New credit card surchages?? Help!

[Marionnette]

Sorry, but it's not a correct usage at all. I guess not many people on the forum are business owners. Merchant service fees (the fees that credit card companies charge businesses for each credit card transaction) can often be in the neighborhood of 2.5%. So everytime you use a credit card, the business owner pays 2.5% of that transaction of Visa/Mastercard or whoever. Most consumers have no idea that businesses have to do this. With fees continuing to go up, it's only common sense that those fees are going to have to be passed back to the consumer. It is not gouging at all.

Exactly!

Now, people can stamp their feet and declare that they're going to take their business elsewhere but it's naive to believe that "elsewhere" isn't also charging them for the convenience of using their credit cards. They just have the cost built into their pricing structure and everyone pays for the credit customer's convenience, including the cash customers.

We've seen more and more people using plastic to pay their bill with the economy in the toilet. It means that we have had to change our prices to reflect the increase in our overhead that this causes. We are contemplating a move towards offering a discount or another incentive for cash payments.

 

[ssawka]

Exactly!

Now, people can stamp their feet and declare that they're going to take their business elsewhere but it's naive to believe that "elsewhere" isn't also charging them for the convenience of using their credit cards. They just have the cost built into their pricing structure and everyone pays for the credit customer's convenience, including the cash customers.

We've seen more and more people using plastic to pay their bill with the economy in the toilet. It means that we have had to change our prices to reflect the increase in our overhead that this causes. We are contemplating a move towards offering a discount or another incentive for cash payments.

It all comes down to pricing and competition. If a small business owner is providing something that the big stores are not providing, or can provide something cheaper (not likely) then people may be willing to pay the fee. However, if the small business is not doing that, some people will walk. The big question is, as a business owner are you willing to allow a customer to walk out the door over a 2.5% fee? For some products, you may choose to do this if the markup is not that great. However, it is yet another variable that may drive consumers away from your business.

 

[Marionnette]

It all comes down to pricing and competition. If a small business owner is providing something that the big stores are not providing, or can provide something cheaper (not likely) then people may be willing to pay the fee. However, if the small business is not doing that, some people will walk. The big question is, as a business owner are you willing to allow a customer to walk out the door over a 2.5% fee? For some products, you may choose to do this if the markup is not that great. However, it is yet another variable that may drive consumers away from your business.

You just aren't getting it.

YOU ARE ALREADY PAYING THAT FOR THAT FEE, WHETHER YOU PAY BY CREDIT CARD OR WITH CASH!

That's true whether you shop at Walmart or at the Mom & Pop on the corner. A good businessman works the cost of doing business into his pricing.

 

[nunzia]

There is supposed to be a sign on the door and near the cash register if they are charging more for credit. I don't think, from what I've read, that all merchants will be doing this.

I will take my business to those that don't decide it's worth it to gouge their loyal customers.

I do not see it that way..As a one time small business owner, those credit card fees can hurt..guess who is REALLY paying for all your credit card rewards? Big companies that do this maybe irritate me a bit more, but they still have that bottom line to worry about so I'll just go more toward cash. I usually only use the CC online anyway, since cash is impossible, so we'll see what happens there, but overall, I don't think it's a bad idea for customers to realize that companies allowing guests to pay with a CC is costing the company money.

 

[tasha99]

Sorry, but it's not a correct usage at all. I guess not many people on the forum are business owners. Merchant service fees (the fees that credit card companies charge businesses for each credit card transaction) can often be in the neighborhood of 2.5%. So everytime you use a credit card, the business owner pays 2.5% of that transaction of Visa/Mastercard or whoever. Most consumers have no idea that businesses have to do this. With fees continuing to go up, it's only common sense that those fees are going to have to be passed back to the consumer. It is not gouging at all.

