Colorado looks to reverse law outlawing credit car... - Page 2 - myFICO® Forums

iced · ‎03-10-2021

@SouthJamaica wrote:
@Brian_Earl_Spilner wrote:
@Anonymous wrote:
@Brian_Earl_Spilner wrote:
Sounds like they're aligning with just about every other state in the country.
Yep, caring more about businesses than people. It was bound to happen as CO becomes new CA.
That's one way to look at it. Another is, by being able to pass those fees along, small business have a better chance at surviving, which means they can stay open and keep all of their employees working.
Another way to look at it is that a business needs customers. And if some customers like to pay by credit card, I think it's good business not to discourage them.

If you're a retailer, and the 3% is cutting into your profits, my suggestion is to figure out what percentage of your sales are from credit cards, multiply that by 3%, and and tack that on to your prices.E.g., if half your sales are with credit cards, add 1.5% to your prices.

Also, by tacking on a surcharge or convenience fee, it's like saying to your credit and debit card customers: I value your business less than that of my currency paying customers.

Customers like this incentivize businesses to be secretive about their costs. If they just silently roll that surcharge into the cost of all their products/services, nobody will notice or care, but if they call it out in an attempt to be honest and transparent with customers, those customers pull the aggrieved or entitled card. By hiding these costs, and using your own argument, that same business is now saying they value cash-paying customers business less than card-paying ones since cash buyers pay for credit card surcharges even though they didn't use one.

No good deed goes unpunished.

Anonymous · ‎03-10-2021

@iced wrote:
@SouthJamaica wrote:
@Brian_Earl_Spilner wrote:
@Anonymous wrote:
@Brian_Earl_Spilner wrote:
Sounds like they're aligning with just about every other state in the country.
Yep, caring more about businesses than people. It was bound to happen as CO becomes new CA.
That's one way to look at it. Another is, by being able to pass those fees along, small business have a better chance at surviving, which means they can stay open and keep all of their employees working.
Another way to look at it is that a business needs customers. And if some customers like to pay by credit card, I think it's good business not to discourage them.

If you're a retailer, and the 3% is cutting into your profits, my suggestion is to figure out what percentage of your sales are from credit cards, multiply that by 3%, and and tack that on to your prices.E.g., if half your sales are with credit cards, add 1.5% to your prices.

Also, by tacking on a surcharge or convenience fee, it's like saying to your credit and debit card customers: I value your business less than that of my currency paying customers.
Customers like this incentivize businesses to be secretive about their costs. If they just silently roll that surcharge into the cost of all their products/services, nobody will notice or care, but if they call it out in an attempt to be honest and transparent with customers, those customers pull the aggrieved or entitled card. By hiding these costs, and using your own argument, that same business is now saying they value cash-paying customers business less than card-paying ones since cash buyers pay for credit card surcharges even though they didn't use one.

No good deed goes unpunished.

That's how business has always worked though. Businesses price their products around their expenses and margins they deem to be acceptable. This isn't the government where transparency is mandated by the people. I will not shoulder the burden of the business' contractual obligations for them. They can eat it themselves or spread it around to everyone like they do with all of their other expenses.

Keep in mind that taking credit cards must be making them more money than without or they would have stopped taking them. Now they just want to get greedy and make us pay for the privilege of paying them. Total nonsense.

iced · ‎03-11-2021

@Anonymous wrote:
That's how business has always worked though. Businesses price their products around their expenses and margins they deem to be acceptable. This isn't the government where transparency is mandated by the people. I will not shoulder the burden of the business' contractual obligations for them. They can eat it themselves or spread it around to everyone like they do with all of their other expenses.

Keep in mind that taking credit cards must be making them more money than without or they would have stopped taking them. Now they just want to get greedy and make us pay for the privilege of paying them. Total nonsense.

Some businesses are trying to be more transparent with how much things cost and what is done with the revenue. More and more people are now demanding such transparency from those they do business with.

"This is the way it's always been done" isn't a mandate or a valid reason to do things that are misleading or archaic. Airlines, rental cars, mortgage lenders, and various other businesses have been itemizing fees for a while now. This isn't new. Even DoorDash and Uber Eats itemize out local regulatory fees from their standard service fees now.

