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(USA Today)   Now that interchange fees have been regulated to more reasonable levels, retailers have won the right to charge more if you pay with a credit card   (usatoday.com) divider line 89
    More: Asinine, interchange fees, MasterCard, visas, credit cards, supermarket chains, u.s. banks, Rite Aid  
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7554 clicks; posted to Main » on 13 Jul 2012 at 9:15 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-07-13 07:31:34 PM
Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?
 
2012-07-13 07:33:40 PM
If you pay with a credit card the merchant is charged for it, subby. Often around 1 percent but it varies.
 
ZAZ [TotalFark]
2012-07-13 07:45:29 PM
Why the hell shouldn't I be able to give a discount to a customer who pays with cash

I heard the standard card agreements allowed cash discounts but not credit card surcharges.
 
2012-07-13 07:46:24 PM
Huh, Specs Liquor has done this for years. Doesn't really bug me.
 
2012-07-13 07:59:17 PM
Is there a fee if it's a debit card instead of CC card?
 
2012-07-13 08:00:28 PM

ZAZ: Why the hell shouldn't I be able to give a discount to a customer who pays with cash

I heard the standard card agreements allowed cash discounts but not credit card surcharges.


i remember this being an issue with gas stations but then the gas stations that didnt offer a cash discount (but charging that discount fee regardless of payment type, or maybe offering both at the higher? i'm sketchy on the details now) siphoned off enough of the customer base that everyone just quittit.
 
2012-07-13 08:02:10 PM

MisterTweak: Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?


If you don't like paying 4% in fees, don't accept charge cards. That is your right as a merchant, and it's my right as a consumer to pay however I choose.

I actually always assumed merchants price everything assuming a 100% charge rate, and just make more off the cash people.
 
2012-07-13 08:02:59 PM
Too tired to read. Someone please tell me how outraged/ecstatic I should be.
 
2012-07-13 08:04:27 PM
fact is, we (people using credit cards as cash, for reward points or miles) had a good run. i wish i had figured out the angle earlier in life, or had the discipline to use it as indicated, but i got a free amazon splurge every couple months for a few years there, and that was nice. now my debit card gives rewards points, iirc, and if it's processed as a debit i think it's still got the cc customer protections on theft, etc? i dont like removing an extra layer f security, but maybe by the time we get there, there'll be other layers in place/practice?
 
2012-07-13 08:08:53 PM

coco ebert: Too tired to read. Someone please tell me how outraged/ecstatic I should be.


Very. You should be very outraged/ecstatic.

scottydoesntknow: Huh, Specs Liquor has done this for years. Doesn't really bug me.


I was going to make this same point. Also, I didn't know you were in Houston.
 
2012-07-13 08:09:59 PM

RobertBruce: If you pay with a credit card the merchant is charged for it, subby. Often around 1 percent but it varies.


I believe Wal-Mart pays 2%. A mom-n-pop is lucky to clear 91 cents on the dollar. Hell, my credit/debit card rebates me 1.5% of every transaction, no exceptions - so I'm guessing 4-6% is average.
 
2012-07-13 08:10:27 PM

MisterTweak: Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?


You've always been able to give a "cash discount." What you couldn't do was apply a SURCHARGE. That distinction between discounting from a set price and surcharging above that price is a fine one but an important one.

I don't expect major retailers will change how they do business... they don't want to dick with a X% more for credit policy. Dealing in cash alone is enough of a hassle I expect they'd be willing to just leave things as is. Small independent places, however, would prefer to deal in cash, so they may well go nuts with this. However, they've probably been doing this already with signage that says things like "5 cents/gallon discount for cash."
 
2012-07-13 08:20:15 PM
It's part of the contract a biz owner signs to accept debit and charge cards. For Charge Cards they can set a minimum--I think up to 35 dollars for charge card, for debit cards they're supposed to accept debit/bank card for even small purchases.


The Cash Discount thing is a red-herring as if the VISA/Master Card found out about that---the merchant would get yanked (in theory) for breaking their contract with VISA/Master Card.
 
2012-07-13 08:21:15 PM
And why would they do that? People will walk away.
 
2012-07-13 08:21:28 PM

MisterTweak: RobertBruce: If you pay with a credit card the merchant is charged for it, subby. Often around 1 percent but it varies.

I believe Wal-Mart pays 2%. A mom-n-pop is lucky to clear 91 cents on the dollar. Hell, my credit/debit card rebates me 1.5% of every transaction, no exceptions - so I'm guessing 4-6% is average.


It's between 2 and 4 % depending on your processor, volume and any other concessions you negotiate/limits they put on your merchant agreement.
 
2012-07-13 08:34:37 PM

Shostie: scottydoesntknow: Huh, Specs Liquor has done this for years. Doesn't really bug me.

I was going to make this same point. Also, I didn't know you were in Houston.


