Though few AK Complete Home Renovations customers currently charge project payments to a credit card, the Atlanta remodeler does offer PayPal as a payment option. Company president Ed Cholfin says that he previously used a bank to process credit charges, which involved paying annual set-up fees — even if he didn’t use the service during the year. In addition, Cholfin says he didn’t accept American Express or Discover cards because of their higher fees. PayPal (a subsidiary of eBay) charges the same fee no matter which credit card is used and does not charge a set-up or annual fee.

Options Open

Cholfin’s customers do not have to register on PayPal to make a credit card payment, and once the transaction is complete, Cholfin has three options: leave the money in his PayPal account; transfer the money to his PayPal credit card; or transfer the funds to his bank. In addition to the annual fees, Cholfin says that banks and processors charge a higher rate for digital transactions and merchants have to process credit card payments in batches. In contrast, PayPal transactions are instantaneous.

To remain competitive in today’s market, Cholfin says he wants to offer clients the option of credit card payments. He says that most customers who choose to pay by credit card do so because they can earn flights or other rewards. He did, however, recently add a 3% convenience fee for the credit charges through PayPal so that he could recoup some of his costs. He doesn’t yet know if the fee will deter some clients from using PayPal because since adding the fee, no clients have opted to pay by credit card.

—Nina Patel, senior editor, REMODELING.

Comparing Costs

PayPal charges AK Complete Home Renovations a percentage of the amount of the credit charge, but the remodeler saves on the annual set-up fee.

Even if PayPal charges a higher percentage on the transaction, the remodeler still saves over the entire year. PayPal’s fees vary based on the value of the charge.

AK Complete’s fees: $0 to $3,000: 2.9%
$3,000 to $10,000: 2.5%
Over $10,000: 2.2%

Below are calculations for a single $10,000 charge for the year.