<< <i> As I see it, the only folks this is really impacting are those living on credit to fund their coin purchases.
All in all, this change is no big deal to me and will not affect my buying habits in the least. >>
This is bull if I have ever read it, everybody has a price point where they feel the pain and might have to use credit to make the transaction happen unless they have unlimited funds. Credit is not a 4 letter word and it is only the abuse of it when it poses a problem. The main point of this thread is that by lowering the limit it puts the pain point of having to finance out of liquid assets a larger spectrum of coins by a greater number of people that might have been ok letting a balance float for X amount of time on a card to stretch for that special coin to add to their collection. IMO the kind of coin one has to stretch for at $2501 isn't as convincing as a 4-5k coin. Not to mention I have earned hundreds back from my coin purchase on my PENFED Card, that doesn't really hurt.
<< <i>The bad business part of this is that the change wasn't communicated until you went to pay the invoice. Even now, I can't find anywhere on their website where it mentions the newly implemented $2500 CC limit. To just change it without notification before a major auction is not good business. >>
<< <i>The bad business part of this is that the change wasn't communicated until you went to pay the invoice. Even now, I can't find anywhere on their website where it mentions the newly implemented $2500 CC limit. To just change it without notification before a major auction is not good business. >>
Agreed.
My only beef is that I no longer get a "cash discount" to help offset their shipping and handling charge.
What I am gathering from the above discussions is that Heritage is cutting down their credit card fees that they have to pay, by avoiding the fees they pay credit card companies, particularly on larger dollar purchases. Credit card companies fees to merchants are often as much as 2-3% and some of this money is given back to the consumer in the form of airline points, cash, or other payments that really cost the credit card company money, which they pass off to the merchants. It is also my understanding that if you sign up as a merchant you agree to participate with the card company with any promotion they come up with, a unilateral decision by the card company that could cause the merchant to lose even more of the payments made.
When markups on items like clothing can be 40-100% or whatever, the amount of money the merchant gets of the credit card costs is more than offset by the increased business that taking the credit card seems to have for their business. We all like getting cash back or points toward purchases (or other bribes) so this system works very well for the credit card companies, and for many merchants, as well as the consumers. In the coin market, often the markups can be large in retail transactions, but in auctions, there may be small margins, vide infra.
Consignors to Heritage (or any other auction company) negotiate a percentage of hammer that they get. This varies depending on the total value of the consignment (consignors with millions of dollars of coins get better deals than someone selling a few thousands of dollars; this makes perfect business sense), the buy-back agreements (how much, if any, of your own coins you can buy back at no penalty if they don't sell for as much as you wanted; the greater the leeway for the consignor, the more the auction company will get percentage-wise), the ability to set reserves (consignors that want to set reserves lowers the negotiated rate generally), etc. My understanding is that the final negotiated amount of hammer can exceed 100%. Whatever the lot sells for is 115% of hammer. The auction company ends up with the difference between the 115% and the negotiated rate to the consignor. This can easily be less than 15% of the hammer price. If you then use a credit card that may cost Heritage another 3% of the total sale, their margin drops considerably. In a case that the auction company gets 15% of hammer, the loss of 3% of the total sales price from credit card cost to the merchant,
Let's use as an example a coin that hammers for $1000. The buyer will pay $1150. If a credit card is used, the amount charged is $1150 and at a 3% charge from the credit card company is $34.50. Thus, if the auction company would get $150 net from this transaction if paid by cash/check, they now get $34.50 less, or a total of $115.50. The amount they net is now only 77% of what they would get from a cash customer.
As I said above, this makes good business sense to me for auction companies to try to avoid losing a good chunk of their net proceeds to credit card companies. It is also balanced against the fact that NOT accepting credit cards will turn some customers away. Better to have the 77% than nothing at all.
Another point I didn't make in my lengthy post above, is that with a consignor getting more than 100% of hammer, a credit card purchase takes an even bigger bite out of the net that the auction company gets.
<< <i>Another point I didn't make in my lengthy post above, is that with a consignor getting more than 100% of hammer, a credit card purchase takes an even bigger bite out of the net that the auction company gets. >>
Comments
<< <i>
As I see it, the only folks this is really impacting are those living on credit to fund their coin purchases.
All in all, this change is no big deal to me and will not affect my buying habits in the least. >>
This is bull if I have ever read it, everybody has a price point where they feel the pain and might have to use credit to make the transaction happen unless they have unlimited funds. Credit is not a 4 letter word and it is only the abuse of it when it poses a problem. The main point of this thread is that by lowering the limit it puts the pain point of having to finance out of liquid assets a larger spectrum of coins by a greater number of people that might have been ok letting a balance float for X amount of time on a card to stretch for that special coin to add to their collection. IMO the kind of coin one has to stretch for at $2501 isn't as convincing as a 4-5k coin. Not to mention I have earned hundreds back from my coin purchase on my PENFED Card, that doesn't really hurt.
<< <i>The bad business part of this is that the change wasn't communicated until you went to pay the invoice. Even now, I can't find anywhere on their website where it mentions the newly implemented $2500 CC limit. To just change it without notification before a major auction is not good business. >>
Yes. Exactly.
<< <i>The bad business part of this is that the change wasn't communicated until you went to pay the invoice. Even now, I can't find anywhere on their website where it mentions the newly implemented $2500 CC limit. To just change it without notification before a major auction is not good business. >>
Agreed.
My only beef is that I no longer get a "cash discount" to help offset their shipping and handling charge.
When markups on items like clothing can be 40-100% or whatever, the amount of money the merchant gets of the credit card costs is more than offset by the increased business that taking the credit card seems to have for their business. We all like getting cash back or points toward purchases (or other bribes) so this system works very well for the credit card companies, and for many merchants, as well as the consumers. In the coin market, often the markups can be large in retail transactions, but in auctions, there may be small margins, vide infra.
Consignors to Heritage (or any other auction company) negotiate a percentage of hammer that they get. This varies depending on the total value of the consignment (consignors with millions of dollars of coins get better deals than someone selling a few thousands of dollars; this makes perfect business sense), the buy-back agreements (how much, if any, of your own coins you can buy back at no penalty if they don't sell for as much as you wanted; the greater the leeway for the consignor, the more the auction company will get percentage-wise), the ability to set reserves (consignors that want to set reserves lowers the negotiated rate generally), etc. My understanding is that the final negotiated amount of hammer can exceed 100%. Whatever the lot sells for is 115% of hammer. The auction company ends up with the difference between the 115% and the negotiated rate to the consignor. This can easily be less than 15% of the hammer price. If you then use a credit card that may cost Heritage another 3% of the total sale, their margin drops considerably. In a case that the auction company gets 15% of hammer, the loss of 3% of the total sales price from credit card cost to the merchant,
Let's use as an example a coin that hammers for $1000. The buyer will pay $1150. If a credit card is used, the amount charged is $1150 and at a 3% charge from the credit card company is $34.50. Thus, if the auction company would get $150 net from this transaction if paid by cash/check, they now get $34.50 less, or a total of $115.50. The amount they net is now only 77% of what they would get from a cash customer.
As I said above, this makes good business sense to me for auction companies to try to avoid losing a good chunk of their net proceeds to credit card companies. It is also balanced against the fact that NOT accepting credit cards will turn some customers away. Better to have the 77% than nothing at all.
edited for grammar et al
<< <i>Another point I didn't make in my lengthy post above, is that with a consignor getting more than 100% of hammer, a credit card purchase takes an even bigger bite out of the net that the auction company gets. >>
How can I become one of those consignors?