Why we chose to Accept only Paper Checks and eChecks

Muthukumar Marappan3 years ago

We’ve been getting a lot of emails asking us why we do not accept cards as a mode of payment from the clients of our customers. I felt like making things clear by way of a blog post.

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Credit Cards are not evil, we do understand that this is the most common and preferred mode of payment for a lot of people around the world. However, we feel that card payments are not an appropriate mode of payment when it comes to Overseas Business Payments for reasons listed below.

Transaction Fees
Card payments come with huge transaction fees of more than 2% which is passed on to the card issuing bank, the card network (Visa, MasterCard, etc.)

Chargeback Risk
Your client can pay you using his credit card for service received from you and then later ask his bank to refund this transaction in full quoting that the service received was not satisfactory – this is called a chargeback. The payment processor is now forced to refund the payer and collect this amount from the payee. In International payments, chargebacks could be a huge risk for the payment processor and on average 5% of all the transactions turn out to be either fraudulent or become chargebacks whose refunds are to be borne by the payment processor. This is the reason why International Card Payments cost as much as 10% in the first place. All the other payment processors are forced to charge a huge premium for themselves on all the transactions so that could still make a profit even if 5% of all the transactions go bad.

We made the decision to eliminate cards altogether which was the only way to bring down the transaction fees to 0%. Having worked with a number of US businesses ourselves, we found that most of them do not hesitate to pay by way of a paper check in the mail. If there’s a client of yours that hesitates to pay by way of Paper Checks, she can pay via eChecks (ACH payments) by keying in his account number and routing number for us to process the transaction. The 3 major advantages of using checks are

Check payments remain the most popular mode of business payments in the US. Almost 75% of business payments in the US still happen by way of checks and you wouldn’t have a problem convincing your client to send us a check.

Source – http://www.wsj.com/articles/SB10001424052702304732804579425233344430424

Unlike sending an international wire transfer where your client will have to visit a bank during working hours, checks can be sent at any time and is one of the most convenient mode of payment for your clients.

It costs just 25¢ for a person to mail a check anywhere in the US and therefore is one of the most economical modes of payment.