I still fail to understand the logic that they're being greedy if they tell you why they're charging you more but they're not greedy if they don't tell you why they're charging you more. If anything, they're trying to call out that they don't get that extra money they're charging you, the credit card issuer does.

And, that's the thing -- you have been shouldering that burden. Their crime was telling you that you were.

And thus no good deed goes unpunished.

K-in-Boston · ‎03-12-2021

@iced wrote:
Airlines, rental cars [snip] have been itemizing fees for a while now.
[snip]
If anything, they're trying to call out that they don't get that extra money they're charging you, the credit card issuer does.

This is a false equivalency. Taxes, excise fees, regulatory fees, location surcharges, etc. are fees that are imposed on the end consumer that these businesses are required to collect on behalf of the relevant agency. It is not a part of the cost of doing business like rent, utilities, merchant fees, etc. but a pass-through fee. Looking at my last Hertz rental receipt, Hertz is not making a dime from the ~$50 in Concession Fee Recovery (charged by the airport), Facility Use Fee (charged by the airport), Road Safety Program Fee (charged by the state), state and local tax (charged by the state and city, often significantly higher than standard sales taxes), etc.

Businesses that choose to impose surcharges to make up for credit card merchant fees often take a short-sighted approach to business, much in the way that many cash-only businesses do. It has been well-studied and shown that consumers who pay with a credit card typically spend significantly more with the same merchant than consumers paying cash, and with American Express cardholders in particular that percentage of additional spending is very high. Why would any business want to discourage credit card use in lieu of cash? Cash comes with its own headaches in additional labor and risk.

The other issue with this is that merchants who impose credit card surcharges often charge unrealistic fees. Outside of flat-rate credit card processing or a merchant signing a poor deal (the consumer should not be penalized for the business owner's ineptitude), debit signature transactions (which compose a small majority of credit card purchases by transactions) will not come anywhere near these fees except on very small transactions (like paying for a pack of Wrigley's gum in a vending machine small).

In other states, I have seen merchants charging as much as 5% for a credit card surcharge; that's not recouping their fees but outright gouging. I went to pick up a pizza some years back here in Boston, and they were imposing a $1 transaction fee for credit card payments. $1 on a $9 pizza - that's over 11%. I informed them that it was a violation of their merchant agreement (at the time this was universally true on all card networks in the US) and that it was illegal (and still is here: No seller in any sales transaction may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means.).

iced · ‎03-12-2021

@K-in-Boston wrote:
This is a false equivalency. Taxes, excise fees, regulatory fees, location surcharges, etc. are fees that are imposed on the end consumer that these businesses are required to collect on behalf of the relevant agency. It is not a part of the cost of doing business like rent, utilities, merchant fees, etc. but a pass-through fee. Looking at my last Hertz rental receipt, Hertz is not making a dime from the ~$50 in Concession Fee Recovery (charged by the airport), Facility Use Fee (charged by the airport), Road Safety Program Fee (charged by the state), state and local tax (charged by the state and city, often significantly higher than standard sales taxes), etc.

Businesses that choose to impose surcharges to make up for credit card merchant fees often take a short-sighted approach to business, much in the way that many cash-only businesses do. It has been well-studied and shown that consumers who pay with a credit card typically spend significantly more with the same merchant than consumers paying cash, and with American Express cardholders in particular that percentage of additional spending is very high. Why would any business want to discourage credit card use in lieu of cash? Cash comes with its own headaches in additional labor and risk.

The other issue with this is that merchants who impose credit card surcharges often charge unrealistic fees. Outside of flat-rate credit card processing or a merchant signing a poor deal (the consumer should not be penalized for the business owner's ineptitude), debit signature transactions (which compose a small majority of credit card purchases by transactions) will not come anywhere near these fees except on very small transactions (like paying for a pack of Wrigley's gum in a vending machine small).

In other states, I have seen merchants charging as much as 5% for a credit card surcharge; that's not recouping their fees but outright gouging. I went to pick up a pizza some years back here in Boston, and they were imposing a $1 transaction fee for credit card payments. $1 on a $9 pizza - that's over 11%. I informed them that it was a violation of their merchant agreement (at the time this was universally true on all card networks in the US) and that it was illegal (and still is here: No seller in any sales transaction may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means.).

