So you’re ready to start selling your art, but have you thought through the logistics of accepting payments from your customers? There are a variety of payment options, each with a distinct set of advantages and disadvantages. In “Payment Options: How to Accept Payment for Your Art,” Daniel Grant takes you through the benefits and potential downfalls of the basic payment options. Read an excerpt from the payment option article below or you can read the complete article in the 2016 Artist’s & Graphic Designer’s Market or on ArtistsMarketOnline.com.
Keep creating and good luck!
Payment Options: How to Accept Payment for Your Art by Daniel Grant
At Sam’s Club, members have a range of options to pay for their purchases, from cash and checks to credit and debit cards and even food stamps. Wal-Mart adds PayPal to the mix, and the California Department of Motor Vehicles notes its willingness to accept money orders and e-checks. A buyer comes into your studio or booth ready to make a purchase: What are you willing to accept?
Perhaps, the best answer is most of the above. “You want to make it as easy as possible for people to pay you,” said Dr. William Osgood, director of the Knowledge Institute in Exeter, New Hampshire, which provides counseling for small business development. Let’s consider the advantages and disadvantages of some of the payment options available.
Cash has obvious advantages. Unlike checks and credit card payments, it doesn’t need any time to “clear,” and there is no 2–4 percent service charge for the vendor to pay to a middleman, as exist with credit cards and PayPal. In fact, vendors might have reason to encourage prospective buyers to pay in cash by offering a small discount. Still, as a practical matter, most people do not carry large amounts of cash on them for the same reason that vendors might be reluctant to be paid with large amounts of cash—they make themselves a potential target for thieves.
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Personal checks continue to be an option, although a declining number of people pay for their purchases this way these days, due to the ubiquity of credit cards. The benefit of a personal check is that, just like cash, they do not require the vendor to concede some percent of the payment to a middleman. Hanging over a check, however, is the potential that the buyer’s bank account has insufficient funds, which would be discovered only after the purchased object has been taken and the check has been returned (five to ten business days later). A number of craftspeople in Minnesota had this experience when an elderly woman attended a number of crafts fairs, purchasing items with checks that did not clear. As one jeweler wrote on the ArtFairInsiders forum page, “I live in Florida and, after spending considerably more time on it than the amount was worth, have found that I can’t attempt to collect on it without returning to Minnesota and taking her to conciliation court, where the filing fee is far higher than the amount of the check.” Her comment named the individual, recommending that others not accept checks from her.
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Debit Cards and E-Checks
Debit cards tend to be accepted at most of the same places that take credit cards, and the main difference between them and credit cards is where the money comes from. Using a credit card is a form of borrowing money, while debit cards draw directly from the purchaser’s bank account. Vendors who receive authorization to accept debit cards can find out immediately if the buyer has the money to pay for the purchase, and the bank would put a hold on that amount of money in the account. Presumably, that should protect buyers and sellers, since no one would be able to spend money he or she doesn’t have in the bank. The only problem in the system is that the process of transferring money from one bank account to the other may take a few days, during which time the “hold” has elapsed and the buyer may no longer have sufficient funds to cover the purchase. That doesn’t happen often, but it has occurred.
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There are many different types of credit cards, including MasterCard and Visa, that are bank-issued and underwritten by these companies. Discover and Capital One as well as Diner’s Club and American Express are charge cards. Too accept charge cards as payment, vendors must obtain a merchant services account, which involves a range of set-up fees, the acquisition of a credit card terminal, transaction fees (the percentage of the purchase price that the company takes, plus a flat per-purchase cost), authorization fees (a charge for each time the company authorizes a transaction), statement fees, annual or monthly fees (the cost of having an account), monthly minimum fees (an additional cost if the amount of charges does not reach a certain amount) and chargeback fees (for reimbursing the buyer if there is a return).
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PayPal (and other, similar companies) is quickly becoming a preferred way for consumers to make purchases online, though, just as with every other option, there are benefits and drawbacks. The largest benefit is that it is easy for buyers to use, paying for items with their credit cards or e-checks, and setting up a PayPal payment option on a vendor’s website (with buttons for single purchases or a shopping cart) is quick and uncomplicated. What’s more, customers may be familiar with PayPal already through purchases from eBay or Amazon, which adds to their comfort level.
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In its short history of existence, the nontangible Internet currency bitcoin has earned an uneven reputation, but increasingly this “cryptocurrency” has gained legitimacy and is being used in a variety of online stores, such as at Etsy and Overstock.com. Will artwork and other collectibles be next? Perhaps. Burning Man, the nonprofit summer arts festival based in California, began accepting bitcoin donations in late 2014, and a number of online exhibition sites (cointemporary.com, btcartgallery.com, bitdazzle.com/art, art4bitcoin.net and bitpremier.com/4-fine-art-antiques) accept this form of currency.
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The subject of money often makes artists uneasy. How much should they charge for their work? Should they offer or agree to discounts? And then, when the sale is about to take place, comes the issue of what kind of money to accept. Every form of currency brings with it some form of anxiety, and artists need to select from this smorgasbord of options what makes them feel most secure and satisfies their buyers.
Daniel Grant is the author of several books including The Business of Being an Artist and The Fine Artist’s Career Guide (Skyhorse Publishing).