Credit Card Fees

[KMEM]

What shall you do when and if a vendor such as your local grocery store charges you a fee to use your credit card?

 

This fee could easily be 4% of your total bill.

 

So far, no fees for debit cards but those might be right behind.

 

Personally I shall complain to the parent company and do whatever I can to eliminate any such charges. However, it might take a concerted effort by many of us to effect any change.

 

Best regards,

KMEM

[operalover21]

What shall you do when and if a vendor such as your local grocery store charges you a fee to use your credit card?

 

This fee could easily be 4% of your total bill.

 

So far, no fees for debit cards but those might be right behind.

 

Personally I shall complain to the parent company and do whatever I can to eliminate any such charges. However, it might take a concerted effort by many of us to effect any change.

 

Best regards,

KMEM

 

The credit card company charges the grocer everytime they accept a credit card. Why shouldn't they pass this charge along to their customers? It's no different than gas stations who have one price for cash and one for credit. I'd much rather they do this than raise the price of their food or gas for everyone. This way only the people who want the convenience of using a credit card are charged. It's perfectly acceptable, IMHO.

 

There is a solution. Pay cash.

[+ WilliamM]

I pay a 2% fee for using an American Express card on a bill I must pay twice a year. I feel lucky to only pay a small fee on this one bill, which is either $1,000 0r $1,500 depending on the year (the bill, not the fee). I might complain, or more likely just pay cash, if the local grocery store charged a fee. I understand it may be issue in the future, but it is not right now. It's not at the top of my list of concerns.

[SteveEscort]

In the UK a shop is charged around 1.2 to 3% for a card transaction. The lower end of the scale is for swiped/pin transactions and the higher for cardholder not present.

 

Debit cards attract a fee of around 40p regardless of the value with no percentage fee.

 

I would suspect this is the same in the United States or would be very similar.

 

Third party companies like Square, iZettle, Nochex and Paypal can charge their customers a sliding scale depending on their worthyness and personal/business status and may not differentiate between debit or credit cards.

[corndog]

State laws and agreements with credit card processors limit the ability of retailers to charge extra for credit card use, although this is apparently changing in some states tomorrow, January 27, 2013:

 

http://usa.visa.com/personal/using_visa/checkout_fees/index.html

[biguy]

Already certain states such as California do not allow the surcharge. They also have to post if they are going to charge it.

[KMEM]

Interesting replies. I am not so willing to pay any additional fees now or in the future. I think all states will have to post a notice that they are charging for the use of plastic of any description. Overhead is overhead and it is up to the vendor to deal with this issue, not just pass it along. We all are now paying for electricty, water, insurance, labor and all of the other overhead costs of conducting a business, why should various collection fees be any different?

 

Has anyone had to pay a fee for using cash or had to provide an ID for using cash? I have and it is just around the corner as a frequent nuisance if we as consumers do not object as we go.

 

Best regards,

KMEM

[corndog]

I think that there is a good argument that the retailer benefits from accepting credit cards, and therefore should cover the fees. In theory, people spend more freely when using a credit card, in addition to the convenience and safety of reducing the amount of cash that the merchant has to deal with.

 

As a small business which sells to other small businesses, I can see the benefit of accepting credit cards: as the alternative, I can bill my client, who will expect "net 30" terms but usually pay in 45-60 days, or I can absorb the 2-3% credit card fee and have payment immediately.

 

I don't want to go back to carrying around cash for everyday purchases, so I'll do my best to avoid any retailers which try to charge extra for credit card transactions.

[Guest]

Currently, there are laws limiting surcharging in: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Well, those states cover more than half of the U.S. population. Here in California, they apparently allow gasoline stations to tack on a surcharge because many do. So when I'm shopping for gas, I just ignore the cash price and compare the credit prices. I'm not sure if gas stations get charged more by credit card companies, because many credit card companies give extra points for charges made at gas stations (and supermarkets). I get 6 Hilton HHonors points per dollar at gas stations, so I like using that card at gas stations. I agree with a previous poster that the way in which credit card customers are charged a surcharge seems like a pretext to charge more than an advertised price, rather than an attempt to recoup fees. As the previous poster said, there are costs involved in sending an employee to the bank to deposit the cash, as well as risks of being robbed when cash is at hand (or expenses involved in keeping a safe system). Credit cards also increase a merchant's business. So credit cards are a convenience to the merchant as well as to the customer. I still see some customers at the grocery store paying by check--and for the life of me I have no understanding about why someone would pay by check in this day and age. Maybe their credit rating is so low that they can't get any credit card?

