CREDIT FREEZE? Alternatives to taking CREDIT CARD PAYMENTS

10667 Views 54 Replies 20 Participants Last post by CardPaymentServ, Feb 19, 2009

Girlzndollz

Discussion Starter · Oct 1, 2008

Hi folks.. no matter what happens tomorrow with the vote (no political discussions on it... Pleeease) I thought it would be a good time to proactively plan....

How would you take payments if there are no credit cards available?

This is a good topic to discuss for those who do not want to deal with Credit Cards by choice, and want to look at the alternatives other folks use.

Also, for those already who choose not to accept credit cards, please share your payment taking methods. Thanks.

As I ordered something over the phone for out of state yesterday, I wondered, how would I do this without a credit card? My hub and I figured online sales could come to a halt.

Please note: There may NEVER come a "credit freeze" out of all this, so let's stay calm in here, and cross bridges as we come to them. I am not looking to stir a bee's nest, , please, just to say, hmmm, what would be the game plan if that would happen this year, or if not now, even in a few years should the economy turn that way? After all, like the show must go on, we want to make sure business goes on as uninterrupted as possible.

It's good to ponder all aspects of business life, and to prepare as much as possible for events may affect us, and our ability to be profitable.

I was thinking that Paypal might be a good solution, as they can draw payments directly from someone's savings/checking - bypassing credit situations.

I am also hoping that my debit card would work as that is a direct draw on the bank account as well.

Please share you solutions for credit card free payment taking. Thanks so much!

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Solmu

· #2 · Oct 1, 2008

Paypal funded from a bank account, wire transfer, money order; the usual eBay payment methods (or at least the old usual before eBay got all totalitarian and banned them in favour of PayPal).

If credit cards stopped working the economy would grind to a screaming halt though. I'd be more worried about the riots on the streets than how I was going to take an online payment for a t-shirt.

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Girlzndollz

Discussion Starter · #3 · Oct 1, 2008

Thanks, Solmu, and for the shiver down my spine. I'm trying to address this one little thing that maybe I can do something about, to help myself.

Whatever crazy folks do, can't do anything about that. I'd rather not think about it, and get everyone going on those things. Rather just focus on alternate payments methods. Thanks for your great suggestions....

Solmu

· #4 · Oct 1, 2008

Well, looking at each option individually:

PayPal is great as a backup / alternative / additional payment method.

Wire transfer is popular in Australia, but I get the impression it's less commonly used in the US. PayPal pretty much does the same thing anyway (although with added fees, but also added security).

Postal money order is fine... but a little more effort.

Cheques... bleurgh. Dealing with bouncing cheques, will it/won't it clear, etc. isn't something I want to do.

If you're approaching it from a "be prepared" angle then PayPal is great. It gives an additional payment option now that some people might like (that is, there's a reason to be using it already) and then it's already there if you need it. Other methods you might only want to take if you have to, so you might not be as happy to add them now if they're not really needed.

Obviously some people have issues with PayPal (I sometimes forget, but I'm actually one of them

), but overall I think they're not too bad.

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Girlzndollz

Discussion Starter · #5 · Oct 1, 2008

I was thinking last night that lucky Paypal stands to do well should other forms of payment be taken.

Checks, yeah, I agree, not so much, and they are not that instant kind of payment that a credit card/Paypal is. Money orders, cashiers checks = good, but again, dealing with snail mail.

Using wire transfers isn't that common that I know of in the US, not obsolete, but not one of the ones you hear much of. I'm not sure I even see Western Union commercials much if at all, and they used to be pretty funny, some of them, back in the day.

Debit cards: Any idea where Debit Cards might come into play? Some debit cards have a Visa symbol on them. With those you can choose "debit" or "credit" when you pay for gas, groceries, at Walmart, etc. If available credit was to go bye bye at any time in our future, I wonder what place the plain old debit card would hold.

That one I can't seem to flush out. ? How would a merchant handle that? Does anyone take debit cards as payment?

Rodney

· #6 · Oct 1, 2008

Debit cards: Any idea where Debit Cards might come into play? Some debit cards have a Visa symbol on them. With those you can choose "debit" or "credit" when you pay for gas, groceries, at Walmart, etc. If available credit was to go bye bye at any time in our future, I wonder what place the plain old debit card would hold. That one I can't seem to flush out. ? How would a merchant handle that? Does anyone take debit cards as payment?

The ones that have the visa/mastercard symbol can be accepted by those with merchant accounts just like a credit card.

The only difference is on the consumer side, where the money comes from. With a credit card, it's money loaned by the bank, with a debit card it is taken directly from their account (just like PayPal would).

Personally, I don't think it's something we would ever need to prepare for because it would be too drastic a move to be taken. The drawbacks would outweigh the benefits.