So, it's a false equivalency because a vendor calls out that they collect a fee they have to pass on to another source isn't the same thing as a vendor that calls out they collect a fee they have to pass on to another source? These are mandatory, imposed fees, but nowhere does the government (to my knowledge) say those costs must be passed on and communicated to the customer. Nothing's stopping an airline from rolling those fees into the ticket price and showing it as a flat price, but that would cost them business as people who price-shop would see one airline's ticket price (excluding all fees) come in significantly cheaper than an all-inclusive airline's ticket.

How about fuel surcharges that airlines impose, or any other carrier-imposed charge that's line-itemed? Those aren't even going back to another source. Same logic as above: people want to see $69 tickets, $19 rental cars, and $7 pizzas and order without looking what the total cost will actually be. They'll just gripe about those surcharges later.

If the airline charged you $100 for a destination fee and was only sending $50 of that fee to the source, it's just as egregious and wrong as a vendor that charged you 5% credit card processing fee and only sent 2% along. With small dollar amounts like a pizza, it may just be simpler to go flat-fee than a random percent, but there's not any regulation around that so vendors are gonna do what they do. There's a simple solution to all of this -- regulation. If a state can outlaw card surcharges, they can just as easily limit how much one can charge instead.

Whether or not card spenders spend more is irrelevant. Every business who's intelligent about their margins and business is passing the credit card merchant fees on to the buyers. They aren't just eating it as a cost of doing business with card holders who spend more. Some businesses obfuscate that charge so we never know how it breaks down, and that's super-easy for them to do because we don't know a lot of their other costs. We're blissfully ignorant to whether or not they're gouging us or scraping by on a 5% margin. I think many of us assume the margins are larger and that's why when they raise prices we get mad -- we think they have this huge margin that can just eat into. We shouldn't be blissfully ignorant that we aren't already paying those fees.

Let's talk IKEA for a minute, as they took an interesting approach to this. They roll their merchant fees into the cost. How do we know this? They will discount your purchase by 1% if you pay by debit card or cash. People go 'ooh, I can save 1%' and whip out their debit card or cash. I'm going to wager their actual merchant fees are higher than 1%, so it stands to reason that they're only partially passing that lower cost on to the debit card users. That is, I suspect they pad in 2-3% to their pricing model for card fees and realized it's a good psychological trick for the masses to tell them they can save 1% by saving IKEA 2-3%. Therefore, I would wager they actually walk away with more profit from cash/debit buyers than they do CC ones.

Now, let's assume that instead all prices were lower by 1% and they said they'd charge a 1% surcharge for credit card usage. Would the reaction from customers be inverted to today, or do you think that many customers would also be outraged at being charged a surcharge? That's what I'm calling out -- this is psychological reactionism by people who were ignorant about what they were already paying for. Now they're being told about it and they don't like it.

K-in-Boston · ‎03-12-2021

We're not going to see eye to eye on whether the charges should be passed onto consumers so I'll skip the back and forth, but a few things to clarify:

So, it's a false equivalency because a vendor calls out that they collect a fee they have to pass on to another source isn't the same thing as a vendor that calls out they collect a fee they have to pass on to another source? These are mandatory, imposed fees, but nowhere does the government (to my knowledge) say those costs must be passed on and communicated to the customer.

No it's a false equivalency because we are comparing a charge that is mandated to be charged to the consumer rather a cost to the merchant. Taxes and regulatory fees are charged by a 3rd party agency that a business is obligated to collect on their behalf unless the consumer can provide legal proof that they are exempt from those taxes and/or fees, and the merchant is required to furnish this proof upon demand. Businesses are free to rebate those amounts (see Payboo card), but they must be collected from the consumer directly by the merchant, and the merchant must remit these fees on a designated timeline. Again, credit card merchant fees are a cost to the business not a fee that is being demanded of the consumer by the card issuer, payment network, or merchant processor.

As for airlines, they are highly regulated and despite numerous attempts to change it in the legislature, they must all prominently feature the full price inclusive of all taxes and fees, which prevents the $19 fare that turns into $300.

gdale6 · ‎03-13-2021

No such controls exist in Michigan. Looked for a new HVAC system for my house at the local HVAC shop, settled on one and when I pulled out my BoA cash rewards to put 2500 down so I could use up first quarters max 3% back I canceled the order upon learning they would nail me automatically for 3.5% of the charge as a fee. They were perplexed that I would cancel the order over this and not just write a check.. Told em this is a plastic society I have not written a check for over 3 years and never will again. Left them dumbfounded and walked out...