[Atlantagaguy]

This one is easy, a company that wants to charge a surcharge for me to use my credit card, will be a company that I won’t do business with. I don’t like to carry cash and most fraud is stemming from debit card use, I will not use a debit card period.

[KMEM]

Anyone can have a credit card even if it is courtesy of a pre-payment. So, if you have cash to write a check, then you have cash to "buy" a credit card.

 

I used to feel the same way about debit cards and never carried one but there are more "safeguards" now than ever for them and with the ease of watching your account on line you can catch problems very early on. They are cheaper for the merchant to take and likely there will not be a fee to use them, at least not as quickly as for credit cards.

 

I agree about checks. I write about 5 a year.

 

Best regards,

KMEM

[+ LIguy]

My business accepts credit cards and we pay 35.00 per month just for the priviledge of accepting Visa and MC. We pay an additional 7.00 to accept AmEx. Then we pay a percentage of the customer's bill. If a client uses a card like a Worlds Rewards Visa etc, we pay a higher percentage than a regular(?) Visa or MC. All these cards offering great rewards have to be paid by someone and it's usually the vendor. As a small business owner it's getting increasingly difficult to compete with the big guys who are just waiting in the wings to take us small guys over.

The latest thing in my area is that landlords in shopping centers are also charging a percentage of your yearly gross in addition to monthly rent and real estate taxes.

[Atlantagaguy]

My business accepts credit cards and we pay 35.00 per month just for the priviledge of accepting Visa and MC. We pay an additional 7.00 to accept AmEx. Then we pay a percentage of the customer's bill. If a client uses a card like a Worlds Rewards Visa etc, we pay a higher percentage than a regular(?) Visa or MC. All these cards offering great rewards have to be paid by someone and it's usually the vendor. As a small business owner it's getting increasingly difficult to compete with the big guys who are just waiting in the wings to take us small guys over.

The latest thing in my area is that landlords in shopping centers are also charging a percentage of your yearly gross in addition to monthly rent and real estate taxes.

I am sorry LIguy, but you’re in business. AS a consumer I am tired of paying extra fees that business is coming up with. Here is the deal, if you don’t think credit card help your business don’t accept them. But studies have shown that people that use credit card are more appt to spend more. Most businesses build in the price of all these operational cost into the finale price. I hope the consumer stands their ground on this issue. We have allowed the Airlines to go wild on adding fees. Next thing we will see is businesses want us to pay their marketing and advertising fees, OH wait a minute we do!

[KMEM]

My business accepts credit cards and we pay 35.00 per month just for the priviledge of accepting Visa and MC. We pay an additional 7.00 to accept AmEx. Then we pay a percentage of the customer's bill. If a client uses a card like a Worlds Rewards Visa etc, we pay a higher percentage than a regular(?) Visa or MC. All these cards offering great rewards have to be paid by someone and it's usually the vendor. As a small business owner it's getting increasingly difficult to compete with the big guys who are just waiting in the wings to take us small guys over.

The latest thing in my area is that landlords in shopping centers are also charging a percentage of your yearly gross in addition to monthly rent and real estate taxes.

 

The annual gross percentage has been going on most places such as malls/shopping centers for decades at least. I have always viewed it as similar to a loss leader in that the monthly rent was kept artificially low. The worst thing about percentage of gross is that it in no way considers profit and loss. Even the IRS suggests that they consider profit and loss, whether they actually do or not.

 

Best regards,

KMEM

[operalover21]

Already certain states such as California do not allow the surcharge. They also have to post if they are going to charge it.

 

Look at it this way. There are two customers. One buys an item for $1.00 with a credit card and the other pays $1.00 cash. In the cash transaction, the merchant gets the full $1.00. In the credit card transaction, the merchant gets 97 cents. So the merchant gets less when you use a credit card. Sure, he could eat the charge as a business decision. I use paypal for my business but I also receive checks. With a check, I get the whole amount but with paypal I get less. It's a choice I make in my business to give my customers the convenience of using paypal and to get paid faster. But it's perfectly acceptable to charge people for the convenience.

