Credit card app make payments easy to collect

This story originally appeared in NARI’s Tuffin’ It Out series.

How to pay for a remodeling project is a top concern for clients. How to accept payment via credit card without incurring a lot of charges has been a hurdle for the remodeling community. Square, a free mobile payment tool, solves both of these issues.

Square allows business owners to swipe a client’s credit card via an app on a Smartphone or tablet and e-mail a receipt. It’s convenient, it’s efficient and it’s allowing clients to pay wherever and however they wish.

Two members share their use of Square and the benefits they’ve seen in just a short time.

Freeing up your process

David Roberts, AIA, CR, UDCP, president of Roberts Construction Group Inc. based in Evanston, Ill., first learned about Square at an art fair in Portland, Ore., eight weeks ago.

“I was interested in one of the artist’s work, and I told him I didn’t have enough cash on me,” Roberts says. “Next thing I know, he takes out his iPhone, and I’m paying by credit card. Then the moment I finished the transaction, I immediately received an e-mail on my phone with my receipt—still standing right in front of him.”

Roberts knew right away this tool was not just designed for starving artists. He thought of it as the wave of the future for any small business owner.

Square is a free app that can be downloaded onto an iPad, iPhone or Android, along with a free credit card-swiping device, known as the Card Reader. Once a business owner provides Square with his/her information and account numbers, they can start swiping away by plugging the Card Reader directly into the phone or tablet. The transaction can be labeled to identify the item purchased, the amount, and signed for digitally directly on the Smartphone or tablet. Once the transaction is submitted, money is transferred from the purchaser’s account into an owner’s account within 24 hours. The tool takes all major credit cards, including American Express, and charges business owners a flat 2.75% interest rate, regardless of the type of card being used.

“At first, I wasn’t really sure about the tool, but I got my e-mailed receipt almost immediately, I knew this was a very professional way to collect a payment,” he says.

Recently, Roberts had success with Square during a meeting with a client. It was the first in-person meeting with the client and was focused on details about the project and getting to know more about each other. At the end of such meetings, Roberts hopes that the clients sign a design agreement and write a check to begin work. At this meeting, Square made that happen smoothly as the clients signed the design contract and made the first deposit right from the comfort of their home, Roberts says.

“There’s always that chance people are hesitating to write that check, or they will tell you they’re sending the check,” Roberts says. Roberts no longer has to wait by the mail to know if he is starting the design work.

One out of five of his clients request to pay by credit card rather than checks.

Roberts says a big draw in clients choosing this method of payment have to do with incentives that come from the card. “Clients want the miles, and for many younger clients, using credit cards and online banking statements is much more of a normal activity.”

He has found this tool especially helpful during the first meeting with clients when they are signing a design contract because it is a manageable amount to have on a credit card in a short period of time. “People usually don’t mind charging a few thousand dollars on a credit card to get their project design started,” he says. And on his end, Roberts can get started without delay and keep his projects moving along swiftly.

 Adding it up

As president of DK Automation, based in Plano, Texas, Darren Kammer is not one to underutilize a new technology—in the home or in his business.

Before switching to Square, Kammer was incurring additional expenses whenever he accepted a credit card payment. “I had a merchant service account through my bank that allowed me to accept credit cards,” he says. But, the service caused him more headaches and money than checks.

Kammer says his business is lower volume, bigger ticket. When adding monthly service account fees and an ever-changing interest rate based on the card his client was using—things weren’t adding up. Kammer tried to reduce overhead by not renting a credit card device, which meant he had to manually copy credit card information and call the numbers into the bank adding on another layer of inconvenience.

“I got to a place where I would price out a job and then a client would hand me an American Express card, and I knew right then I was going to lose out,” he says.

That has all changed with Square. Kammer factors the 2.75% into his budgeting and he never has to worry about reduced margins. He has multiple Card Readers that he carries with him everywhere.

“People are more apt to pay,” he says. “They love the points generated from spending so much money on their credit cards.”

According to the 2012 NARI Member Profile Study, 28 percent of remodelers said their client’s principal form of payment was through credit cards.

But even if payment is made on a credit card, that doesn’t mean the homeowners aren’t backing that with cash. Kammer and Roberts agree that credit-card incentive programs have created a consumer mindset where it is smarter to pay via credit rather than by check or a credit line that won’t earn them anything additional. Both say clients are probably paying those credit cards off right away with saved funds.

And on his end, Kammer says funds come in within a day. All he has to do is import the payment into his QuickBooks program, almost completely eliminating clutter and paperwork at his company.

Convergence of phones and wallets

Smartphones and tablets are not only changing the way people communicate but also how they make purchases.

For example, one day Roberts’ employees at every level will be given the Square Card Reader. Whether it’s a sales employee, designer, project manager or handyman, they will be able to charge and deposit money instantly into the company account.

“It’s a matter of security—people don’t like to hand checks and cash to different people working on the project and hope that it gets into the right hands,” he says. He adds that it provides extra security on his end as an owner as well.

Square could be very helpful in times of a change order, when the change is outside of a loan being used for a remodeling job, yet small enough to charge and continue work as planned. Really large jobs require shifting of funds in order to make sure the money is available when it’s needed. This allows work to continue seamlessly when smaller charges can be placed on a credit card.

And, in the most basic sense, Roberts is happy to eliminate the need for him to ever step foot in a bank. “Anything that can reduce paperwork and free up company time is good for my business,” he says. —Morgan Zenner

 Do you use a different app to accept credit cards or to make your business run smoother? Let us know at marketing@nari.org.

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