New Credit Card Checkout Fees!

[MomToOne]

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?

Public agencies (including schools and universities) are explicitly exempt from the law. I don't know whether or not your club falls into that category or not.

If they don't, all they need to make it legal is to say "Price if paying by check/cash: $X; Price if paying by credit card: $Y". That is considered offering a discount for cash - this is what many gas stations do and it has passed legal challenges. What you can't do is say "Price=X; 2% additional charge levied if paying by credit card".

Yes, it's all semantics. But it's semantics that have been shown to have a significant effect on consumer behavior.

And I can tell you if a store started posting a credit card price vs. a cash price, I wouldn't shop there - for reasons I have previously posted I don't think it's fair to pass on a one line item expense to the credit card users without also passing on the price increases to cash customers that would occur if the merchant didn't take credit cards. I used to work on pricing systems for large companies that had to evaluate the true cost of any item, and all of the tradeoffs like this had to be taken into consideration. It's always extremely complex and trying to boil it down to "I get charged 2% by the credit card company so you should have to pay that charge" is a sham.

 

[Lewisc]

And I can tell you if a store started posting a credit card price vs. a cash price, I wouldn't shop there - for reasons I have previously posted I don't think it's fair to pass on a one line item expense to the credit card users without also passing on the price increases to cash customers that would occur if the merchant didn't take credit cards. I used to work on pricing systems for large companies that had to evaluate the true cost of any item, and all of the tradeoffs like this had to be taken into consideration. It's always extremely complex and trying to boil it down to "I get charged 2% by the credit card company so you should have to pay that charge" is a sham.

I've read, but I"m not sure if it's a "real fact" or an "internet fact" that customers paying with a credit card spend a lot more then customers paying with cash. In other words the cost of accepting credit cards could be worth it if it encourages customers to spend more $$$.

My understanding is many gas stations have a flat markup of so many cents per gallon. As the price of gas went up the credit card surcharge became a significant part of the markup.. Larger gas stations were able to negotiate caps on the credit card fees and most smaller stations (by my) now have a lower cash price.

 

[cats mom]

Public agencies (including schools and universities) are explicitly exempt from the law. I don't know whether or not your club falls into that category or not.

If they don't, all they need to make it legal is to say "Price if paying by check/cash: $X; Price if paying by credit card: $Y". That is considered offering a discount for cash - this is what many gas stations do and it has passed legal challenges. What you can't do is say "Price=X; 2% additional charge levied if paying by credit card".

Yes, it's all semantics. But it's semantics that have been shown to have a significant effect on consumer behavior.

And I can tell you if a store started posting a credit card price vs. a cash price, I wouldn't shop there - for reasons I have previously posted I don't think it's fair to pass on a one line item expense to the credit card users without also passing on the price increases to cash customers that would occur if the merchant didn't take credit cards. I used to work on pricing systems for large companies that had to evaluate the true cost of any item, and all of the tradeoffs like this had to be taken into consideration. It's always extremely complex and trying to boil it down to "I get charged 2% by the credit card company so you should have to pay that charge" is a sham.

Nope, it's not a public agency, it's a for profit company. The exact verbage states: "Please note that a 3% processing fee will be added to any and all CC payments"

Like I said, I could call them on it, but what's the point? All they'd need to do is re-word their paperwork to offer a 3% discount for cash payments instead and they'd be covered legally. The end result would still be the same. My guess is they'd jack up fees to cover the cost of printing new paperwork though, so best to leave it alone.

I just found it ironic that you quoted the CA Code and I had an example of a CA co blatantly disregarding said Code.

 

[MomToOne]

I've read, but I"m not sure if it's a "real fact" or an "internet fact" that customers paying with a credit card spend a lot more then customers paying with cash. In other words the cost of accepting credit cards could be worth it if it encourages customers to spend more $$$.