 

It seems very anti-business to not allow a merchant to do that. I would not accept credit cards as a merchant in CA if they didn't allow me to charge.

[operalover21]

Interesting replies. I am not so willing to pay any additional fees now or in the future. I think all states will have to post a notice that they are charging for the use of plastic of any description. Overhead is overhead and it is up to the vendor to deal with this issue, not just pass it along. We all are now paying for electricty, water, insurance, labor and all of the other overhead costs of conducting a business, why should various collection fees be any different?

 

Has anyone had to pay a fee for using cash or had to provide an ID for using cash? I have and it is just around the corner as a frequent nuisance if we as consumers do not object as we go.

 

Best regards,

KMEM

 

I know you can probably see the difference but let me point it out. In the case of the things you describe -- overhead -- those costs are shared by all the customers. Use of a credit card is not. Therefore, the analogy doesn't work. You are, in effect, asking all of the other customers to subsidize your use of a credit card because you choose not to use cash. That's fine but let's just understand that that is what you are asking.

 

I think the choice -- on both the side of the customer and the merchant -- is what is paramount here. As with most things, I believe in choice without government interference. Let the merchant and the customer decide what they wish to do in this situation.

[operalover21]

I am sorry LIguy, but you’re in business. AS a consumer I am tired of paying extra fees that business is coming up with. Here is the deal, if you don’t think credit card help your business don’t accept them. But studies have shown that people that use credit card are more appt to spend more. Most businesses build in the price of all these operational cost into the finale price. I hope the consumer stands their ground on this issue. We have allowed the Airlines to go wild on adding fees. Next thing we will see is businesses want us to pay their marketing and advertising fees, OH wait a minute we do!

 

In what other areas of life would you be willing to accept two people being treated differently? Race? Gender? Sexual orientation? It's a slippery slope. You're asking one set of customers to subsidize the credit card use of another set of customers and saying that that's okay. I really hate subsidies of any kind. I hate the fact that people with kids get tax breaks, I hate it that people with mortgages get tax breaks. Heck, I paid cash for my co-op. I get NO tax break because I chose NOT to go into debt to buy a home.

 

See where all of this stuff gets us?

 

Yes, there are fees that are getting crazier and crazier but some seem legitimate. I never understood those people who complained about paying ATM fees when they use an ATM that isn't from their bank. Who do you think should pay for that? Me? You're paying for convenience and what I'm hearing here -- and elsewhere -- is a variation on "I want the convenience but I don't want to pay for it."

 

Pretty selfish if you ask me.

[KMEM]

There are almost endless variations of these themes. In the case of the customer who buys a $1 item for cash but then walks out, what if the credit card customer bought two $1 items because you "made it easy for him to shop" by accepting credit cards? Are you ahead or behind in making the $1 or $1.94 in gross receipts? Only you can tell.

 

I would like to think you know that accepting a check is not all profit. A business checking account to receive those checks does cost money and, in some cases, a lot of money.

 

In every business, all the customers do subsidize various things to one degree or another; the same as paying via taxes for the government to "do things" for all. Is it not up to the owner to figure out how to make these transactions fair not only to the owner but also to the customers, if one is be fair?

 

The customers sharing overhead is one way of looking at things but another is the owner figuring out how to include overhead in the price of goods without driving off customers. Don't you think?

 

Best regards,

KMEM

[JT Brooklyn]

The credit card company charges the grocer everytime they accept a credit card. Why shouldn't they pass this charge along to their customers? It's no different than gas stations who have one price for cash and one for credit. I'd much rather they do this than raise the price of their food or gas for everyone. This way only the people who want the convenience of using a credit card are charged. It's perfectly acceptable, IMHO.

 

There is a solution. Pay cash.

 

Rarely do BUT on this I do Totally Agree with Operalover!

[bigvalboy]

I think that there is a good argument that the retailer benefits from accepting credit cards, and therefore should cover the fees. In theory, people spend more freely when using a credit card, in addition to the convenience and safety of reducing the amount of cash that the merchant has to deal with.

 

As a small business which sells to other small businesses, I can see the benefit of accepting credit cards: as the alternative, I can bill my client, who will expect "net 30" terms but usually pay in 45-60 days, or I can absorb the 2-3% credit card fee and have payment immediately.

