Even though credit cards may be becoming the way of the world, you may find that there are significant reasons that will deter you from accepting them as payment for your escort services. Although 80% of U.S. consumers own and regularly use debit cards, there is nothing suggesting that you have to accept plastic in order to continue to have a thriving business.
To the contrary, there are some issues related to credit cards that may actually cause problems for your business.
Here are several reasons you should not accept credit cards in your escort business:
- Fees: While most fees associated with accepting credit cards may not be terribly expensive, they do cut into your bottom line, especially when you sum up all of the charges. For instance, to obtain a merchant account, you may have to pay an application fee. After you’ve been approved for an account, you will be required by the company to pay set-up fees to establish your account. Some companies rent you equipment you can use to accept credit cards, while others require you purchase it. (Very few escorts actually use card swipe equipment, but if you choose to, you will incur this cost.) Monthly maintenance fees usually run around $15 per month, and transaction fees may cost $0.15 to $.20 per swipe/charge (or more — sometimes 1 to 5 percent or more of the amount charged). Annual fees are charged by some companies, and termination fees may apply if you wish to stop accepting credit cards before your agreement term is complete. Combined, these charges may add up to at least $100 (or more) per month.
- Paper trail: When you accept credit cards with your merchant account, the company creates a paper trail. And, it’s not simply a paper trail that documents your income. It’s one that documents the names, addresses and other contact information of your clients. Their spending may be tracked back to you. Your business shows up on their credit card statements, too. Their business associates, wives, family and accountants can see they spend money with you. This can create questions and inquiries. Cash leaves no paper trail. When clients use cash, there is nothing that links you and them together in any sort of fashion — either professionally or personally.
- Taxes: Because there is more evident proof of your business receiving income, taxes become more of an issue with the IRS. Credit card payments have recently come under extreme scrutiny by the Internal Revenue Service, and businesses with merchant accounts are examined very closely to make sure they are reporting adequate incomes in comparison to their accounts. You may attract more attention to yourself through the use of a merchant account, which could create more problems for you legally and financially, depending on how well your business is established and how honest you are with Uncle Sam at tax time.
- Credit card fraud: In 2010, merchants lost over $2.7 billion due to credit card fraud. Credit card fraud includes the unauthorized use of credit cards, theft and chargeback schemes. Credit card fraud increased 21% in 2008 compared to 2007 figures. Even though you know your clients and you carefully screen them, it’s best to steer clear of any method of payment that could be trouble. Cash is a solid, stable form of payment. Credit cards are ridden with many problems that may just create problems for you.
- Credit card counterfeiting: Just like you may worry about receiving funny money, credit cards can be counterfeited, too. Cards can be duplicated with valid, stolen numbers on them and used for the purchase of any sort of gods and services. It’s extremely difficult, if not impossible, to recognize a counterfeit credit card. Thieves may present a card to you with their names on them, and the card looks completely legitimate. The magnetic card swipe may even work. However, counterfeited card charges must be reimbursed to the original owner when discovered, which leaves you providing services to someone for nothing in the long run.
- Chargebacks: Chargebacks occur when a consumer is unhappy about the product or services he received and requests a chargeback from the credit card company. Typically, clients claim they did not receive quality services. When a credit card company refunds his money, they take money from your account to give to him. You have little recourse when this happens, because credit card companies are interested in protecting their consumers.
- Immediacy: Cash is immediate. If you have to pay your electric bill TODAY, your client’s payment in your hand may help. However, clients’ credit card payments may take up to a week to post to your bank account. The immediate availability of cash is often hard to beat. You can walk into any store or business and acquire what you need with cash.
- Tips: Because most credit card payments are made prior to the delivery of your services as an escort, a tip cannot be figured into the charge. And, if your clients are not accustomed to bringing cash with them to your encounters, they may not have any money available for a tip. So, you may be cutting yourself out of a good tip by accepting credit card payments from your clients.
- Hassle: Your current method of accepting cash isn’t broken: so, don’t fix it. Getting a merchant account, establishing a way to accept credit cards and going through the process of waiting for approval on each credit card transaction is a pain. Add to that the details surrounding your fees and other financial fine points regarding the account your credit card earnings are funneled into. Accepting credit cards may be much more trouble than it is worth for you. Asking your client to simply leave his “donation” in an envelope on the side table is much, much easier.
Although you, yourself, may use your debit or credit cards regularly, it doesn’t mean that you have to accept credit cards as payment for your escort services. Some clients may request this payment method, because they fail to carry much cash on them regularly. However, you can direct them to the nearest ATM prior to their arrival, and gladly accept their cash payment for your time.