait, however, until they get the feathers smoothed on this duck. It's a new idea, and a new venture. They're going to have to find the kinks and work them out in order for the duck to fly. Let's see if they can do that.
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haydentiff
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Post by haydentiff on Jan 26, 2015 8:54:37 GMT -5
Don't forget, merchants will also be consumers (I prefer the term "user" over "consumer"). Using Etsy as an example (since I already brought it up), there are 43.9M members. Building a massive user base is definitely going to be a challenge. The coupon finder and in-app marketplace are resonating well. The more conversations we have like this, the more ideas will spring up. We'll be focusing on the younger generation and we have (what I think is) an "ace in the hole" for that group. I'll share more when I can. If you have any other suggestions, keep them coming. Sum Dum Gai -Really enjoyed your posts!
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Lizard Queen
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Post by Lizard Queen on Jan 26, 2015 9:37:30 GMT -5
Get the kids using it in college. If you get it up and running on campuses, it'll be a great step for it to spread elsewhere.
And, it seems like the attitude is that US "older" people (over 40) are just hopelessly behind the curve technology wise. I don't think that's the case, as a rule. We just don't have the time/urge to fuck around with new stuff that may or may not work well.
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Deleted
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Post by Deleted on Jan 26, 2015 9:44:48 GMT -5
We use a lot of technology. Even this old timer. My kids are being brought up to use credit cards though. For the ease and service they provide.
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Formerly SK
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Post by Formerly SK on Jan 26, 2015 9:50:10 GMT -5
Why? Because the credit card companies say so? At some point, whether it's this app or not, somebody will invent a radically new system where the merchant has as much, or more, protections as the buyer since we're the ones paying all the fees. Visa and MC lost the antitrust case for price fixing. Their monopoly was pretty sweet while it lasted but the government, the courts, or a competitor are going take it down sooner or later. But CCs LEND MONEY. People who use them are shopping with a loan (which is a HUGE part of their appeal for consumers). How fast they pay back the loan may vary, but it doesn't change the fact that it's still a loan. Loans = fees. Of course Visa/MC/etc have cemented this huge, complicated, expensive system and it sucks for mom & pop businesses. I get that and I sympathize. Truly. Just like I think it's obscene how expensive tickets to sporting events are, just so players can earn 25M/yr instead of 15/M. How much profit is "too much" where it starts to feel like the little guy is screwed? We could debate these issues forever.
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swamp
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Post by swamp on Jan 26, 2015 9:54:10 GMT -5
Tracking numbers add shipping cost, and don't matter. If you buy something on Amazon, I ship it to you with tracking, and you contact Amazon to say it never arrived, Amazon gives you a refund anyway. Same deal with signature required packages. If you contact your cc company and ask for a chargeback they won't even contact me to see if it had a tracking number, was sent certified mail, or whatever. They don't care. I'm stuck taking cards anyway, so you're the customer. They want you to keep using the card, even though I'm the one that pays them every time you do. OK, but that's all part of the bullsh*t of accepting credit cards. Presumably, you get more sales/revenue accepting them (even with all the bullsh*t) than you'd get if you didn't accept them. You can always conduct an experiment and not accept them for a period of time and see what happens to your sales. Frankly, I would never buy something off a random website without CC protection, and I'd only buy something via Amazon because I know I'm protected by their clout and reputation. In theory, any random creep can set up a website and take a bunch of money from my debit card and close up shop. In fact, I'm kind of dealing with that right now with an Etsy purchase. Fortunately I only use AMEX for Etsy so I have recourse. It's still a PITA. BUT, that has nothing to do with OP's biz. She seems to be saying you can send money anywhere for free. I'm wondering what perks that has for the consumer. She'll have to address that question if she wants to get tens of thousands of people to fall in love with her product. For merchants it seems obvious. But that's only half the equation. I don't take credit cards. I seem to do OK.
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Formerly SK
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Post by Formerly SK on Jan 26, 2015 9:59:03 GMT -5
OK, but that's all part of the bullsh*t of accepting credit cards. Presumably, you get more sales/revenue accepting them (even with all the bullsh*t) than you'd get if you didn't accept them. You can always conduct an experiment and not accept them for a period of time and see what happens to your sales. Frankly, I would never buy something off a random website without CC protection, and I'd only buy something via Amazon because I know I'm protected by their clout and reputation. In theory, any random creep can set up a website and take a bunch of money from my debit card and close up shop. In fact, I'm kind of dealing with that right now with an Etsy purchase. Fortunately I only use AMEX for Etsy so I have recourse. It's still a PITA. BUT, that has nothing to do with OP's biz. She seems to be saying you can send money anywhere for free. I'm wondering what perks that has for the consumer. She'll have to address that question if she wants to get tens of thousands of people to fall in love with her product. For merchants it seems obvious. But that's only half the equation. I don't take credit cards. I seem to do OK.
Yeah but you're a lawyer. You have all the power and clients are at your mercy. I don't know that the Olive Garden or GAP can say the same thing.
