The purpose of this post isn’t to bad mouth anybody for charging a fee for a service, especially a useful one which they both can be. In this article, Target and Macy's are suing Mastercard and Visa over swipe fees. I'm wondering if there is something magical in the use of the 3% rule in charging card swipe fees compared to realtor fees, which are 6% typically. The article also doesn’t mention how much the retailers will likely receive upon a verdict that goes their way.
Realtor fees of 6% often get split up depending upon the business model, but usually 1/2 goes to the selling agent’s firm and half to the buying agent’s firm, so each firm gets 3%. That’s where the 3% comes into our viewfinder again. Does this mean that 3% is some "magical" number where people are comfortable paying up to that fee but people want to avoid going above that level?
Now if 1/2 of your customers use credit cards, then you will have to increase the selling price of your product by 1.5% to make sure you cover your costs for using the credit card service. Obviously you can assume that everyone uses credit cards and therefore increase all of your products by 3% to cover costs. That helps your bottom line if people pay using cash obviously, since they paid the 3% increased costs when purchasing the products.
Final thoughts: Personally I would appreciate paying the 3%-6% for having a house sold if it sold quickly and for very close to the amount that I wanted. On the other hand I don’t think that I would like to pay the extra 1.5%-3% to pay for transaction fees, unless I was actually making use of that service.
The post Card swipe fees compared to realtor fees appeared first on Rich In The Heart.