I think Ive upset someone....

[Aknot]

So I got this email from Money Metals Exchange with the title of - How You Pay for Your Precious Metals Matters

My first comment was deleted. That comment went on to how I think the 4% surcharge for Paypal is unfounded for established large companies. Reason being "back in the day" customers at some brick and mortar stores would be charged a 4% (or some other fee) to process CC because their profit margin was terrible. This was small stores not your Sears, Macys, Grocers, etc. Think Mom and Pops.

Now knowing what goes into a Brick and Mortar store and knowing how online companies can easily beat a B&M as it relates to prices I find it kind of funny the customer would still have to cover that full "fee".

What really blows my mind is I can go to an Ebay online store of a major company and not have to pay that surcharge nor do I have to pay for shipping (even under 100$).

In a business you expand your acceptance of payment methods to increase your sales which then would offset your cost of accepting that type of payment.

Am I missing something here? Am I being to harsh? Am I completely off base?

It reminds of the theaters that started saying we are now showing commercials... that they get paid to show.... and my price for admission/concessions still goes up...

[BrumChris]

Do you mean to buy bullion? Normally the premium above spot price is pretty low. If they get charged 4% that will wipe out most of their profit.

[Aknot]

So as of now as I type this up the ticker above their site I see 21.42 an oz. And a 1oz round is 25.44. Plus 4% (1.02) is 26.46.

I am assuming (correct me) that they get pricing lower than 21.42 due to bulk?

21.42 to 25.44 is like a 20% mark up. Take the Paypal 4% from that and you are still over 15% per ounce. This doesnt even take into consideration when they purchased. (or hey maybe thats something else I dont understand. Are these rounds sitting in their warehouse? Meaning they bought it 4 months ago at a lower price or is it always a prepurchase type thing?)

This is still all new to me (the metals) so maybe its just that and I know I dont have to buy, im just trying to wrap my head around it. However a 15% per even taking 5% per off (again for an online established company) for overhead makes 10% per which is pretty good (again depending on the volume and cost they get it at "bulk").

Then tack on that I see on ebay some stores (established ones) dont create a surcharge for the use of paypal and the prices seem better then their own online store. (I know what you are saying then buy there).... Why can I buy a the same silver round 3$ cheaper on Ebay (with free shipping and using paypal) then I can on their site and get charged for shipping?

I mean I know the 4% is Paypal/Credit Card companies not disputing that but when I add the other stuff in I just get a headache... Maybe I should just buy and not think about it....

[Melon]

I feel like something is missing in your first post, did you mean to post their email or something? 

In terms of your question "I am assuming (correct me) that they get pricing lower than 21.42 due to bulk?" - no, that's not the case. 21.42 is the value of the base metal, before refinement and being turned into a coin. Cost to them will be higher. 

PayPal charge a big fee, so I can understand the retailer passing that on to the customer. Their other option is to build it into the price which effectively does the same thing, just in a less transparant manner. At least this way you can make an informed decision about which payment method to choose. You'll notice the majority of PM dealers (at least in my location anyway) require bank transfers for bullion coins for exactly this reason. It just wipes out the value for the seller and buyer otherwise. 

[Gildeon]

As far as I know every bullion dealer adds the fees in the price when using PayPal and it is pretty understandable and transparent.

[Aknot]

@Melon I didnt want to post their email It was a teaser to go to their site and read and post about their article on payment methods. Here is the LINK .

I had also mentioned in my deleted post that the merchant is also or should also be protected against fraud, which was one of their major points in not using a credit card and or charging a fee for it. "That is why, in addition to a 4% fee, clients will also find they are limited to small purchases if they pay with a card. Companies can’t afford the risk of shipping thousands of dollars worth of metal to a scammer using a stolen credit card." Why not lock my rate wait a week to ensure the charge goes through with no issue then release the product?

I use paypal because I get paypal payments from other things I sell. Just sold a football card for $80. $80 dollars is what is in my paypal account. So I don't see why I would have to pay $83.20 (4% more) for $80 of Silver. Maybe I don't do enough regular business (or amounts are not large enough) to need to charge that 4% and the bigger companies do? But then again thats the cost (or a cost) of doing business and being able to accept more payment methods. I also pay a monthly fee to another site for gaming and as far as I know they dont get charged 4% on top of my payment or the other payments they recieve from other people.