It's not gouging, but it's a way of restructuring the payment that will likely be painful to small businesses. I think businesses that take plastic make more money because people are more likely to buy that extra item when they use a card. If I was in a store that wouldn't take my credit card without paying the fee, I think I'd go to a different store (and who won't charge the fees? My guess is the big box stores). My guess is Visa/MC will lose money on this as people balk, and small businesses will lose money if they charge the fee rather than rolling the average cost of processing into their pricing. The previous structure was set for maximum purchasing, and the new structure is set for fairest purchasing (only people who use the service pay the fee).

**edited to add, I don't actually use credit cards for purchases, but if I did (or as they say, back in the day . . .)

 

[ssawka]

You just aren't getting it.

YOU ARE ALREADY PAYING THAT FOR THAT FEE, WHETHER YOU PAY BY CREDIT CARD OR WITH CASH!

That's true whether you shop at Walmart or at the Mom & Pop on the corner. A good businessman works the cost of doing business into his pricing.

Sure, but that means that a Mom & Pop has to be competitive whether they charge the fee or not. In other words, if a Mom & Pop shop is selling at the same price as WalMart and then adds on the fee, guess what; customers will walk!

 

[Marionnette]

Sure, but that means that a Mom & Pop has to be competitive whether they charge the fee or not. In other words, if a Mom & Pop shop is selling at the same price as WalMart and then adds on the fee, guess what; customers will walk!

Being competitive doesn't necessarily mean charging the same price. I don't know of any Mom & Pop stores that charge the same price as Walmart for everything. They can't. Walmart gets volume discounts from their wholesalers that Mom can't.

But Mom & Pop are right down the road from you. Their kids go to school with yours. When you buy a left-handed smokeshifter from them, they'll install it for free and if it starts moving smoke too far to the right, they'll adjust it for you at no charge. Walmart charges you less for the smokeshifter, but there's no one there who can tell you if it's the correct model for your do-hickey. They have no idea how to install it and it it goes out of alignment, they'll tell you to call the manufacturer.

That's how Mom & Pop stay competitive.

BTW, Walmart IS passing the cost of credit card processing on to their consumers. It doesn't show up as a line item.It's build into their prices as well. Credit card processing fees are not a new thing. The banks have always charged merchants to do it. And Walmart has always added that cost to everything on their shelves. You pay it whether you make a credit card purchase or pay cash. It just doesn't show up as a line item on your receipt.

 

[ICF]

You just aren't getting it.

YOU ARE ALREADY PAYING THAT FOR THAT FEE, WHETHER YOU PAY BY CREDIT CARD OR WITH CASH!

That's true whether you shop at Walmart or at the Mom & Pop on the corner. A good businessman works the cost of doing business into his pricing.

Exactly...so why should I pay an ADDITIONAL fee for using a CC, if those merchants also decide to make me pay an additional 4%? We are then being double charged....as I'm sure you're not going to lower your prices across the board by 4%.

If all at possible, I'll avoid any and all merchants that try to impose additional CC fees.

 

[eliza61]

I think it's going to be really minimal damage.

1) most businesses will not opt in for the simple fact of the negative perception. they will raise their prices on their goods, post a nice little sign saying "no cc transaction fees" that will give everyone a warm and fuzzy feeling about the store and minimally raise prices.

2) Now let's leave the dis world for a moment because dis world in no way represent reality. sorry guys, it does not. Nowadays it's been proven that in the war between convenience and cost, 99% of the time convenience wins. Consumer reports just did a study that shows even with price increases, less than 2% of people will go out of their way for a lower price or change their shopping habits. the only exception is when the public feels they are being ripped off. We've got stores around here that already have signs up saying "no cc charge". that gives people a warm and fuzzy feeling, even if the price goes up. Some one is not going to drive 2 miles down the road for what they feel is a minimal charge. We already know this. many people use their debt cards at non authorized machines and simple pay the 2, 3 some times 5 dollar charge. I'm supper guilty of this. If I'm at the gas station and need money, I'm using their atm and paying the $2.50 charge. I'm simply not going to bother getting in the car and making the extra stop to save 2 bucks. so not worth it for me.

