In this day and age, most transactions completed online are done so by using a credit card. Even when shopping offline, in physical stores, most people either pay by cash or card. But in the world of precious metals, especially when it comes to buying gold and silver, the paper check is still alive and kicking.
Due to the processing fees charged by credit card companies, which can either be absorbed by the retailers or passed on directly to the customer, this form of payment isn’t popular with precious metal dealers at all. As profit margins on these types of sales are very tight as it is, combining that with a 1 to 3 per cent payment processing fee, can make this business unprofitable for most.
Also, as credit card transactions can be contested many months after the goods have been sent out, it can be risky for the dealers of gold and silver to take this form of payment as they could end up without payment for a deal that was completed successfully many months ago.
For this reason, many precious metal dealers choose to charge a processing fee for those using a credit card payment. Other dealers choose to offer a discount on the list price for those who pay by paper check. Usually the price amounts to the same for those paying by check, whether it is listed as a discount or an added fee.
Downsides of Paying Via Paper Checks
Using a paper check for payment, it isn’t without its downsides. One of the main problems or inconveniences of using this payment method is the time it takes to wait for the payment to be processed. While credit card payments incur a fee, they are almost instantaneous in terms of the amount of time it takes to verify and complete the transaction.
The first step in the process of paying by paper check is physically sending it to the silver dealer. This can take a day or two at least. Then it is time to wait for the funds to clear and the money to be transferred from your account to theirs. This can take up to five or 10 working days. When you add these two time periods together you could be waiting up to two weeks before the dealer is prepared to start the process of delivering your goods to you.
As well as being inconvenient for some, this lengthy processing period could cause problems with the availability of the items that make up your order. While waiting for the check to arrive, the dealer may have sold some of the items you had in your order. While most precious metals dealers will put your items on hold for a few days, while they await payment, there is no guarantee your check will arrive before this period expires.
When buying items such as gold and silver, whose price fluctuates on a daily basis, any delay in your payment being received could coincide with a rise in the price of these precious metals. This would mean your ordered amount would have to be recalculated to reflect the new increased price of the metal.
So while paying by paper check can save you money, as opposed to using a credit card, it is not the perfect payment method. All the downsides of paying in this way are things you should talk to your precious metal dealer about and find out where they stand on these issues to ensure you don’t end up dissatisfied with the transaction.