When I tell potential new clients that I require down-payments and payment by check (or bank transfer), some of them balk. Can’t I take credit cards? Yes, I can take credit card payments, but on the whole I prefer not to. Why? There are a few practical considerations.

Making a down payment in cash demonstrates the client is solvent

I never accept credit card payments as a down payment. In my experience, any new business that isn’t solvent enough to come up with a few hundred dollars down payment is not ready for the big time.

I know many businesses rely heavily on loans and credit to get started. They may succeed but they also may very well fail. I want to work for companies that have liquid start up capital (i.e., real money) to invest in the business. This shows planning and foresight. There is a very good chance that if the new company can’t come up with real cash for 30% down, I’m never going to see the rest of the 70% payment anyway.

Checks and transfers are harder to fake

Real checks or bank transfers show the company is (probably) legit, has been established with tax numbers and has created a real bank account. While these are not impossible to fake, stealing a credit card number is far easier than making fake checks.

I don’t have to pay 3rd party vendors

I also prefer additional payments by check. Yes, it’s “only” a few cents per payment for processing. But let’s take a look at that. Since most of us have no intention of signing up for a pricey merchant account, let’s take rates similar to Paypal or Stripe - 2.9% of the sale plus $.30.

On average, I receive 20 or so payments for jobs a month. That’s 240 payments a year times $.30 = $72 dollars. Now let’s say the average of each of these payments is $150. 2.9% is $4.35. Take the $4.35 times 20 and you get $87 a month. Over a year, that’s $1044 plus the $72. Total? Around $1116. This is not chump change. This is more than a month’s mortgage payment. And you don’t need to be paying it!

Yes, sometimes people have to pay by credit card. Sometimes you want the money fast, they don’t have a business account yet, the payment is way overdue and you just want something on the total… But on the whole, try to avoid paying a third party money if you don’t have to. You earned it, you should keep it!