A CASE FOR CREDIT CARDS

By Ally Kennedy, Founder of Amiga

For the first four years of my practice, I completely refused to use credit cards. My main reasons were: (1) the companies charge so many fees that I would be losing money to accept credit cards, (2) my clientele comes from a “cash culture” meaning that they prefer to use cash, and (3) my clients are undocumented and are less likely to have access to a credit card and often do not have bank accounts.  

All I can say now is that I was wrong. So, so wrong. Accepting credit cards has transformed my business. The first month that I accepted credit cards, I earned nearly $10,000.00 in additional revenue. This is one of those things that I can add to the list of “things I wish I would have done sooner.” Now that I accept credit cards, none of the reasons above even seem relevant so I want to share what I have learned. 

 

You Will Make, Not Lose, Money By Using Credit Cards

When I first started my law firm and I was not running it like the CEO of my law firm and instead was acting as if I were an associate attorney in my own firm, I was completely out of touch with the business side of my practice. When it came to money all I knew was either (a) there’s money in the account or (b) there’s no money in the account. That was absolutely it. I was completely in the dark about my firm’s finances and so any fraction of money that I would pay out to a credit card processing company seemed like too much. To sum it up, I was afraid that those fees would break me. I wasn’t earning a lot, and $200 in credit card processing fees felt like $2000. It was incredibly difficult for me to “let go” of the money that was being paid in fees. 

Now, however, I can see that that amount is extremely small when you look at the overall benefit to accepting credit cards. Maybe on one transaction I will “lose” $80, but I will also get a large contract that I would not have otherwise had if I did not accept credit cards.

Also, and I am no tax expert, it is my understanding that the fees can be written off as an office expense. Thus, they are “recovered” in some way from a tax standpoint. 


Credit Card Company Breakdowns

Here is a chart about the credit card company fees along with some tips to consider when accepting credit cards, all put together by my Virtual Assistant extraordinaire

*Manually entered transaction fees may vary, *For using Square check this link

Tips for making your decision:

  • Depending on your financial institution, you may have the possibility of eliminating the third party processor and process directly through your bank. This has the benefit of money going into your account as soon as the next day.
  • You can a check with your financial institution about opening a merchant account. Be aware though, this option would make you liable for fraudulent activity. The advantage to this, however, may be lower transaction fees.  
  • Another thing to keep in mind is how you process most of you credit card transactions. Many third party gateways charge a higher fee if you are manually entering the card information in. So if you are accepting most of your payments over the phone and not actually swiping the card this is another aspect to consider.
  • You also want to consider the amount of money that your credit card charges will be bringing in. If it is a small amount then you may consider a less costly company. With gateway services such as Square, PayPal, and Stripe there are no monthly charges.

How To Make Credit Cards Work for You

Here are a few things I have learned so far about using credit cards to increase your firm’s profits:

 

  • Offer a Discount for Prepayment of the Consultation

Though many attorneys require prepayment to schedule an appointment, and that is a great way to increase revenue, it may not be realistic for your clientele. Since my clients do not always have access to a debit or credit card, we offer a $50 discount to anyone who prepays the consultation within 24 hours of the appointment. 

 

  • Combine Credit Process Companies To Make it Work For You

Using my practice as an example, the MyCase payments will not work because it requires that the clients sign in to a client portal and my clientele does not use email and is not very internet savvy. For the same reasons, a payment button on our website through PayPal would not work well either. Instead, we use a combination of Stripe for taking payments over the phone and Square for taking payments in person. This allows for us to get the best rates from the different companies.  

 

  • Suggest Pre-paid Visa Gift Cards

This tip comes straight from the AMIGA group where someone shared that she tells her clients who do not have credit or debit cards to buy one of those pre-paid Visa Gift Cards since that can be processed as credit card. This idea is genius!

 

  • Request Credit Card Authorization for Cases on Payment Plans

We have put together a credit card authorization form so that clients can agree to have their monthly payments automatically debited from their accounts. This works best for people who are on steady, even payment plans and do not have different amounts being pulled each month. If you do hourly billing you can make this work for you if you follow the suggestions here and require a flat payment amount each month that will be automatically deposited into the trust account.  

**We have created Credit Card and E-Check Authorization Forms that you can update with your Firm's name and contact information.   Check it out in Amiga Docs!

What tips do you have for making credit cards work for your law firm? Leave your comments below! 

 

 


About your Ally in Life, Business and Law:

Alexandra "Ally" Kennedy is a national award-winning attorney and the founder of AMIGA Lawyers and Alexandra Kennedy Immigration Law.. After becoming a mother, and in a matter of 3 months, Ally transformed her practice from earning in pesos to earning 6-figures and she is passionate about teaching attorneys how they can do the same. Ally empowers lawyers to be the CEOs of their law firms with her weekly blog, webinars, and conferences where she teaches step-by-step how to do the work they love while running a profitable legal business. Ally lives outside of Seattle with her partner and their 5 children.