We've done it both ways, and for a large auction, or an on-going scrip program, I think the fees associated with credit cards are a small price to pay for the increase in sales. That said, there's some issues you need to understand if you set up a merchant account. There's a link on the bonus tools page on this website that takes you to a company who can set up the PTO with a merchant account. There's also a spreadsheet to help you calculate the fees, obvious and not so obvious, if you evaluate more than one vendor. Ask people in your community who have home-based or small businesses which vendor they use to set up their merchant account. You might be able to get some fees reduced or waived if you shop around locally.
We set up a merchant account for an auction, then cancelled the account a month later to avoid ongoing maintenance fees. Make sure there's no early cancellation fee. We set up our own account so our customer's credt card statements would actually refer to our PTO. I've heard of other groups using (with permission) someone else's merchant account, but then the customer's bills will say something like "Diane's Flower Shop".
Keep in mind if you pursue this that it will probably be impossible to electronically process the transactions on the spot at your auction venue. Instead, you'll capture credit card info at sale time, but key them into the credit card system later. This means you'll pay more per transcation. Make sure when you shop for a vendor that you specify you want the "discount rate" (% fee per transaction) for manual transactions - ones when you don't actually swipe the card.
The costs of processing credit cards would be too high for our group. There's a monthly service charge and you also have to pay a percentage of what was "swiped."
