Mobile payment solutions abound, but fees vary
Personal Finance Writer
Uncovering quirky, offbeat financial stories
Considering credit cards as a payment form for your next garage sale? It’s easier than ever before.
When Wendy Gubman of Mission Viejo, California, prepped for her recent garage sale, she collected and priced her items, scrawled her address on a sign, put an ad on Craigslist, and then added one final high-tech detail to that ad: “We accept credit cards for sales over $10!”
Accepting credit cards at a garage sale was something she had never done, and something almost unthinkable for the average person hosting a rummage sale a decade ago, but she ended up happy with her decision.
“I thought this would be a great way for my sales to increase,” says Gubman, who used a Square payment device linked to her iPhone. “People don’t think when they pull out a card how much money they spend, but when they only have a certain amount of cash in hand, I believe they may pass by something they really want.”
About 10 people out of the approximate 50 who visited Gubman’s sale used credit cards – and those who did ended up purchasing higher priced items, she says.
“People don’t think when they pull out a card how much money they spend, but when they only have a certain amount of cash in hand … they may pass by something they really want.”
Mobile payment options continue to expand
Natasha Mehra, head of product development for 5miles, a Craigslist-style peer-to-peer marketplace where people advertise garage sales and also individual items for sale, says that mobile payment options will become more popular.
U.S. consumers are warming up to mobile payments – at the end of 2016, 19 percent of smartphone users in the U.S. has made a mobile payment within the past six months.
“When was the last time you pulled out a wad of cash to pay for dinner or a stack of dollar bills to cover your rent?” says Bruce Dragt, executive vice president of YapStone Payment Processors.
Video: How to set up your mobile wallet
Consumers can fund mobile wallets through their bank accounts or use credit cards to pay via their mobile device.
The most popular e-wallets include PayPal and Venmo, along with mobile payment systems such as Square, Apple Pay, Google Pay and apps such as WeChat – a Quick response (QR) code-based payment method that is wildly popular in Asia.
“If I want to have a garage sale and accept credit cards, I think Square would be the way to go,” says Mehra, noting that the physical act of swiping a credit card that Square offers may be important to people who aren’t yet accustomed to mobile payments.
Mobile payment transaction fees vary
Garage sale proprietors need to keep in mind that each mobile payment option carries its own set of terms and transaction fees.
- Square currently charges a 2.75 percent fee for each transaction using swiped cards and a 3.5 percent plus 15 cent fee for manually keyed-in payments (which carry a greater risk to the company because a physical credit card isn’t necessarily involved in the transaction).
- Venmo, which is owned by PayPal, is a free digital wallet that allows people to share payments. If both parties have Venmo accounts, the transaction is free – but if you use Venmo to pay by credit card, you’ll incur a 3 percent fee.
- Apple Pay allows iPhone or Apple Watch users to pay for their transactions via a secure chip inside those devices. Similar to Venmo, people can use Apple Pay Cash to send money using a debit card for free. But if they use credit, there will be an additional 3 percent fee to the merchant.
- For Android users, Samsung Pay and Google Pay function much like Apple Pay.
Mobile payment options and credit card processing fees
|Mobile payment option||Credit card transaction fee||Debit card transaction fee|
|Venmo||3%||No fee ($0.25 for instant transfers)|
|Apple Pay||No fee||No fee|
|Apple Pay Cash||3%*||No fee|
|Google Pay||No fee||No fee|
|Samsung Pay||No fee||No fee|
Regardless of which payment platform someone chooses, people hosting a garage sale shouldn’t be turned off by potential transaction fees, says Mehra.
“Most people do not carry cash on hand anymore, so it’s either having to sacrifice that minimal transaction fee, or not getting a sale at all,” she says.
Tips for shopping at garage sales using your credit card
If you’re a garage sale junkie, here are a few points to keep in mind while shopping and considering paying with credit:
- There are no fees to you as a shopper to use any of these platforms to pay for your garage sale items – any fees incurred are all on the side of the merchant, or garage sale proprietor.
- Since it’s advantageous to the seller for you to pay using funds from a mobile wallet, they may encourage you to pay by debiting funds from your bank account or e-wallet as opposed to a credit card. If you’re the type who likes to bargain, you may be able to negotiate a lower price since you’ll be saving him or her money on fees.
- Credit cards still offer the best protection against fraud, though – under the Fair Credit Billing Act, consumers are protected from losses over $50, with zero liability to you as a cardholder if your card number is stolen, for example. Many issuers have a $0 fraud liability policy. With mobile payments using e-wallets, you are subject to the policies of the individual platform.
- Mobile payments are convenient, but also can pose potential security risks. Locking your device, being alert to malware and exercising caution while using public Wi-Fi are just a few steps you can take to keep your mobile wallet secure. For further advice, see “3 major mobile payment security risks, and how to avoid them.”
Gubman says she was pleased with the results from her first time using Square at her garage sale.
“Once I said that I took credit cards, the reaction was positive, and people took a longer time shopping,” she says.
See related: Bonus rewards for mobile payments aim to win over users, 7 tips to spring clean your finances
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