I don't want to go back to carrying around cash for everyday purchases, so I'll do my best to avoid any retailers which try to charge extra for credit card transactions.

 

I think you are exactly right here corndog, studies have shown consistently across the board that credit card customers spend more, as do customers with gift cards. Rarely does a customer stop at the value of that GC, but will often go beyond.

 

I do things a little different from you however, I removed credit cards almost entirely from my life except for reservations on travel. Except for a traditional market, or restaurant, I almost inevitably receive a 5-10% discount on products or goods and services when paying by cash. My mechanics bill the other day was $980, when I pulled out cash, he immediately said, "Ya know I always give a 10% discount for cash".....I have bought furniture, home supplies (usually large amouts) cars and recreational items, and received hefty discounts. I even discussed a discount for cash with the moving co. the other day, and the driver agreed to a 10% discount on the unload end. No easy answer here, but there is frustration in having additional fees passed down to the consumer.

[jawjateck]

I use my credit cards because of the rewards that the bank pays me to use them. When fees begin to be added, I will look to conduct business elsewhere. If the cost of using the card exceeds the benefit, I will stop using them.

 

I was one of the many to complain to Verizon who eventually backed off their proposed policy to charge their customers for performing internet transactions with a cc. I told 'em, "well ok, let's see how you like getting that paper check in the mail every month." True, I could have just set up an electronic bill pay from my checking account, but the policy annoyed me, so I determined I would pay them in a way that would maximize their cost.

[Guest]

Look at it this way. There are two customers. One buys an item for $1.00 with a credit card and the other pays $1.00 cash. In the cash transaction, the merchant gets the full $1.00. In the credit card transaction, the merchant gets 97 cents. So the merchant gets less when you use a credit card. Sure, he could eat the charge as a business decision. I use paypal for my business but I also receive checks. With a check, I get the whole amount but with paypal I get less. It's a choice I make in my business to give my customers the convenience of using paypal and to get paid faster. But it's perfectly acceptable to charge people for the convenience.

 

It seems very anti-business to not allow a merchant to do that. I would not accept credit cards as a merchant in CA if they didn't allow me to charge.

 

The economics are not at all that simple. Much of a business's overhead is fixed, such as employees' compensation, utilities, and basic rent. So even if he makes less profit per unit, if he sells significantly more units, his total overhead costs per unit (TOCPU) go down, and his net profits go up. A business owner who doesn't understand this is bound to have troubles. I don't think too many people would question but that accepting credit cards increases business. Increasing business lowers TOCPU and increases net profits. Of course, this doesn't even factor in the hidden costs of cash transactions, such as securing the cash and having to pay someone to go to the bank to deposit it (and get change). Even if the business owner himself goes to the bank, it is still time=money taken away from the owner.

There are all types of business decisions a business owner has to make in order to maximize net profits. Simply looking at the gross profit from a single sale is foolish. For example, I enjoy both Subway and Quizno's sandwiches. When I find coupons for either, I usually go to whichever sandwich place has the coupons. If the franchise owner resents the fact that he is making less per sale when I bring in a coupon as opposed to the customer without the coupon, he's being foolish. What he needs to understand is that I wouldn't be there in the first place were it not for the coupon. Accepting coupons ultimately increases his business and net profits. There are many other similar decisions a wise business owner makes to increase profits, such as a supermarket that has specials which sell a product at little if any profit, but which bring in customers to hopefully spend on other items. Another example is the restaurants' OpenTable reservation system. While the restaurant has to pay OpenTable a few dollars per reservation, OpenTable ensures that customers keep their reservations, because they eliminate members who make reservations and don't show up. It's well worth it for most restaurants to pay OpenTable for this system even if they make less per diner, because it mostly eliminates the risk of a broken reservation and an empty table.

It's totally silly for a business owner to resent the 3% credit card fee because he makes a bit less per transaction. I will rarely do business with someone who doesn't take credit cards. The benefits to me for using a credit card are simply too great. Credit cards get me free hotel nights, improved statuses with airlines and hotels, and even got me a free business class ticket to Singapore last year. A wise business owner understands that credit cards involve a relatively small cost which improves marketing and the bottom line.