Anonymous · ‎03-13-2021

@gdale6 wrote:
No such controls exist in Michigan. Looked for a new HVAC system for my house at the local HVAC shop, settled on one and when I pulled out my BoA cash rewards to put 2500 down so I could use up first quarters max 3% back I canceled the order upon learning they would nail me automatically for 3.5% of the charge as a fee. They were perplexed that I would cancel the order over this and not just write a check.. Told em this is a plastic society I have not written a check for over 3 years and never will again. Left them dumbfounded and walked out...

Interesting as I bought a new refrigerator (energy efficient) and a new dishwasher (replace 1985) and the price was fair with a 2.9% add for use of credit. Wrote a check to the local merchant (neighbor) but was shocked. In talking it seems the customers were fine with checks. Had to go home and get mine as I do not write checks.

DaveInAZ · ‎03-24-2021

@SouthJamaica wrote:
@Brian_Earl_Spilner wrote:
@Anonymous wrote:
@Brian_Earl_Spilner wrote:
Sounds like they're aligning with just about every other state in the country.
Yep, caring more about businesses than people. It was bound to happen as CO becomes new CA.
That's one way to look at it. Another is, by being able to pass those fees along, small business have a better chance at surviving, which means they can stay open and keep all of their employees working.
Another way to look at it is that a business needs customers. And if some customers like to pay by credit card, I think it's good business not to discourage them.

If you're a retailer, and the 3% is cutting into your profits, my suggestion is to figure out what percentage of your sales are from credit cards, multiply that by 3%, and and tack that on to your prices.E.g., if half your sales are with credit cards, add 1.5% to your prices.

Also, by tacking on a surcharge or convenience fee, it's like saying to your credit and debit card customers: I value your business less than that of my currency paying customers.

Yeah, credit card fees are just a part of doing business, set your prices accordingly. And while most businesses probably don't think about it but there is also a cost to accepting cash payments. One, raising the risk of robbery, but it takes an employee time to count up the cash for a deposit, and then time to take the deposit to a bank, wait for a teller to count the deposit, and then make a change order. And then many banks are cutting back on branches, especially in small towns. In my small rural town the only bank closed up a couple years ago, now the nearest bank is 40 minutes away, so an hour & a half for an employee to make a deposit. Debit/credit deposits are all made electronically, and no need to have a supply of changes on hand.

SouthJamaica · ‎03-24-2021

@DaveInAZ wrote:
@SouthJamaica wrote:
@Brian_Earl_Spilner wrote:
@Anonymous wrote:
@Brian_Earl_Spilner wrote:
Sounds like they're aligning with just about every other state in the country.
Yep, caring more about businesses than people. It was bound to happen as CO becomes new CA.
That's one way to look at it. Another is, by being able to pass those fees along, small business have a better chance at surviving, which means they can stay open and keep all of their employees working.
Another way to look at it is that a business needs customers. And if some customers like to pay by credit card, I think it's good business not to discourage them.

If you're a retailer, and the 3% is cutting into your profits, my suggestion is to figure out what percentage of your sales are from credit cards, multiply that by 3%, and and tack that on to your prices.E.g., if half your sales are with credit cards, add 1.5% to your prices.

Also, by tacking on a surcharge or convenience fee, it's like saying to your credit and debit card customers: I value your business less than that of my currency paying customers.
Yeah, credit card fees are just a part of doing business, set your prices accordingly. And while most businesses probably don't think about it but there is also a cost to accepting cash payments. One, raising the risk of robbery, but it takes an employee time to count up the cash for a deposit, and then time to take the deposit to a bank, wait for a teller to count the deposit, and then make a change order. And then many banks are cutting back on branches, especially in small towns. In my small rural town the only bank closed up a couple years ago, now the nearest bank is 40 minutes away, so an hour & a half for an employee to make a deposit. Debit/credit deposits are all made electronically, and no need to have a supply of changes on hand.