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Solmu

· #7 · Oct 1, 2008

It depends what is causing the problem with credit cards. As far as I know, the payment processor can't tell the difference between a Visa debit and credit card. They both have numbers, expiry, etc. and are processed the same way. I even had to pass a credit check to get a debit card, even though it has zero credit capacity on it. I've asked some banks and vendors about it before, and as far as I know they are treated as the same thing (except at their end point of what happens with funds, obviously).

So if, for example, Visa shut down - they'd take their debit cards down with them. But if credit was just unavailable for some reason (unpopular, intervention, whatever) then the infrastructure should still be functional, and debit cards should work.

Maybe I'm out of the loop (I've been watching the bank bailout thing a bit, but not closely), but I didn't know there was anything on the table that might kill credit cards? (other than people voluntarily tightening their belts and cutting back - which Visa et al will always find a way to ride out)

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Girlzndollz

Discussion Starter · #8 · Oct 1, 2008

So unless Rodney is right on the debit cards (and you sound like you know what you are talking about), then the debit card thing is a tough one to call.

And, true, we may not need to use these other forms, but I always think an ounce of prevention is worth a pound of cure.

What's being explained about the credit card is that if one has a credit card, and has a $5K limit and a $3K balance, the other $2K available credit would go bye-bye. Someone would go to use their card and the charge will be rejected.

That is what is being said would happen - if a credit freeze came about, which we have no idea if that will ever come about. This is just a discussion on Alternates to Credit Card payments, spurred by talk about a possible credit freeze, which is trying to be avoided, and hopefully will be.

(please?!)

jamaspea

· #9 · Oct 1, 2008

I think you also would have a problem on the other end, rather not just the customer buying from your site, but i know when we buy supplies we buy them on credit, and hope to get the sales quick enough to pay it off. Rather than spend the capital we have.

I guess make sure your suppliers take paypal, not for the credit side, but then you wont have to wait for checks to clear, before you get your products.

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Solmu

· #10 · Oct 1, 2008

Girlzndollz said:
What's being explained about the credit card is that if one has a credit card, and has a $5K limit and a $3K balance, the other $2K available credit would go bye-bye.

Gotcha, I get it now. Thanks.

Well... in theory if that were to happen... people would be out of credit, which means the available payment methods would be actual funds. Which means in order to purchase they'd need actual funds. Which means any potential purchaser can pay down some of their credit card debt. Which means they'd have credit they could use. Which means any person in a position to purchase, is in a position to use their credit card, even in a freeze. In theory.

But if that was the way people actually approached their personal finances, those getting frozen wouldn't have been buying t-shirts anyway. But chances are they are.

In the event of a credit freeze, the credit card companies would still be making a lot of money. Which means debit cards would be unaffected.

More to the point, those living within their means would be unaffected. Depending on what market segment you're targeted at, that can be most customers anyway. The credit lines would be re-drawn so that those who shouldn't have been extended credit in the first place would no longer have it - it's not like all credit would disappear completely.

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Girlzndollz

Discussion Starter · #11 · Oct 1, 2008

jamaspea said:
I think you also would have a problem on the other end, rather not just the customer buying from your site, but i know when we buy supplies we buy them on credit, and hope to get the sales quick enough to pay it off. Rather than spend the capital we have.

I guess make sure your suppliers take paypal, not for the credit side, but then you wont have to wait for checks to clear, before you get your products.

Yes, a credit freeze would hinder businesses abilities to buy Supplies on credit as well. Great idea to suggest that folks not only look at how would they take payments, but how would they purchase their supplies so that their business could continue to function as smoothly as possible (in the event that credit was not available for whatever reason).

plan b

· #12 · Oct 1, 2008

If there is a credit freeze on cards then we will more than certain not have any business at all because that would and other problems plunge us into a depresion of likes we have not seen,, the last one would be childs play compared to the one that we could face because it would not only be the USA but world wide.

prometheus

· #13 · Oct 1, 2008

I would think that a person trying to buy something on a credit card, would be depending on that credit. If the extra credit was not there, then they probably would not be buying then, cutting back to necessary purchases. If they didn't need the extra credit, then they would be using their debit card. Now some people do purchase things on their credit card for the kickbacks and such, but still, I think it would end up not puchasing extra things like t-shirts.

Girlzndollz

Discussion Starter · #14 · Oct 1, 2008

Solmu said:
Gotcha, I get it now. Thanks.

No prob.

solmu said:
Well... in theory if that were to happen... people would be out of credit, which means the available payment methods would be actual funds. Which means in order to purchase they'd need actual funds. Which means any potential purchaser can pay down some of their credit card debt. Which means they'd have credit they could use. Which means any person in a position to purchase, is in a position to use their credit card, even in a freeze. In theory.

