dweick

There seems to be a lot of misunderstanding about ChargeSmart and I suspect that ChargeSmart can't really explain it, for reasons that I'll explain.

Let's start with 4Heath's complaint. The $9.95 fee has nothing to do with Wells Fargo, Wells Fargo doesn't get the $9.95.

ChargeSmart accepts credit cards, it pays credit card processing fees just like every other merchant. Those fees are a percentage of the amount charged.

However, merchants are not generally permitted to charge people for using their card. For example, your grocery store can't add 2.5% to your bill if you use a credit card.

ChargeSmart originally did add a % fee to each bill paid using their service and they caught a bit of heat for it.

So they came up with the idea of a processing fee that was fixed, everyone pays it. But the fee depends on the merchant, but that is only a subterfuge. In reality the fee is related to the dollar amount where the "security fee" kick in and the security fee is related to the size of the transaction.

If you add the base fee + security fee you'll see that they are really collecting a fee related to the size of the transaction but not a flat %. This keeps them out of hot water.

In 4Health's case it comes to about 2.7%, a quite reasonable fee.

They can't process $1000 credit card transactions for $9.95, they pay far more than than to Visa/MC/Discover in fees. 2.5% to 2.9% are pretty typical fees charged to process credit cards.

Summary: ChargeSmart's strange fee structure is a way to get around Visa/MC/Discover rules restricting a merchant's ability to charge fees. The fees Chargesmart charges are quite reasonable. Just add the two fees up and make your decision whether to use the service or not.

dweick

I appreciate the service ChargeSmart provides, it does appear that the practice of not disclosing all the fees on the first page where you enter the biller and the amount of the payment is a big part of the problem.

Disclose both fees and a total on the first page and most of the complaints would go away.

If that isn't possible due to Visa/MC/Discover rules then at least disclose them when you click to the second page of the process.

Also, get American Express accepted as a means of paying, that could substantially increase your business, even at a 3% average total fee ...

Finally, make it easier to get major billers added. There seems to be no feedback when Chargesmart is emailed with the names of national billers that could generate substantial business if Chargesmart added them to their list.

dweick

They can't process credit cards for a 1% fee, no merchant can.

Ritz

It's not that we don't understand it. It's that we don't agree with it. This practice is incredibly shady at best, and a borderline violation of MC/Visa Merchant Services T&C's (and possibly illegal) at worst.

That's not our problem, it's ChargeSmart's. We all have our contracts with MC/Visa (which we agree to when we sign for our credit cards), and we aren't violating our contracts. ChargeSmart, by passing on a ridiculous "large security fee", is effectively - and sneakily - violating their contract with MC/Visa.

Exactly. Yes, it is.

No, they're not.

This would definitely shine a light on just how ridiculous their "large security fee" is, which is why I'm sure they don't do it.

Not our problem. ChargeSmart agreed to accept MC/Visa AND their Terms of Services contracts. The size of the transaction SHOULD NOT MATTER - and charging a seperate fee because some payments are larger than others is the very definition of a shady merchant....and a complete violation of the MC/Visa T&C's contract which ChargeSmart had to sign to accept Mastercard and Visa in the first place.


There is no confusion here. We're all simply recognizing how shady ChargeSmart's business practice of applying a "large payment security fee" to certain payments (and not disclosing that fee until the very last page) - after already charging a seperate $9.95 service fee for using their service. Very shady.

dweick

It's clear that many people don't understand it, one poster even thought the base fee went to the mortgage company he was making the payment to. Others have thought that if only Chargesmart could reduce chargebacks the security fee could be greatly reduced or eliminated.

I'm not sure what you don't agree with, the size of the fees is what is required to profitably process Visa/MC charges, that can't be gotten around. A merchant can't process a Visa/MC transaction for 1% and forward the amount of the charge to your bank to pay your mortgage when the Visa/MC processing fees are far higher than 1%.

2.5% - 3% for turning a credit card into cash is a reasonable fee, it's similar to the cash advance fee your card charges, it's similar to what PayPal would charge so explain why you think those fees are unreasonable for Chargesmart to charge.

There isn't any getting around that. You can have ChargeSmart continue to exist and pay 2.5-3% in fees or they can go out of business. If you don't like paying 2.5-3% in fees then don't use their service.

Seems simple enough to me.