Ive also checked with my Credit Union (bank) and they charge for wire fees etc. So I dont think its I can send $80 via my bank without incurring another cost.

Ok so there is some insight and thank you (about the base metal refinement etc) and I will be off to Google to read about that. My assumptions were 21.42 is the cost of refined silver per ounce. I didnt know it was the "raw" price. Im learning... Thanks.

To all dont get upset with me.,.. Im triyng to take in as much as possible as fast as possible...

 

[Aknot]

3 minutes ago, Gildeon said:

As far as I know every bullion dealer adds the fees in the price when using PayPal and it is pretty understandable and transparent.

Not debating that. But every bullion dealer could slap us in the head with a wet tuna but it wouldnt feel good all the same. What you are saying they all do it and they tell us about it so its ok and makes sense. Im just trying to make sense out of it and see how/why it is incorporated so it makes more sense to me.

Also it is not added in when on Ebay..... and going through a dealer. At least on a few items I cross referenced that they (Apmex) had on their site and on their Ebay store. So maybe they are protected more through Ebay and dont feel the need to charge that 4%?

 

[Melon]

I think what you've not considered is the nature of buying an investment product. They are literally selling you money. They can't just swallow a 4% fee. If I'm selling a designer toothbrush, I build the cost into my price and you don't need to worry about it because all you see is the final price. You're still paying for it, you're just not aware. That method doesn't work when dealing with an investment product where people are obsessed with the % premium over the spot price. You can't generically charge everyone for transactions, you need to give people options which is exactly what they're doing. They don't get that 4%, PayPal does. It's your choice if you want to use that method, and you pay the fee. Totally fair, totally transparent. 

Look at it another way. Let's use your example. 

"So as of now as I type this up the ticker above their site I see 21.42 an oz. And a 1oz round is 25.44. Plus 4% is 26.46."

Let's assume they get their silver at $23 an ounce as a completed coin. I don't know what they pay of course, but take into account the metal itself is worth $21.42, then someone else (a mint) has to pay to turn that into a coin, then ship it to the dealer, so this all adds cost along the way. 

Now if they sell that $23 coin to you at $25.44 with you covering the 4% fee, they make a $2.44 on the deal. The rest of the money isn't profit, it's just what they paid to get the coin they are selling you. 

Now assume they sell that same coin to you at $25.44 but they cover the 4% fee. Now they make $1.42 as they have to pay that 4% on the deal. That's because they are paying that 4% on the entire transaction value not just the profit. 

So while you may think they should cover the 4% fee, in reality that drops their profit on the coin by approx 42%!! 

To make matters worse, they of course have other costs to contend with. Running the website, staff, warehouses etc. As that overhead eats into the profit spread across all orders, the 4% PayPal fee will proportionately grow as the profit margin shrinks. Factoring all that stuff in, you'd easily be asking the dealer to give up HALF their profit on the order to give you the option to pay by PayPal rather than a bank transfer. 😲

So moral of the story is pay via bank transfer or prepare to cover the fee 🙂

[Aknot]

"Let's assume they get their silver at $23 an ounce as a completed coin."

Now see this makes it a bit more clearer (again with my ignorance of who pays for what when).

I can understand this and thank you for taking the time to explain it.

Is there a write up or video that you know of (I can look) that shows the process from digging it up until I purchase it along with percentages based on the price at the time? Are there companies that dig, refine and mint then sell? If not why not that seems like the thing to do or is there laws governing that?

Thank you once again for your time and effort in explaining this.

 

[Ansel]

The TV show Gold Rush goes some way to showing effort required to mine gold. It is certainly not as easy as anyone might initially think. I know you are asking specifically about silver but It will give you a good idea of the process they go through as well as being an enjoyable show. 

[Aknot]

Oh I figure its all a bit different but a bit the same. I was reading where Silver is sometimes a by product from mining other stuff. Which I thought was kind of neat. Thanks!