Huh? What? Haha, just kidding (I think). The credit available: It seems not really. As people pay down the debt, the available credit would be reduced by the payment amount, to whatever the current balance is. Pay off $500 of the $3K, and the available credit would then be $2500, supposedly. Of course, I am a firm believer that there is no way to know for sure, nothing is certain until the day arrives, but that is predicted as the likely procedure. And this may never come to be.

For those who use the cards and pay them off each month, I suppose the available credit would go bye bye at the end of the month.

For those who use their CC's for gas, groceries, meds, dr bills, untilities, and pay only the minimum payments each month, because they can't/don't make ends meet on what they bring in... they will lose the credit that enables them to go month to month.

More to the point, those living within their means would be unaffected.

Pretty much, in the sense that they can still afford the things the need, but changes to the economy all around them (which likely would be significant), would affect them, that and figuring out how to pay for things if credit cards are not available.

The credit lines would be re-drawn so that those who shouldn't have been extended credit in the first place would no longer have it - it's not like all credit would disappear completely.

We'll have to wait and see. Nobody wants to lend to anybody right now.

This article reflects alot of what I hear:
Until fear is checked, credit freeze up will not ease - BloggingStocks

Well, are those the only suggestions of how to pay or take payments if for some odd, whatever crazy reason... a credit card couldn't be taken?

Whatever happens, or doesn't, well just all end up going thru it together anyway. We'll have some stories for the grandkids, or not... ya know?

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EntropyGuy

· #15 · Oct 3, 2008

A lot of my purchases come via PayPal. Especially from younger buyers.

R.

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charles95405

· #16 · Oct 3, 2008

Kelly... get a beer and relax...the circumstances you layout...just will not happen in my opinion...the world runs on credit...it will still be there...you may not get a home loan with 5% down and 5% interest BUT you ..with decent credit buy a house with 20% down at 7.5% as my neighbor did last week..it just means more upfront... as to using debit cards...I use them some but mainly will use either of the major credit cards for money back etc....and protection in case the product(s) are defective...you can protest and they will help BUT with debit there is no protection...you make the purchase and you own it...in fact..legally if someone hijacks your account you might on the hook...most banks have stood behind the customer but.....

The use of wire transfers in US will never go very well. Just last week I had to make a wire transfer to Germany and because of short time...and the other end did not know of paypal..I had to use...the wire transfer was only $110 but the bank charge for the transfer was $40! that is the fee for any fund transfer under $150..

I use paypal quite a lot and so far I am happy

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Girlzndollz

Discussion Starter · #17 · Oct 3, 2008 (Edited)

Thanks, Charles, and no worries, I am relaxed, thanks for thinking of it. I really am, that's one of the first things I made sure to say up front in the first post. These are the things we are all seeing on the tv these days, and I totally believe: don't worry until you have something to worry about.

Who knows for sure if it ever would happen or not, but it seemed to spur a good topic for discussion, since it's the central topic of the day, and what would happen if credit cards in fact for some reason did become unavailable.

I was thinking Paypal would be the way, but I wanted to ask since others might be using other non-credit card payments. So kind of looks like paypal would be the main go to. Hm.

I guess we now know why wire transfers aren't too popular in the US. I didn't know any of that, thanks for the info. If WT comes up with anyone, I'll let them know to look into the fees, bc that could really hurt profits if it's not built in... thanks alot, Charles!

AustinJeff

· #18 · Oct 3, 2008

I think it's more likely that cash (American cash, at least) will "stop working" before credit cards do.

Moreover, the potential problem is with the credit that backs the cards. I don't think many of my customers -- regardless of the form of payment -- are actually buying shirts on credit, i.e. using money they don't have. I certainly hope not. But if so, it won't matter what kind of payment arrangements you have because those customers won't have the funds to use them.

And although there are reports that many American Express and some other issuers customers have recently had their credit lines cut, this is not happening with all card issuers. In fact, I have received two unsolicited card card line increases this week alone. And even my WaMu card still works just fine.

charles95405

· #19 · Oct 3, 2008

I use credit cards extensively...but pay IN FULL each month...never a unpaid balance..makes life cheaper. I can have several cards with hundreds of dollars due..thousands in some cases..but again..paid in full when due..I have Amex, discover, Visa and M/C..and have had no indications that my limit has been touched..

wormil

· #20 · Oct 3, 2008

I still get half a dozen pieces of junk mail every day for credit cards and mortgage refinancing but my credit is golden.

The people I hear complaining are people who were iffy to begin with. There was a woman on the radio yesterday morning complaining that the bank wouldn't loan her husband money to build more houses until they sold some of the houses they've already built. It's not fair she said, they can't pay themselves and have no income.

Well their income is supposed to come from selling houses, not paying themselves from bank loans.

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