I'm in full agreement that all the fees need to be disclosed sooner in the payment steps, preferably on step 1.

mooper

Very nicely done, a solid explanation. The bottom line is this - Chargesmart, nor anyone else, is going to operate processing cards at a loss. Because fees typically run 2%+, their total charges must, as well. The only hope would be that a bank/school/landlord would be willing to eat the transaction fee wholly or partially when accepting payments, and while a few apparently are, the vast majority are not. Wells Fargo, unfortunately for me, falls into the "is not" category.

I disagree with anyone who asserts that the fee structure or disclosure Chargesmart uses needs to be modified. It is clear as day - they provide plenty of links and explanations - and anyone who doesn't bother to read them should be accountable for their foolishness. If the fees were hidden, that would be one thing. They are not.

liche90

Most school charge a fee for credit card tuition payments.

fangtl

Phillip, how about disclosing ALL the fees on the main page rather than reserving the second insurance fee on the submission page. I think that's where it gets hairy for a lot of people.

bocastephen

+ 1

I am thoroughly pee'd off at chargesmart, and from where I sit, they are shady at best. I even PM'd Phillip and never heard back to get a clear answer.

We ordered the Travelocity MC for the SOLE purpose of making mortgage payments. I called customer service and was told the 'large payment security fee usually kicked in around $5,000'. OK, so we setup the chargesmart account, got the Travelocity card and went to make a payment under 5,000 - and the fee was over $120

When I called back, I was told the fee varied by biller Every single amount we tested above $100 generated a so-called 'large payment security fee'

Why wasn't the amount of fee disclosed UPFRONT on the webpage to make it CLEAR what the total cost would be. We ran a test payment on the submit payment page before getting the Travelocity card and were quoted $9.95 - the excess fee wasn't disclosed until just before submitting the payment, which we couldn't do until getting the card.

This is totally unacceptable!!

Now we have a new credit card that needs to be canceled, the $2000 in Travelocity credits we expected this year are no more, and this has been a complete, total waste of time all because this company is unwilling to properly and fully disclose total transaction costs UP FRONT.

I am considering filing a complaint with my state AG office to block them from doing business here. Needless to say, if it isn't obvious from my post, I am furious.

the_jaguar

Yeah, the last minute bait n switch is shady at best. As a bunch of previous posters have posted, Chargesmart is doing this to recover their 2.x% fee that MC or Visa charges them. As per MC/Visa policy, Chargesmart can't pass this along to the customer directly, so they are resorting to this hidden fee tactic that they disclose only on the last page.

If us FT'ers end up filing a bunch of BBB complaints, at the very least, they might move the "large payment" fee to beginning of the payment process and be more upfront about this!

I was thinking of using this service to make my car lease payments, but nope, I am not giving any business to shady companies this one...

mooper

Did either of you bother to look at their FAQ, which states, in part:

Or simply think logically for a minute why a third-party billing company would be willing to pay ~2% in fees but charge you less than that?

Even if those two steps weren't enough, the total fee is blatantly displayed in advance of submitting your payment.

Anyone who would bother signing up for credit cards or otherwise take substantial steps to prepare to use something they didn't first understand is akin to someone who would buy yacht along with their lotto ticket. If you just take some reasonable steps and do the most basic due diligence, you'd be able to avoid such pitfalls.

If you consider a fee of $120 on a $5,000 charge to be unreasonable, you don't have any right to complain, as you aren't forced to use their service. They are in business to make a profit, not to provide a public service or charity. Maybe there is someone out there who wants to (almost) buy Gold Medallion status and 135K RDMs on Delta by charging $90K to their DR cards and pay the $2100+ in fees to achieve this. To each their own.

bocastephen

Excuse me, the FAQ is a lie and uses bait and switch tactics, as does their payment entry system.

The FAQ says the fee will be displayed 'prominently', yet does not seem to mention that the first fee you see isn't really the fee you will pay. Quoting me $9.95 to make a payment, then changing it to $120 for the same payment on the confirmation screen, clearly meets the definition of bait and switch, which is illegal.

Telling me my fee is $120 on the first screen and confirming the SAME fame on the confirmation screen would adhere to fair trade practices - had I seen the $120 on the first screen when I inputed the payment information, we never would have signed up for the service in the first place.

