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Frequent Contributor
Dadaluma83
Posts: 364
Registered: ‎08-23-2011
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Merchants may be allowed to charge extra for credit cards

If this does come true I will not under any circumstance shop at a place that charged extra for credit cards.

 

I would think and hope if this happens many merchants wouldn't impose the surcharge just because people are already sick of fees and paying extra for using a credit card would upset a lot of people, and if most merchants did impose the surcharge I would cancel all my rewards cards and pay exclusively cash only or paypal and only use one no annual fee and no frills credit card for emergencies or when it was necessary such as a hotel or rental car.

 

Personally the way I look at it is Visa and Mastercard are providing a service that the merchant purchases. If they don't like the terms and conditions of that service then don't buy the service.

 

What next? Will the merchants want to charge extra for parking for people who drive to the store as opposed to use public transit? Maybe tack on a little surcharge to each person to cover the costs of air conditioning in the summer or heating in the winter?

 

Thoughts?

 

http://online.wsj.com/article/SB10001424052702304022004577516613196796338.html?mod=WSJ_hps_MIDDLETop...

FICO Scores: TU: 768 (Jan 2012), EQ: 755 (Jan 2012 Lender pull)
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Revelate
Posts: 9,479
Registered: ‎12-30-2011
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Re: Merchants may be allowed to charge extra for credit cards

[ Edited ]

*shrug*

 

Either the merchant charges extra, or they just raise their prices to cover the cost.  Either way we pay for it at the end of the day.  Might actually lower the cost of goods by 2% or thereabouts making it a wash anyway.  Market will still determine an equilibrium price in most cases.

 

 

 

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cassembler
Posts: 470
Registered: ‎02-07-2011
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Re: Merchants may be allowed to charge extra for credit cards

It basically equates to a tax that the card processors can (and will) levy on the public. They'll use the money to offer more generous rewards, which we end up paying for with higher prices. More people sign up for more cards, and viola! Cash is further reduced from the equation, further pressuring merchants to accept cards.

 

The end result is that cash users come out the worst, since they pay the same elevated prices merchants charge to cover the credit card costs; but ultimately all consumers lose. Oligopolies suck sometimes.

"Credit is purely a cash flow tool. Thinking of credit as extra money you didn't have before makes it an EXPENSIVE cash flow tool."
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stan_the_man
Posts: 855
Registered: ‎06-29-2010
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Re: Merchants may be allowed to charge extra for credit cards

I was at a BBQ joint on Thanksgiving eve last year and they said that they offer a 3% discount for using cash. I would have done it if I wasn't earning 5% in rewards from my Citi Forward.


BTW -- I believe the way it works is the it is a cash discount, rather than a CC surcharge in most businesses.

Established Contributor
stan_the_man
Posts: 855
Registered: ‎06-29-2010
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Re: Merchants may be allowed to charge extra for credit cards


cassembler wrote:

It basically equates to a tax that the card processors can (and will) levy on the public. They'll use the money to offer more generous rewards, which we end up paying for with higher prices. More people sign up for more cards, and viola! Cash is further reduced from the equation, further pressuring merchants to accept cards.

 

The end result is that cash users come out the worst, since they pay the same elevated prices merchants charge to cover the credit card costs; but ultimately all consumers lose. Oligopolies suck sometimes.


It seems like every time one of these merchant swipe fees articles gets posted I'm defending the CCCs/networks/merchant banks and attacking the merchants. Here goes again.

 

The most important thing you can ever understand is that no form of payment ever comes without cost and risk of acceptance. Most merchants overlook the benefits of CC acceptance and just see the cost, and they also have no clue what it costs them to accept other forms of payment.

 

Here is some examples of the business costs of various forms of payment:

 

CASH:

  • Robbery (both in terms of actual cash loss and violence)
  • Embezzelment
  • Employee Skimming (not ringing up transactions)
  • Counterfeit Currency
  • Increased Beginning & End Of Shift Time (to count cash drawers)
  • Register Dropsafes
  • Office Dropsafes
  • Armored Car Services
  • Bank Fees (to process larger deposits)
  • Bonding Insurance
  • Employee Incompetence (employees who can't count)

CHECKS:

  • Counterfeit Checks/Check Fraud
  • Insuffifcient Funds
  • Check Verification Service
  • Increased Transaction Time (to account for the time it takes to process the check)
  • Bank Fees

CREDIT CARDS:

  • Merchant Swipe Fees
  • Merchant Account Fees
  • Credit Card Terminals
  • Data/Internet Lines
  • Chargebacks
  • Fraud (situations where the fraud comes back to the merchant)

For consumers, the direct costs are:


CASH:

  • Loss/Theft
  • Access Costs/Fees (ATM fees, teller fees, etc.)
  • Storage

CHECKS:

  • Banks Fees
  • Check Printing Fees
  • Increased Fraud Risk
  • Privacy Risk (full name, address, telephone number and driver's license number is usually part of the check acceptance process)

CREDIT CARDS:

  • Annual/Monthly Fees

BTW -- Have you ever noticed that many cash heavy businesses offer some form of reward if you report not receiving a receipt to a manager? It's because they have a high rate of employee skimming without that policy in place.

Frequent Contributor
Dadaluma83
Posts: 364
Registered: ‎08-23-2011
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Re: Merchants may be allowed to charge extra for credit cards


cassembler wrote:

It basically equates to a tax that the card processors can (and will) levy on the public. They'll use the money to offer more generous rewards, which we end up paying for with higher prices. More people sign up for more cards, and viola! Cash is further reduced from the equation, further pressuring merchants to accept cards.

