New Credit Card Checkout Fees!

[BWV Dreamin]

So what is the advantage now to having rewards/cash back CC if swipe fees are imposed? Is it only limited to Visa or Mastercard? We use AMEX Blue for the cash back.

 

[StitchesGr8Fan]

So it isn't clear if you use your debit card but select "credit" for the fraud protection, do the cc transaction fees apply or not?

 

[averysmom]

I'm surpised that the credit cards would allow this. I thought that the agreement that the card companies enter into with a seller prevented this... I know some people got into trouble on ebay for this - charging ppl extra to cover the credit card payment. Perhaps this was just with paypal though?

 

[Friendly Frog]

Just to be clear and before people in these states celebrate, it says "There are 10 states with laws restricting surcharging..."

It does not say prohibiting surcharging. Restricting may mean the merchant can only charge you 1% over the amount that they pay the credit card company, or something like that. Restricting may provide little if any actual benefit.

Anyone have a link to what the restrictions are for those states?

 

[Callie]

So it isn't clear if you use your debit card but select "credit" for the fraud protection, do the cc transaction fees apply or not?

You would be charged the fees if you run the debit card as credit.

One of my jobs we weren't suppose to ask debit or credit, in hopes more people would just choose debit and enter the pin. It cost us less.

 

[raven69david]

Another great reason for using my debit card for 99.9% of all my purchases. I only use it when traveling and we only go to Florida so it looks like we're good.

 

[Lewisc]

The dirty fact is the cost of using the CC is already built into the price. The honest way is going to a cash discount.

"If" it happens, it will be disguised in the form of higher in-store prices for each piece of merchandise.

And the previous poster is right -- for the most part, if fees were to be implemented, it's a safe bet Walmart and Target would absorb the costs (mainly, because Target owns/operates their own bank/card system, and Walmart is just plain huge)...

Ancient history but accepting credit cards eliminated retailer loss due to bad checks and default on store "house" accounts. It's thought accepting credit cards increases customer spending.

The problem is fees for accepting credit cards were increasing as customers are using reward cards.

I'm surpised that the credit cards would allow this. I thought that the agreement that the card companies enter into with a seller prevented this... I know some people got into trouble on ebay for this - charging ppl extra to cover the credit card payment. Perhaps this was just with paypal though?

Those agreements were found to be illegal and/or were made illegal.

Companies can now charge a higher price to customers who use a credit card. Who use a debit card.

This thread applies to the specific practice of charging a surcharge at the time you check out. There have been other ways to charge extra for credit card purchases for a few years.

 

[MomToOne]

Just to be clear and before people in these states celebrate, it says "There are 10 states with laws restricting surcharging..."

It does not say prohibiting surcharging. Restricting may mean the merchant can only charge you 1% over the amount that they pay the credit card company, or something like that. Restricting may provide little if any actual benefit.

Anyone have a link to what the restrictions are for those states?

Don't know about the other states, but California Civic Code Section 1748.1 states:

(a) No retailer in any sales, service, or lease transaction
with a consumer may impose a surcharge on a cardholder who elects to
use a credit card in lieu of payment by cash, check, or similar
means. A retailer may, however, offer discounts for the purpose of
inducing payment by cash, check, or other means not involving the use
of a credit card, provided that the discount is offered to all
prospective buyers.

 

[usnuzuloose]

No credit card here. I use my debit. I am so sick and tired of companies taking advantage of the consumer to make more money.

 

[mks18412]

There are some states that prohibit these fees and if a store is in the state that prohibits them they can NOT charge the fee anywhere. For example Walmart is in Fl, so Walmart in different states could not charge this fee. That is my understanding.

 

[Callie]

Checks cost the company more, because they can be hit with bad checks easily.

 

[Lewisc]

There are some states that prohibit these fees and if a store is in the state that prohibits them they can NOT charge the fee anywhere. For example Walmart is in Fl, so Walmart in different states could not charge this fee. That is my understanding.

Every state allows a merchant to charge cash customers less then they charge customers who pay with a credit card (including a debit card processed as a credit card). Will any of us feel better if cash people get a discount instead of credit card people paying a surcharge?