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swamp
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Post by swamp on Jan 26, 2015 10:01:31 GMT -5
I don't take credit cards. I seem to do OK.
Yeah but you're a lawyer. You have all the power and clients are at your mercy. I don't know that the Olive Garden or GAP can say the same thing. I get stiffed for fees once in a while, but not that often. I wouldn't call it power, I just make people pay up front.
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justme
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Post by justme on Jan 26, 2015 10:08:54 GMT -5
There are some businesses I'm not surprised if they don't take credit cards, but there's others that I expect to take them and I and my 20 something friends never have cash.
There's this one hole in the wall bar that's pretty cool in town. It's cash only and what's worse is they didn't say it off the bat and we were left scrambling to get money. We've mentioned going back there a few times but the response is always I don't have any cash. There was a retail store that I was at that only accepted cash but didn't have a sign. I got to the register and said oh well I don't have any cash, never did get cash to go back and buy the items. Probably searched Amazon for them.
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Formerly SK
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Post by Formerly SK on Jan 26, 2015 10:18:32 GMT -5
I've only had one lawyer ask for up front payment and it was the smallest legal fee we've paid. I think much of the issue is urban vs rural. When I visit my home town (pop 9K) NO ONE accepts Amex. I have a Visa for those situations, but you can tell cash/check are the major methods. Course, no one there locks their houses/cars either.
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Deleted
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Post by Deleted on Jan 26, 2015 10:39:33 GMT -5
Well, I use cash or check at the Amish store. Otherwise everywhere around here does accept cc now.
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Cookies Galore
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Post by Cookies Galore on Jan 26, 2015 10:43:31 GMT -5
Yeah but you're a lawyer. You have all the power and clients are at your mercy. I don't know that the Olive Garden or GAP can say the same thing. I get stiffed for fees once in a while, but not that often. I wouldn't call it power, I just make people pay up front. Way to shift the paradigm! You're really thinking outside the box. Pushing the envelope!
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imawino
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Post by imawino on Jan 26, 2015 11:01:51 GMT -5
So why link to a bank? Who keeps the records? Who guarantees the transactions? Who keeps the actual money? Again, "actual money" is a figment of our imagination. It's "actually" not, and that's a silly thing to say. If it's just a figment of our collective imagination, why does it matter to you whether the store has to pay merchant transaction fees? It's not "actual money" it's just data. Your mortgage provider doesn't care.
Yes, a lot of money movement is just data transfer but I can still exchange actual money for actual goods and services if I so choose. I choose not to unless I have to because I prefer, as a consumer, the benefits my credit cards provide me in terms of rewards, protections (not just on purchases but against fraud, insurance on rental cars, for travel delays, etc), and lag time to pay. I've yet to hear any actual words of substance that tell me why it's better to link my bank account directly to an app, and give up all the things I listed above.
Haydentiff - can you tell us that? Without using fluffy, meaningless jargon words words about how it resonates well? It's obviously not resonating well with a lot of folks here. I don't care if "free payments are happening and the technology won't uninvent itself", I want to know why I should be interested.
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Deleted
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Post by Deleted on Jan 26, 2015 11:29:42 GMT -5
imawino, we are just old, out of touch and don't get it... ... It really sucks we are the ones with the most money to spend
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imawino
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Post by imawino on Jan 26, 2015 11:45:51 GMT -5
imawino, we are just old, out of touch and don't get it... ... It really sucks we are the ones with the most money to spend LOL. How did you know I was old and out of touch?? Who told? I'll kill them!
I can be stuck in my ways for sure. I'm certainly willing to try new things if I think they are BETTER - but I haven't seen anything to indicate how this is a better option for consumers.
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Deleted
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Post by Deleted on Jan 26, 2015 11:48:33 GMT -5
I generally like new and better too, but I think we've been dismissed
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haydentiff
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Post by haydentiff on Jan 26, 2015 12:28:58 GMT -5
imawino, I've given all of the info that I can right now. I know you guys want specific information, especially in regard to security and rewards, but there are many different ways that these things can be approached. VC's in this space are extremely tech savvy. They won't be drilling me with questions because they're trying to understand, they'll be drilling me with questions to make sure I understand. Many of them already have their own teams and ideas for how things should be done. This is all part of agreeing on the "terms" of the funding. There is no point in telling you about the ways we have figured out to offer cash back incentives, if that may never be an option because of who we "partner" with. My updated cv is one of the items that had to be submitted. There is a chance a VC may be gung-ho for Casheer, but take one look at my profile and say "pffft. we don't need her.". Once we secure funding, we'll build our teams and explain the security architecture very clearly. The feedback from this thread has been great. I underestimated how much certain groups truly appreciate their credit cards. And that's fine. One app isn't going to appeal to every person on the planet. I'm not dismissing anyone because they are older than 30 (as am I), but it's a fact that the younger generations are more open to new technology. It makes sense to start there. Right now, I can name half a dozen instructors at the community college that I work at that refuse to learn email. I'm sure you can guess what age bracket they might fall into. I absolutely want to try and think of incentives for the 30 and up crowd to want to use our app. And I don't mind any criticism that's thrown my way because it all helps put together pieces of a puzzle. I'm sorry that it has come across as fluff but our unwavering, core mission is to provide free payment processing. Period.
