It costs 6.5% to Handle ……….credit cards? NO CASH!!!

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It costs 6.5% to Handle ……….credit cards? NO CASH!!!

One of the companies represented at the Temecula Parking Group had done an extensive study on what it costs to take and process cash in parking operations.  Their goal was to compare the costs of handling cash to the fees charged by credit card companies. The result, the cost to handle cash was 6.5%, much higher than any credit card fee.

Some of the group members thought the number was low but we were told that in its efforts to be fair, the survey always rounded down and took the lower estimates when loss due to theft and carelessness were considered.  Did you know  that banks charge a fee to take cash deposits?  When you have large cash receipts, you need armored cars, vaults, and often guards that would be unnecessary if there was little or no cash involved in the process.

Cash acceptance means that cashiers probably have to be present. Sure you can accept notes and coin at POF machines, but there is usually a fall back person in a central location to step in when machines fail or the customer cannot negotiate the process. A tremendous amount of auditing time and energy is put forth dealing with and accounting for cash transactions. Consider the difference in cost of a POF that accepts only credit cards and one that accepts cash and gives change. That number can be in the $40K range.

Often owners see a line item that says “credit card fees” and balk. They don’t see that cumulative costs of dealing with cash.

JVH

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John Van Horn

4 Responses

  1. John –

    Don’t forget you have to include the cost of employee theft into cash transactions as well! 😉

  2. The reason I see those credit cards and balk is that I also have to take cash, as most parking operations do. I can’t run a parking ticket collection operation without taking credit AND cash. So not only am I incurring credit card fees, I’m also incurring all that auditing, staffing and whatnot and I have no choice in the matter.

    And my “automated” garage? It takes 3 people to run it what with customers trying to figure out how to pay the ^%$^* Pay On Foot machine, the intercom ringing off the hook with the same customers who I just helped pay the POF machine and now can’t figure out how to get out of the garage, access cards out of sequence, etc, etc. If I had one cashier, even on a part time basis, I’d not be wasting salary and benefits for 3 higher level employees managing a parking garage. I would happily settle for the 6.5%.

    1. And lest the naysayers say I don’t have enough signage, I’m not running the garage properly and all those other things, I DO know what I’m doing, we have proper signage placed correctly and a well-designed garage.

      When fully a third of your intercom calls are from people trying to get into the garage who seem to have no problem finding the tiny intercom button but can’t locate the large flashing button with a picture of a ticket on it 6″ away from the button they just pushed, I dare someone to tell me I can run this garage without staff.

  3. Our internal audit folks are suggesting that credit card fees total around 9% – a significant premium beyond the cash fees we pay.

    Brandy, you didn’t think they were paying you all that money because they like you, did you? 🙂

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