A Boring But Essential Piece

So, Evil Hat has a company Ipad. This is something Fred and I discussed during the pre-order period, and we concluded we would definitely get a 3g one for the business. Absolutely, some of the decision was impacted by our love of shiny objects, but the bulk of it was a business decision. The ipad seemed like exactly the right device to bring to a convention. You could show off products on the big, friendly screen. 3G meant being able to maintain connectivity in environments where the wifi is slim to nonexistent. Plus, mobile payments are a growing field, and we figured we could use one of the iphone apps to take credit card payments.

I'm not going to pretend we're big time convention veterans. We only go to a few conventions a year, and we have mostly operated under the IPR umbrella when we have. That said, due to Fred's relationship with IPR, we've been pretty cognizant of the business end of things, and one of the important lessons that comes of sales on the road is that taking plastic will net you sales you would not otherwise be able to manage, especially when the ATM runs out of cash (and the ATM will always run out of cash).

That said, taking credit cards is not necessarily as simple as all that. It costs money to make money, and in the case of businesses who don't move a large amount of money (like many game companies), the costs associated with taking credit cards can be high enough to offset any benefit. What costs? Well, historically you needed to get a merchant ID (that costs), pay a monthly fee (more $$$) and then you paid a certain amount of every transaction for the privilege. Plus, you needed to figure out how you would take the cards in the first place. You could get a card swiper, and while that's easiest for your customers, that's the most expensive option (plus you also need to account for how you'll print the receipt). If you've got a register that can handle it, you can punch in the card, but that register probably wasn't cheap, and you're going to pay more per transaction. Plus, in both cases, you need to figure out how to get the connection you need to make the transaction. All these complications are why a lot of folks use knucklebusters, which is to say card-imprints - those old devices that they put your card down on, then with a CHUNK-CHUNK take an imprint of onto carbon paper. That's easiest to set up, but it exposes you to fraud (nothing says the card has any money on it) and it has the highest interchange rate[1].

This model, for all its craziness, works pretty well for a good size business. The costs of equipment, connectivity and regular fees can all get amortized pretty quickly, especially across a chain. Once a company reaches a certain size, they're much more concerned with reducing interchange because that's the biggest bite for them. Oh to have such problems. But for a small merchant, especially one who is selling things only occasionally?

With all this (and other factors I haven't even mentioned) in mind, the prospect of a way for a small merchant to take payments without paying through the nose is pretty appealing, and the good news is these options are starting to emerge. While they generally cost more per transaction, they reduce or remove the other fees in such a way as to make things much more cost-reasonable for a merchant who isn't producing the kind of volume in a year that a Target is seeing in a day.

So, I started looking into this, and two real contenders stood out: Intuit[2] and Square. Intuit's a known player in this space since they're the folks behind Quicken, and Square was created by a founder of Twitter (of all things) and is looking to shake up small payments.

Both of them offer pretty decent terms. Intuit's GoPayments is $12.95 a month, but it's month-to-month, so there's no setup or breakdown fee. It charges 1.7% + 30 cents for a swiped transaction and 2.7% + 30 cents for a keyed (the number is entered by hand) transaction. The big rub is that you need to buy your own card reader ($145, $220 if you want it to print receipts, which you probably do). But on the plus side the readers are bluetooth, and plug into a huge number of phones.

Square has no monthly fee and they offer a swiper for free (for Iphone, Ipad and apparently Android too) but they charge more per transaction: 2.75% + 15 cents swiped, 3.5% + 15 cents.[3] the swiper, it might be a tough call, but on the face of it, Square looks like a clear winner for smaller merchants, with things tilting more towards intuit the bigger you get.

Let's assume you're a game company with a $30 product and someone buys it by swiping a card: with Intuit you'd pay 81 cents per unit. With Square you're paying 97.5 cents. Not a huge difference, and it's going to take a long time to make up the difference in price from the monthly fee and buying the hardware. At $100 a sale, then it's 2 bucks for Intuit versus $2.90 for Square. Still not huge, but at roughly a dollar per transaction, it's only 250 sales or so before you make back your costs.

All of which is to say, it's worth looking at what you're selling and how much you expect to sell before picking an option. Take the DFRPG for example. Most sales will be $90 pairs of the two books, so, ballpark, Intuit starts being a better deal for us somewhere around the 300th sale. If we decide to bring 500 copies, then the decision on what service to use is a difference of almost $200 in our pocket. Yes, that's a small amount in terms of the whole of the game, or even the whole of the convention, but I say this: if you're a small game designer, I doubt you want to leave that $200 on the tables.

Now, these aren't the only options out there, and I don't want to pretend that they are, but I want to call a little attention to this very dry topic because it's one of the realities that you're going to have to deal with, whether you're a game designer, and artist or god knows what else, if you're looking to sell your stuff at a convention. Personally, I've signed up for Square just to see how it works out - never underestimate the power of free signup plus ease of use - but I'm still waiting on my swiper to arrive. I'll probably have more to say once it actually gets here.



1 - Interchange rate is the percentage of the transaction cost the merchant pays to the credit card processors. It's arcane, but the important part is that the riskier the transaction, the higher the rate. CNP (card not present) transactions and transactions where the card isn't authorized online are generally the riskiest, and thus elicit the highest fee.

2- And in the interest of full disclosure, I actually deal with Intuit's stuff in my day job, but not in a way that gives me any particular insight into this product.

3 - Square has no printed receipts, but it has a robust receipt-emailing capability. That's nicely futuristic, but I can see that being an issue.