Getting paid faster without a payment processor

Where the fee comes from

Card fees start at the bank level, and your processor adds more on top.

Visa publishes the fee that moves between banks on each card sale. For a consumer credit card swiped in person, the Visa USA Interchange Reimbursement Fees schedule lists 2.30% plus 10 cents. For a business card swiped in person, the same Visa schedule lists 2.50% plus 10 cents. A customer paying with a company card costs you more than one paying with a personal card.

These are bank to bank fees, so what you actually pay your processor is higher by its markup.

What each channel costs

Here is the same $5,000 invoice collected through each channel, using each company's published rates.

Every fee above is computed from the named company's published rate on a $5,000 payment. Stripe rows use Stripe's pricing page, Square rows use Square's pricing page, and Visa rows use the Visa USA Interchange Reimbursement Fees schedule. The check row uses Regulation CC as published by the CFPB and the Federal Reserve Board, and the Same Day ACH windows come from Nacha.

Checks are not slow at the bank

The bank holds your check for a day or two, so the delay lives somewhere else.

Under Regulation CC, a bank must make the first $275 of a check deposit usable the next business day, up from $225, per the CFPB and Federal Reserve Board final rule. The rest of an ordinary check must generally be usable by the second business day after deposit, per the Federal Reserve Board's Regulation CC compliance guide. Cash, wires, Treasury checks and cashier's checks must generally be usable by the next business day, per the same guide.

There is one catch. A bank may place a longer hold on check deposits over $6,725 in one day, up from $5,525, per the CFPB rule. For most checks, the bank is fast once the check arrives. The slow part is the customer, who has to decide to write it, find a stamp, and mail it.

Move money through the bank

A bank transfer costs pennies next to a card, and it can land the same day.

Same Day ACH can carry a single payment of up to $1 million and settles 3 times a day, at 1 pm, 5 pm and 6 pm Eastern, per Nacha, the group that runs the ACH network. A payment your customer sends in the morning can be in your account that afternoon.

People use it when they can. In the year Nacha raised the Same Day ACH limit to $100,000, the average Same Day ACH payment grew 46% from February to April, and Same Day ACH dollar volume grew 86%, per Nacha's own network numbers.

Now the cost. Square charges 1% with a $1 minimum for ACH on invoices, with no cap on its free plan and a $10 cap on its Plus and Premium plans, per Square's pricing page. On a $20,000 invoice, that is $200 through Square's free plan and $5 through Stripe's capped rate, computed from the two pricing pages.

Surcharges are not a free fix

You can pass the card fee to the customer, but the rules shrink what you get back.

Visa requires you to tell your acquirer 30 days before you start adding a credit card surcharge, per Visa's small business regulations page. Visa's merchant surcharge Q and A, as described in an ArentFox Schiff client alert, says surcharges are capped at 3% and cannot go on debit or prepaid cards. I did not read that Visa document myself, so treat the 3% as what the alert claims.

States add their own limits. A summary of Colorado's statute on the LegalClarity site says Colorado caps surcharges at 2% or the merchant's actual cost, and I have not read the statute text, so that is what the summary claims. Some states ban surcharges outright, and I did not verify which ones, so check your own state first.

Stripe's card rate is 2.9% plus 30 cents, per Stripe's pricing page, so a 3% surcharge recovers less than that on any sale under about $300, computed from that rate. Surcharging helps on big tickets and does little on small ones.

What we got wrong

I started this piece with the wrong villain.

I thought check clearing was the problem. Regulation CC, per the Federal Reserve Board's compliance guide, makes most check money usable in 1 or 2 business days. The delay is the customer and the mail, not the bank.

I also assumed ACH was cheap everywhere. Square's free plan charges 1% with no cap, per Square's pricing page, so a $5,000 ACH invoice costs $50 there and $5 through Stripe's cap, computed from the two rates. And the title says without a processor. Every electronic path still has one, so fewer processor dollars is the honest promise.

One more. Search descriptions of Texas Property Code Chapter 28 say a private owner must pay a contractor within 35 days of an invoice and unpaid amounts accrue 1.5% interest per month, but I could not open the statute text, so those are claims I did not confirm. Do not carry them to your own state.

What to do Monday

Put a bank transfer on the invoice, keep the check option, and record every payment in one place.

Put a bank transfer link on every invoice and make it the first choice. Keep card as a second option. Avoid keying a card in over the phone, since Square charges 3.5% plus 15 cents for keyed payments, per Square's pricing page.

Then record it. VuseDesk records payments and never processes or moves money, so you can use any bank or processor you already have. The Contractor plan is $39.99 a month and the General Contractor plan is $99.99 a month, per VuseDesk's pricing.

Try VuseDesk on your next invoice. Send it, take the bank transfer through the bank you already use, and log the payment in one place. If you would rather have someone map your whole billing flow first, the consult is $199.