3) people who shop on credit generally spend more than cash shoppers. (as Howard clark just pointed out). So all you folks who say you're going to walk? Big deal. you're in the minority (a very tiny one at that). most shoppers will not, so in all reality depending on the size of your business, the 1% who may go else where is not a huge problem. Now I know you'll say "but if millions leave".... that's just it, millions will not leave.

My families restaurant always offered a discount for cash and a noticeable one at that and guess what, 90% of our revenue was paid for with plastic.

just my take.

 

[Marionnette]

Exactly...so why should I pay an ADDITIONAL fee for using a CC, if those merchants also decide to make me pay an additional 4%? We are then being double charged....as I'm sure you're not going to lower your prices across the board by 4%.

If all at possible, I'll avoid any and all merchants that try to impose additional CC fees.

Because Mom & Pop aren't going to charge you both. If anything, they would most likely offer their cash customers a discount instead.

The proposed surcharge for credit card usage is an accounting nightmare. The merchant can only charge the customer a surcharge that equals what it costs him for THAT customer. Every credit card has its own processing fee - AmEx is more than Visa, rewards cards are more than regular cards, the more credit card swipes at your location, the lower your overall processing fees for each card. No Mom & Pop business is going to wade through the mess that this would cause. It would cost more in accounting fees than it would save in processing costs.

 

[Gorechick]

I watched a news report that said very few will actually institute it because there are so many laws. For example, there are some states that have outlawed the surcharge so if there is a store in both the outlaw states and non outlaw states they can't institute the charge at that store. There was something about AMEX too, if a store accepts AMEX they can't put a surcharge on Visa or MC because AMEX won't have a surcharge.

 

[Good Morning Dewdrop]

I saw this on the news last night too. Wal-Mart has publicly declared they won't pass the charge along to CC users. I know the arguement is they already to (via prices) but it makes me happy as I don't like carrying a lot of cash.

 

[ssawka]

Being competitive doesn't necessarily mean charging the same price. I don't know of any Mom & Pop stores that charge the same price as Walmart for everything. They can't. Walmart gets volume discounts from their wholesalers that Mom can't.

But Mom & Pop are right down the road from you. Their kids go to school with yours. When you buy a left-handed smokeshifter from them, they'll install it for free and if it starts moving smoke too far to the right, they'll adjust it for you at no charge. Walmart charges you less for the smokeshifter, but there's no one there who can tell you if it's the correct model for your do-hickey. They have no idea how to install it and it it goes out of alignment, they'll tell you to call the manufacturer.

That's how Mom & Pop stay competitive.

BTW, Walmart IS passing the cost of credit card processing on to their consumers. It doesn't show up as a line item.It's build into their prices as well. Credit card processing fees are not a new thing. The banks have always charged merchants to do it. And Walmart has always added that cost to everything on their shelves. You pay it whether you make a credit card purchase or pay cash. It just doesn't show up as a line item on your receipt.

ITA! And I know that the credit card charges are rolled into the pricing structure. I have two business degrees, you don't have to tell me how businesses operate.

As for how Mom & Pop make their money, go back and reread my first post. I said

If a small business owner is providing something that the big stores are not providing, or can provide something cheaper (not likely) then people may be willing to pay the fee.

It is precisely those intangibles that I was referring to. For some products that will work and I will absolutely purchase from a company that is providing me with better service. But for everyday widgets, I really do not care who I am purchasing from. For these types of products, I prefer to purchase from Amazon because I know they have what I need in stock and I don't have to pay credit card fees or sales tax, and with Prime the shipping is already paid for.

Maybe it depends on where you live, but where I live it is very difficult to find a Mom & Pop shop and if you do they often show the same indifference towards their customers as the big box stores. Of course, there are exceptions to this and those are the businesses I prefer to deal with. What really frustrates me though is the fact that I cannot even find the products I want to buy in any stores near me. I often find I am better off avoiding Brick & Mortar stores all together so that I do not have to waste time sitting in traffic to find that the store does not have what I need.