Also, chargesmart is lying - they are claiming the larger fee is for large dollar amounts to 'combat fraud' - that's a lie. The fee applies to EVERY transaction regardless of the amount and is to recover the 2.5% processing charge - which, according to their merchant agreements and posts upthread - is a violation and I will gladly report this behavior to Visa and MasterCard and let them decide who is playing fair.

mooper

Funny. It actually doesn't meet that criteria whatsoever. Would you mind citing the statute they are violating? *Before* you are charged a penny, it shows, quite prominently, the full charge. Your assertion that they quote you $9.95 and then charge more is bogus. Furthermore, as you can see from the FAQ I quoted above, they certainly don't imply that $9.95 is the only charge, nor should any rational person assume that they'd operate a company with a ridiculous business model.

How do you presume they will tell you the actual charge before knowing what service you plan to use, the amount, etc., as the fee varies along with these inputs? Once you give them the information, they state the total fee extremely clearly before you pay a cent. Is any of this not true? If not, be specific.

Maybe you don't understand how banking works, but the larger the amount involved, the greater the risk of chargeback/fraud/etc. Ultimately, it doesn't matter what their reasoning is for their fees... they could charge you a "nose picking fee" and it would be completely legit, as long as they disclose the fee before you pay it. They do this. When you go into McDonalds, do you think you have the right to demand an explanation for the charge and a breakdown of where each penny goes? If not, why do you presume to have any more entitlement when you pay a bank for their services?

bocastephen

That is not the test for bait and switch. They advertise one price, then when you are about to purchase say "oops, we meant THIS price" - that is bait and switch.

Have you ever actually looked at their website or tried it out? It sounds like you haven't. Please do so before criticizing. When you click on a payment type, you are taken to a screen where you select the payee, choose their mailing address, enter your account number and enter the amount of the payment - when that is done, your fee is displayed. In all cases, the fee displayed is $9.95. When you click to submit the payment and are taken to the details page to enter your CC info, only then do you notice the $9.95 is now about 3% of the total payment amount.

I very well understand how banking works - and you're trying to defend them in two conflicting ways. First you say they have a right to recover their costs - namely the credit card processing fee. When I (as did others) pointed out that charging people the fee to use their card violates all merchant agreements, now you're claiming it's a fraud protection fee? We all know it's a fee to cover their expenses and generate a profit - which on its face violates their merchant agreements.

Based on this, along with the bait and switch pricing tactics, their business model is not legitimate, their merchant agreements should be canceled and they should be shut down.

Ritz

WOW, you are nasty. Just nasty and uncalled for. No one here is insulting you're opinions or points of view - why do you see fit doing it to others? How about assuming that some here may actually have the requisite knowledge to form their own opinions AND still disagree with you. If you think that's not possible - then you're posting on the wrong message board.

Further, since some of us actually have a law degree - and actually work with credit card processing companies everyday, some of us might fully understand what ChargeSmart is and isn't doing legally. Notice I didn't say you didn't understand - thereby getting my point across without hurling personal insults at you in the process.

Now, back to some of OUR issues with ChargeSmart:


BECAUSE MASTERCARD AND VISA EXPRESSLY PROHIBIT PASSING THAT CHARGE ONTO CARDHOLDERS.

THEY AREN'T CLAIMING THIS IS WHAT THE "LARGE PAYMENT FEE" IS FOR. Only you are, sparky. And if you're attributing it to accepting CC's and paying merchant fees therein - then THAT IS CALLED BAIT AND SWITCH.

Its not a statute, sparky, it's the Mastercard and Visa TERMS AND CONDITIONS.

So, which is it? A charge for using a specific merchant OR a charge to combat "all" of the chargebacks and fraud they've experienced?? You can't have it both ways - and neither can ChargeSmart. Why? BECAUSE IT IS A VIOLATION OF MASTERARD AND VISA's MERCHANT TERMS AND CONDITIONS.

Again, wrong. They are legally bound by the Terms & Condition of their agreements with Mastercard and Visa, which prohibit this.

Wrong again, sparky. ChargeSmart is not a bank - they're a payment processing clearinghouse.


Some of us would like that fee disclosed earlier in the process than on the very last page - after inputing not just which vendor we're paying, but ALL of our personal and CREDIT CARD information. If you don't mind being prompted on the very last page of the payment process for a fee that wasn't disclosed at the primary input page - than good for you. Some of us don't like that - good for us. We're not insulting YOU by expressing our issue with the fee disclosure placement. Well, unless you're ChargeSmart - then you're rather MONUMENTAL OVEREACTION to our opinions of ChargeSmart makes alot more sense.



Well said, my friend.