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justme
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Post by justme on Jan 26, 2015 15:36:34 GMT -5
They aren't asking for specific details but responding with things like: we'll have the same encrypting banks do for online bill pay, rewards for using the app have been talked about but no specific implementation, you'll have the same protections as a cc if your item arrives damaged or doesn't arrive. So many simplistic answers instead of not answering. Hell saying we haven't thought of that or we aren't planning on doing that is a million times better than just saying it's free over and over again when everyone knows nothing is ever really free.
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Deleted
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Post by Deleted on Jan 26, 2015 16:30:21 GMT -5
You said your prices were set by the manufacturer...
so, you will lower your profits on everyone because you are no longer charged swipe fees on some people?
I don't just get rewards from my cc. There are other benefits. For the most part, especially at large retailers, I'd choose someplace else rather than pay the fee.
Now, if they anted to offer me a BIGGER reward... Like target that gives me 5%, then I might do something different.
In those states where passing the swipe fee on is allowed.. Do the majority of merchants do it?
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haydentiff
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Post by haydentiff on Jan 26, 2015 17:24:20 GMT -5
They aren't asking for specific details but responding with things like: we'll have the same encrypting banks do for online bill pay, rewards for using the app have been talked about but no specific implementation, you'll have the same protections as a cc if your item arrives damaged or doesn't arrive. So many simplistic answers instead of not answering. There is NOTHING simplistic about this. There are major changes happening to the current financial infrastructure in the U.S. -and payments are at the forefront. Start following the Federal Reserve meetings while they scramble trying to come up with strategies. They are seeking input from everyone.
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Post by Deleted on Jan 26, 2015 17:26:35 GMT -5
I'm so confused Dark. You say 1) you lose profits on cc... But 2) if there were no swipe fees you'd give a discount, ie. Lower your profits anyway, and 3) actually currently you give the same % discount if they don't use a card... So how are your profits considerably different between the two groups?
I don't see how all those exist at the same time.
There are benefits to the merchant for taking cards as well. People are taking a loan To buy stuff from you. Lots of times more than they normally would have bought. Studies have show the increase in revenue from more sales weighs out the fees.
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Post by Deleted on Jan 26, 2015 17:33:37 GMT -5
Tiff, I think you can see though how 1) you are going to need to be able to explain the concept in some simplified way which does not rely on clique phrases and 2) need to be able to answer some simple questions... Ie. How will you protect bank data? or Are charges reversible if my information is hacked ? Or Is there a dispute process?
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imawino
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Post by imawino on Jan 26, 2015 17:42:32 GMT -5
Lower fees for merchants will pass through to consumers. We set our prices based on our cost. If our costs come down, so do our prices since we're all trying to undersell each other. The only piece missing to change consumer behavior on credit cards is the ability for merchants to pass through the swipe fees to the end consumer through cc swipe fees at the point of sale. 40 states allow it. The other 10 don't, but you can offer a discount for other payment methods. Unfortunately those 10 states are the most populous, and the ways the regs are written a national chain has to have the same policy in all stores, so a single store in CA, NY, TX, or one of the other 7 blocks you from passing on the swipe fees at point of sale. It's coming though. Walmart would love to be able to advertise 5% lower prices across the board, and charge those using plastic at checkout a 5% cc fee. If consumers paid the swipe fees instead of merchants your reward cards start looking like a really shitty deal. The major banks got away with selling one group a product and having another group pay for it. Pretty smart on their part, and they made billions a year on it, but that gravy train can't last forever. So manufacturers are going to lower their MSRPs? Because that's how you said you price. And as a merchant, why on earth would you lower the price even if swipe fees went away? If paying that swipe fee right now makes you so mad, why would you want to apply that same discount to every single customer going forward? If you (and/or the manufacturer) have included the swipe fee in your pricing structure right now, and you have even one customer who pays in cash - you are making more money than planned. If you pass on the swipe fee savings to all customers, that "extra" little profit you get off cash customers vanishes, doesn't it? So what you are saying is you dislike credit card companies so much that you would choose to make less money given the opportunity to cut them out of the deal?
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Post by Deleted on Jan 26, 2015 17:44:35 GMT -5
I choose to accept the same profit from each group in the hopes of training my customers to use cash. My preference would be a set price and pass the swipe fees onto those that use plastic. I'm barred from doing that by my state legislators. The CC companies know that letting merchants pass the swipe fees to consumers would be the end of everyone carrying plastic. So, you would reduce all of your prices 4-5%, and then pass the swipe fee... Won't you make less that way? Or at least the same? There really wouldn't be a difference to you... ?
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