It's not just about whether or not CC customers spend more (although I believe that is a significant issue and I suspect where companies will lose the most money if they institute a service charge). You also have to look at things like:
- Is there a labor savings or cost when customers use credit cards? Does it take longer for your cashier to process the transaction one way or another, leading to increased staffing costs if an overwhelming majority paid one way vs. the other?
- Is book keeping easier one way or the other? What is the cost of any increased complexity?
- What is the likelihood and cost of errors one way or the other (e.g. cashiers giving too much change on a cash transactions)?
- What are your likelihood and costs of employee theft one way or the other? (Stealing from the cash drawer, not ringing transactions to keep the cash, etc.)
- What is the cost of equipment to support each type of transaction?
- What is the risk of customers giving fraudlent payment methods each way (e.g. counterfiet cash, bounced check, stolen credit card), and what is the cost to the business each way?

and that's just what I can think of off the top of my head.

I just found it ironic that you quoted the CA Code and I had an example of a CA co blatantly disregarding said Code.

Unfortunately, just because there is a law doesn't mean everyone follows it...but if you google the code I quoted, the next part describes the penalties for not following it, should you chose to go after them LOL

 

[Jex]

Kind of silly since if everyone started paying in cash businesses would have to pay more for deposit fee's into their bank accounts.

 

[Friendly Frog]

Less consumer protection paying in cash..Maybe that is the real motivation for some businesses pushing for the change?

 

[Halbleib1]

It is my understanding the retailers in the suit did not push for this. Some are even considering appealing the decision as they do not feel it addressed the reason for the lawsuit to begin with.

From what I have read on this debit cards even if you choose credit are exempt from the fee. Perhaps because the money is being taken from a bank account and not borrowed from the card companies. Or perhaps retailers are not charged for this or at least not charged as much. It is only speculation as the articles I have read did not say why they are exempt.

If the fees are ever passed on they are going to vary based on what credit card you have. Those with reward cards esp are going to see higher fees because the credit card companies charge more for them.

 

[BWV Dreamin]

I called AMEX to inquire about the upcoming swipe fee. They said they are not participating in this fee. If there were going to be new fees, we would be getting something in the mail stating the changes, and that is not happening, at least not at this time. So maybe these changes are held to just Mastercard and Visa. FYI, I have not received anything in writing from the last two companies mentioned here about the fees.

 

[AmberHeartsDisney]

thanks for the heads up!

 

[Marionnette]

Less consumer protection paying in cash..Maybe that is the real motivation for some businesses pushing for the change?

Businesses didn't push for this change and in all likelihood, most will not institute the surcharge. The paperwork is cumbersome to even advise Visa and Mastercard of your intent to charge a surcharge. The bookkeeping is a nightmare - different surcharge rates for different credit cards depending on what the actual cost to the business is. And of course, there's a chance of alienating your customer base, as has been evidenced in many responses here.

The truth is, it was the credit card companies that pushed for this change instead of responding to the allegations that Visa and Mastercard participated in a form of price fixing when it comes to fees charged to businesses for credit card processing. If you want to blame anyone, blame the idiot judge who sided with them and felt that this was an acceptable solution.

 

[North of Mouse]

I find it all slightly ironic, as all these years trying to get the public to go paperless, then if they start charging extra to use cc, a lot of us will go back to cash (paper)

I *will not* (if a choice) *pay* extra to use my cc - I pay if off in full each month anyway. I doubt most businesses will go along with this.

 

[manning]

The surcharge is just a scam to make more money. How?

The merchant wants you to believe using the card is costing him money. No he's not. The cost of using the card is built into the price. You end up paying for the card use two ways. 1) The credit card fee built into the price and 2) the surcharge.

To be honest the merchant would sell at a cash discount. The discount being the swipe fee to the CC company.

My response to a merchant trying to do this to me would be " I might be dumb but I'm not stupid" and never come back.

 

[Lewisc]

Business fought for better treatment from the credit card companies. I suspect they would have liked lower fees instead they got the ability to charge credit card customers more then cash customers.

 

[monarchsfan16]

If I remember correctly, this fee is a result of that credit card act that Obama brought about a couple years ago to "protect us" from the "evils" that are credit cards. The reason that debit cards aren't subjected to these fees is that they felt that debit cards aren't "evil".

In other words, the voters voted for this. It's not a business scam.

 

[MomToOne]

I called AMEX to inquire about the upcoming swipe fee. They said they are not participating in this fee. If there were going to be new fees, we would be getting something in the mail stating the changes, and that is not happening, at least not at this time. So maybe these changes are held to just Mastercard and Visa. FYI, I have not received anything in writing from the last two companies mentioned here about the fees.