 

The end result is that cash users come out the worst, since they pay the same elevated prices merchants charge to cover the credit card costs; but ultimately all consumers lose. Oligopolies suck sometimes.


Actually it is basically a tax that the merchants can and will levy on the public if they get the chance. Card processors are fighting it.

 

A cash discount and a surcharge while they may seem like simple semantics they are actually very different. Yes the merchant builds the cost of accepting credit cards into the price of the goods, the same way they build the cost of the electricity to run the building, the labor cost to pay the employees, the rent on the building, etc into the price.

 

Merchants are allowed to offer a cash discount but by and large they don't do it except for a handful of gas stations. They want that extra swipe fee money for themselves. A surcharge just punishes people who use a credit card, not reward cash paying customers.

 

Lets say a bag of chips cost 4 dollars. With a cash discount the advertised price can be 4 dollars, but if you pay in cash you can buy it for 3.80 lets say. A merchant is allowed to do that now by the durbin amendment. It rewards cash paying customers.

 

However with a surcharge the cash paying customer pays 4 dollars for the bag of chips, the same price they are paying now, while the credit card customer will pay 4.10 for it. Nobody wins but the merchant. Cash paying customers stay the same, and credit card users are punished.

 

The merchants basically want to accept electronic payments for free, or at a very little cost. They will not lower their prices from where they are now. They will merely make the customer pay the processing costs.

FICO Scores: TU: 768 (Jan 2012), EQ: 755 (Jan 2012 Lender pull)
Valued Contributor
thrasher865
Posts: 1,163
Registered: ‎05-21-2008
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Re: Merchants may be allowed to charge extra for credit cards


cassembler wrote:

It basically equates to a tax that the card processors can (and will) levy on the public. They'll use the money to offer more generous rewards, which we end up paying for with higher prices. More people sign up for more cards, and viola! Cash is further reduced from the equation, further pressuring merchants to accept cards.

 

The end result is that cash users come out the worst, since they pay the same elevated prices merchants charge to cover the credit card costs; but ultimately all consumers lose. Oligopolies suck sometimes.


Nope.  This will have quite the opposite effect.  It will make rewards cards much more worthless.  Even if you get 5% cash back, you then have to pay 2%+ on your transaction.  Card issuers will have to bump up the rewards just so the consumer can break even on using their cards.


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Valued Contributor
thrasher865
Posts: 1,163
Registered: ‎05-21-2008
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Re: Merchants may be allowed to charge extra for credit cards


stan_the_man wrote:

 

BTW -- I believe the way it works is the it is a cash discount, rather than a CC surcharge in most businesses.



Thats the way it works now, due to Visa and MC's merchant agreements.  After this lawsuit, it will be a surcharge.


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Dadaluma83
Posts: 364
Registered: ‎08-23-2011
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Re: Merchants may be allowed to charge extra for credit cards

Well looks like the merchants true colors are showing. I don't mean the mom and pop places I mean big retail like Wal Mart and Home Depot that were the driving force behind all this.

 

The whole argument that brought on the Durbin amendment that swipe fees are too expensive and if they were lowered the merchants would pass the savings on to the customer. Well that was a load of baloney and this proves it.

 

Merchants don't want to offer a cash discount, even though it is perfectly legal to do so to reward people who use a cheaper method of payment. Instead they want to keep charging the same, and charge credit card customers extra. Of course the consumer loses out in all this. Banks are looking to recover costs lost from the durbin amendment by charging more fees or increasing current ones, the merchants are looking to nickle and dime their customers too.

 

So what sort of fee will the merchants look to next? How about charge for parking? After all the cost to maintain the parking lot is built into the price of goods that everyone pays. So people who take public transportation are subsidizing people who drive their own vehicle. Same argument as cash vs credit.

 

This is just aggrivating because instead of now where I just walk into a store and do my shopping, after this every time I go into a store for the first time I will have to ask if they charge extra for credit card payments. Even if I am paying with cash, I will walk out on principle.

FICO Scores: TU: 768 (Jan 2012), EQ: 755 (Jan 2012 Lender pull)
Regular Contributor
sunshine7157
Posts: 137
Registered: ‎11-11-2011
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Re: Merchants may be allowed to charge extra for credit cards


Dadaluma83 wrote:

Well looks like the merchants true colors are showing. I don't mean the mom and pop places I mean big retail like Wal Mart and Home Depot that were the driving force behind all this.

 

The whole argument that brought on the Durbin amendment that swipe fees are too expensive and if they were lowered the merchants would pass the savings on to the customer. Well that was a load of baloney and this proves it.

 

Merchants don't want to offer a cash discount, even though it is perfectly legal to do so to reward people who use a cheaper method of payment. Instead they want to keep charging the same, and charge credit card customers extra. Of course the consumer loses out in all this. Banks are looking to recover costs lost from the durbin amendment by charging more fees or increasing current ones, the merchants are looking to nickle and dime their customers too.

 

So what sort of fee will the merchants look to next? How about charge for parking? After all the cost to maintain the parking lot is built into the price of goods that everyone pays. So people who take public transportation are subsidizing people who drive their own vehicle. Same argument as cash vs credit.

 

This is just aggrivating because instead of now where I just walk into a store and do my shopping, after this every time I go into a store for the first time I will have to ask if they charge extra for credit card payments. Even if I am paying with cash, I will walk out on principle.


Agreed.


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