Credit Card Processing and Fees

TD VISA Merchant Account

Back in the 1978 the Party rented an office on the second floor at 2086 Yonge Street. The front of the office was used as a book store, selling fiction and non-fiction books with a Libertarian theme. To encourage sales, the Party obtained a ‘Merchant Account” with TD VISA under the name Ontario Libertarian Party and Bookstore. Some of you may remember the device used to create sales drafts or credit card receipts. It used the embossed card to imprint details from the card onto the 3-part carbon copy sales draft. These would be collected in a small window envelope and included with cheques and cash deposited to our bank account. From 1993 to 1999 we averaged about $120/year for VISA fees.

As you know, these embossers are no longer used. Instead most retailers have a terminal to process and validate credit and debit card transactions. For organizations that can’t justify the rental of one of these terminals, TD VISA provides a phone number with an Interactive Voice Response (IVR) system for entering the transaction details via a touch tone phone. In addition to the 2.29% fee (minimum $10/month), VISA now charges a credit assessment fee, a discount rate adjustment fee, $0.15 per transaction, a $9.95 monthly service fee and a $6 monthly equipment rental (supposedly for the modems in their office?).

In four years (2007 - 2010) we processed $9,396 in VISA contributions and paid $896 in VISA fees, or about 9.5%. In the same period, income provided via PayPal amounted to $10,960 and fees were $373.48, or 3.4%.

In 2011 we processed $1,847 in VISA contributions and paid $350 in VISA fees, or about 18.9%. In the same period, income provided via PayPal amounted to $9,149.65 and fees were $301.89, or 3.3%.

Update - July 6/12

The Party received a notice titled "Important news about changed to your TD Merchant Services Account, stating on October 1, 2012." The "News" is that they are changing two items;

1. The Visa Discount Rate Adjustment Fee will be 0.70%. (The current fee is 0.30% of Visa credits.)
2. The Minimum Monthly Discount Fee (MMDF) will be $25.00. (The current fee is $10.00.)

The first item is small; $0.40 per $100, or $5-$8 per year. The second item represents an extra $15 for most months, or about $175/year! It would appear that TD VISA doesn't want small customers like us, with well under $10,000 in VISA sales/year. One would need to have $1,100 or more per month in sales to cover the increased MMDF.

I called Customer Service and spoke to Carmen (direct line 1-855-376-9024). After some discussion and pointing out that the much higher Minimum Monthly Discount Fee would encourage us to look into alternatives, and because we have been a customer since before 1990, she was able to arrange the following concessions;

1. Our Visa Discount Rate Adjustment Fee will stay at 0.30% instead of increasing to 0.70%.
2. We may now accept MasterCard as well as VISA, for no additional MMDF.
3. Our credit rate will be 1.70% of the transaction amount instead of the current 2.29%. (I believe this was tied to the addition of MasterCard.)
4. Our MMDF will ONLY be increased to $20 (instead of $25) from our current $10.

This still means an increase in our annual VISA charges of $10 in all months but December, or $115 per year. Had the new fee been in effect last year, we would have paid about 25% of VISA donations in fees.

NOTE: if you want to understand how our VISA fees are calculated, see the Sample VISA Statement File:TD VISA March 2012.pdf

Proposal to replace TD VISA processing

I have received a couple of proposals from companies who are acting as brokers for credit card processing companies. The better one is for Elavon Canada Company.

While Googling Elavon Canada Company I found a web site with advice about card processing services. I downloaded an e-book (PDF) with advice on comparing and negotiating fees for services. I will continue this page after I read it.

--LibertarianCFO 16:38, 21 December 2011 (EST)

Our membership form isn't pay-pal friendly. I remember being confused when I joined, because I paid (or at least tried to pay) online through pay-pal, and then the form didn't correspond. It makes sense to keep paypal as a payment method, but perhaps our membership form could be updated to say something such as "I paid $X via pay-pal, on __/__/____ (DD/MM/YYYY)".--JNMcLarty 08:45, 24 December 2011 (EST)
DONE (without the date field). --LibertarianCFO 20:13, 20 February 2012 (EST)

Evalon Contract

In September 2012 Axxess Payments contacted the Party. After some discussions with the Treasurer and an email polling of the Executive (positive responses received from Jean-Serge, Allen Small, Phil Bender and Christin Milloy and no negative responses), the Treasurer signed a three-year contract with Evalon Canada to provide credit card processing services. There is an early termination fee of $195.00.

The primary features compared to our current plan with TD VISA Merchant Services are;

• Accept both VISA and MasterCard (same as TD)
• $10 Minimum Discount Fee (versus $20 with TD)
• $7.95 monthly service fee (versus $9.95 with TD)
• No equipment charge (versus $6 + HST with TD)
• Minor additional fees of $0.15 per transaction (for both) and $0.10 per $100 (versus $0.07 for TD)

The basic charge in a month with no credit card transactions will be $17.95 with Evalon compared to $36.73 (20 + 9.95 + 6 + 0.78) with TD. This amounts to a savings of $18.75/month or $225 per year (which would cover the early termination fee after 11 months).

VISA and PayPal Fees

PayPal has no fixed fees, only 2.9% percent plus $0.30 for each transaction. VISA has a minimum $10 percentage fee plus several fixed monthly charges. We pay $26.73 even if there are no VISA transactions in a month.

	2007	2008	2009	2010	2011	5 Yr Total
VISA Donations	2,715.00	2,231.00	2,430.00	1,970.00	1,847.00	11,193.00
VISA Fee	222.03	218.79	180.15	225.03	350.19	1,196.09
Percent	8.2%	9.8%	7.4%	11.4%	19.0%	10.7%
PayPal Donations	0.00	2,045.00	4,173.64	4,174.36	9,149.65	20,109.65
PayPal Fees	0	65.85	146.38	161.25	301.89	675.37
Percent	0	3.2%	3.5%	3.4%	3.3%	3.4%

Survey of Members

Eleven members used VISA last year. I sent an email to six of them who had email IDs asking if it would impact their ability or interest in making a donation if we stopped accepting contributions by VISA, and only by PayPal or cheque. Here are the responses.

Brett H - i was unaware of it, i personally say make the switch, but i wonder how much bigger you can get without the ability to use visa

Garrett P - I usually use a cheque and will revert to doing it next time. I used the VISA because I was rather late in the year in making my contribution. So cheque it is next time and let VISA earn its money somewhere else!

Jordan v - I'm not sure it's a good idea to completely shut down VISA contributions. If it is the most convenient (and possibly only) way somebody will contribute, it would be a shame to take that away. Perhaps we could encourage contributors, especially OLP members, to use PayPal or cheque and briefly explain that it will help their donation go further towards helping the party.

Hans K - Those VISA charges are outrageous! For me, paying by VISA is slightly easier than by cheque, but it would not make a difference in my willingness to contribute.