This isn't a new fee that will be charged by the credit card companies. It would be a fee charged by the merchant you are shopping at, to recoup the fees they are (and alway have been) paying behind the scenes to the credit card companies on the transaction.

 

[MomToOne]

If I remember correctly, this fee is a result of that credit card act that Obama brought about a couple years ago to "protect us" from the "evils" that are credit cards. The reason that debit cards aren't subjected to these fees is that they felt that debit cards aren't "evil".

In other words, the voters voted for this. It's not a business scam.

Wrong, the ability for merchants to charge this fee is the result of a lawsuit brought by merchants against the credit card companies (who previously banned merchants from charging extra to credit card users in their contracts with the merchants). It had nothing to do with any governmental action. And it's nothing the voters did. Please educate yourself before posting statements such as this. Reading the news articles linked in the first post would be a start.

 

[wishing4PA]

But we do have gas stations that give a "discount" for using cash and I also know of small businesses (dance studios, automobile repair shops) that add surcharges for using CC's. Every time I add money to my son's lunch account online I have to pay a $1.75 convenience fee. We had wanted to pay youngest DD's tuition bills with our CC (again to get miles) but her college charges a whopping 4% fee for using a CC to pay so we nixed that one.

All anecdotal, but I can view DD's lunch account online. But I send a paper chack in with her to school to replenish it. More work for me, and probably more work for the cafeteria supervisor, but I won't pay that credit card fee.
Also anecdotal - some miles away from us a new Walmart gas station opened. One of the nearby stations apparently decided they would have to match the price, but they did that only for cash customers and card users had to pay about 10 cents more. I used to stop there all the time and would have continued, but I use my credit card for my personal recordkeeping. So I stopped shopping there. Apparently a lot of other people did, too, because it just went out of business - though I don't know if we can blame the CC charge in this case though.

It's not just about whether or not CC customers spend more (although I believe that is a significant issue and I suspect where companies will lose the most money if they institute a service charge). You also have to look at things like:
- Is there a labor savings or cost when customers use credit cards? Does it take longer for your cashier to process the transaction one way or another, leading to increased staffing costs if an overwhelming majority paid one way vs. the other?
- Is book keeping easier one way or the other? What is the cost of any increased complexity?
- What is the likelihood and cost of errors one way or the other (e.g. cashiers giving too much change on a cash transactions)?
- What are your likelihood and costs of employee theft one way or the other? (Stealing from the cash drawer, not ringing transactions to keep the cash, etc.)
- What is the cost of equipment to support each type of transaction?
- What is the risk of customers giving fraudlent payment methods each way (e.g. counterfiet cash, bounced check, stolen credit card), and what is the cost to the business each way?

I find it all slightly ironic, as all these years trying to get the public to go paperless, then if they start charging extra to use cc, a lot of us will go back to cash (paper)

Yes, the irony. Which way are we heading, cashless or backwards? (Though cash does have advantages -- think ID theft. Ever have your ID stolen from a dollar bill? (It's not fair to reply if you are secretary of the treasury.)

 

[monarchsfan16]

Wrong, the ability for merchants to charge this fee is the result of a lawsuit brought by merchants against the credit card companies (who previously banned merchants from charging extra to credit card users in their contracts with the merchants). It had nothing to do with any governmental action. And it's nothing the voters did. Please educate yourself before posting statements such as this. Reading the news articles linked in the first post would be a start.

Then something must have changed, because there WAS a component of that law that allowed for the merchants to charge fees.

 

[Lewisc]

Then something must have changed, because there WAS a component of that law that allowed for the merchants to charge fees.

Nothing has changed. This thread is about the ability of a store to charge a surcharge, at the point of sale, to customers who pay with a credit card. This specific change is the result of the law suit.

There were other changes allow retailers to have a minimum charge for credit card sales, the ability to offer a cash discount etc which were the result of a law.

Again the change being discussed in this thread is solely due the settlement of a law suit.

 

[disneylove69]

Glad I am in a state that does not allow this!

One thing to be glad about living in California. Usually the state costs me money.