 

[ryansstitch]

For those who think that using a debit card will keep prices low for you... That simply isn't true. Business owners, myself included, have to already factor in the cost of processing cards into our fees. My company still needs the same amount of revenue to function, so if someone is paying with cc and it costs me $10 to process her $250 payment, I have to recoup that. I have no choice. So I can charge that customer alone, or spread the cost around. Either way, someone has to pay for the convenience of credit cards.

 

[MomToOne]

For those who think that using a debit card will keep prices low for you... That simply isn't true. Business owners, myself included, have to already factor in the cost of processing cards into our fees. My company still needs the same amount of revenue to function, so if someone is paying with cc and it costs me $10 to process her $250 payment, I have to recoup that. I have no choice. So I can charge that customer alone, or spread the cost around. Either way, someone has to pay for the convenience of credit cards.

Or you could just not accept credit cards.

 

[manning]

The problem I see is the cost of using the card is already factored into the price. Allowing the surcharge is double dipping. The transparent way is to give a discount equivalent to the CC fee.

And if any merchant can't handle the math he/she shouldn't be in business.

 

[Marionnette]

Or you could just not accept credit cards.

No one in business wants to turn away customers, so rejecting credit cards as a form of payment is not an option in today's plastic-driven society. However, they aren't in their line of work just for the fun of it. They need to make a living just like you and everyone else who draws a paycheck. So, whether you like it or not, they have always factored the cost of processing credit card payments into their business model and you have always paid for it, whether you use a credit card to pay or use cash.

 

[Marionnette]

The problem I see is the cost of using the card is already factored into the price. Allowing the surcharge is double dipping. The transparent way is to give a discount equivalent to the CC fee.

And if any merchant can't handle the math he/she shouldn't be in business.

Not quite. Not every customer pays with credit. Some write checks. Some use debit. And we still get quite a few checks.

The cost of processing credit cards is evenly distributed across the price of goods and services for every customer. Processing cards costs me an average of 3.5% per transaction (some cost more, some cost less) and 80% of my receipts are from CCs. However, my business model doesn't include a 3.5% increase in the cost of goods and services in order to cover that expense. It's more like 2.8% because the 20% who pay cash or write checks are also covering what CC processing fees cost me.

 

[MomToOne]

No one in business wants to turn away customers, so rejecting credit cards as a form of payment is not an option in today's plastic-driven society. However, they aren't in their line of work just for the fun of it. They need to make a living just like you and everyone else who draws a paycheck. So, whether you like it or not, they have always factored the cost of processing credit card payments into their business model and you have always paid for it, whether you use a credit card to pay or use cash.

I don't have a problem with the costs being factored in. What I have a problem with is the merchants complaining that they "need" to be able to charge more to credit card users. The fact is their sales volumes are higher because they accept credit cards than they would be if they didn't, which should be resulting in economies of scale (there are numerous studies on consumer behavior that verify this if you Google.) They also have a lower risk of employee theft, loses due to bounced checks, etc. The problem is that now credit card users won't get the credit of those things they are helping save costs on, they just get an increased charge because of one line item expense.

But I say let merchants go ahead and charge more to credit card customers - at their own risk. I expect that the effect on their "living" will be the opposite than they are anticipating, however, because they will ultimately lose customers and/or see smaller sales. Almost the same as if they didn't accept credit cards at all.

 

[ryansstitch]

Or you could just not accept credit cards.

I could, but I will likely still have to pay the also unpleasant expense of would be credit card users going to collections for outstanding bills.

 

[cats mom]

Don't know about the other states, but California Civic Code Section 1748.1 states:

(a) No retailer in any sales, service, or lease transaction
with a consumer may impose a surcharge on a cardholder who elects to
use a credit card in lieu of payment by cash, check, or similar
means. A retailer may, however, offer discounts for the purpose of
inducing payment by cash, check, or other means not involving the use
of a credit card, provided that the discount is offered to all
prospective buyers.

Eh, semantics. You can't add a surcharge for CC payments, but you can offer a discount for cash payments... effectively the same thing, just framed differently.

We're in CA and we get hit with a surcharge if we use a CC to pay for DD's club sport. Sure, we could pitch a fit and say that's not allowed under Section 1748.1, but what would be the point? We'd alienate the club owner and coaches, and all they'd need to do is be smarter about the wording of their payment terms. Instead of tacking on a CC fee they should allow a cash discount. Either way the end result is exactly the same: CC customers pay more, cash customers pay less.

As many have already said, most businesses already build the cost of accepting cc's into their pricing structure.