They are upgrading my Spec's!

Also, there is a credit card upcharge at Splendor's Cabaret as well.
 
2012-07-13 08:36:41 PM

MisterTweak: Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?


Because the Visa/MasterCard corporation put that in a stipulation when you sign on to accept credit cards. Read the EULA..for that as a merchant. With debit cards..you can't set minimum--by Fed Law.
With credit cards you (the merchant) can set a minimum. But you still have to sign on their (V/MC) terms of service to use their network and not offer 'cash discounts'.
 
2012-07-13 08:55:25 PM
The only interchange fees that were regulated were debit. It was broken into 2 categories: regulated & unregulated. Regulated banks have assets > $10Bil. Unregulated is obviously
The interchange fee is broken in to both a percentage & transaction fee. Regulated debit cards have an interchange cost of 0.05% & $0.22. Unregulated was the old rate of 0.95% & $0.20. That was recently lowered. I believe it is now 0.80% & $0.15. These fees are paid to the card issuing bank. So, if you carry a Chase debit card .05% & $0.22 per trxn of everything you buy goes to them. Your credit union card is likely the higher, unregulated rate.

On top of interchange you have you have what is called the assessment. Visa is 0.11%, Mastercard is 0.11-0.13% depending on the card type. This is paid directly to the respective card brand: Visa, Mastercard, Discover.

On top of that you have the processor mark up. This is unregulated & probably the most confusing part of pricing for any business owner as there are numerous billing schemes available. Knowing which one is best requires math. As we know, most people do not like math.

Large volume retailers often receive what is known as Pass Thru pricing. This is where the processor adds a flat markup on top of the Interchange & Assessments. If you negotiate a rate of Interchange & Assessment + 0.30% & $0.10 it works like this;

Swiped debit interchange: 0.05% & $0.22 + Assessment 0.11% + Mark up 0.30% & 0.10 = Total rate of 0.46% & 0.32.

That Delta miles reward card has a higher interchange. I believe it is 1.65% & 0.10 for a swiped transaction. That card would have a rate of 2.06% & $0.20.

Easy math: $100 trxn on debit costs the store $0.78. The card with the free airline tickets: $2.26.

They get f*cked on small ticket items. That has a completely different interchange cost. I believe it's around 1.06% & $0.05.
 
2012-07-13 09:02:52 PM

scottydoesntknow: Huh, Specs Liquor has done this for years. Doesn't really bug me.


Yup. And every time I go to the warehouse store off Smith I'm in danger of spending WAY more than I intentionally did walking in.
 
2012-07-13 09:20:58 PM
BSABSVR: Has the tl;dr version right.

BobtheFascist: With the Tolstoy version.

I run approx. 700K through annually. When all is said and done my CC effective rate is about 2.75%. That includes all the fees(statements, batchouts, higher rated corporate cards, blah blah shiat they throw in when they've worn you down). Debits come in under at 1%. I wouldn't charge more for someone running a cc because I'd look like an asshole. I'll certainly cut someone a break for cash on a big purchase and see that as part of the price negotiation. Also, I've told more than a few younger punks that I won't sell them a $1.49 soda on a credit card. They look incredulous, but I explain it to them and they usually understand.
 
2012-07-13 09:24:40 PM
Great, now I can get more crap from the douche that runs the gas station near me when I pay with an Amex.

/the only good part is the fact that it's been the same conversation for 2 years now and I find that strangely amusing.
 
2012-07-13 09:24:57 PM

But Wait There's More: Is there a fee if it's a debit card instead of CC card?


Yes. The processing fee is put into place on any transaction using plastic and rates vary depending on CC vs Debit.

/Used to program terminals for TransFirst.
//Always ask which is cheaper (depending on the plan) for the merchant. They like that.
///Farking hate that industry after working in it.
 
2012-07-13 09:29:07 PM
Speaking as a merchant -- Just assume everyone is going to pay with a cc. If they don't... bonus for you. There. All better.
 
2012-07-13 09:29:38 PM
The only places that ever gave me discounts for paying with cash is headshops.

Are we trying to make more businesses in America like headshops?

I approve of this.
 
2012-07-13 09:29:56 PM
Something I've always wondered about (and hopefully someone here can answer); Cards all have processing fees, which are apparently variable. Which sucks for merchants. However, the cash operations of a business aren't free, are they? It costs something to count, process, or deliver cash to a business, right? How does this compare to card transactions?
 
2012-07-13 09:30:46 PM

SearchN: //Always ask which is cheaper (depending on the plan) for the merchant. They like that.
///Farking hate that industry after working in it


Yes. It's debit with me by far. And yes the processing industry is the sleaziest bunch of criminal pests that I have to deal with 3 times a day every gotdam day on the phone. It's started slowing down once I agreed to meet with every one of their reps every time and then told him to GTFO immediately upon his appointment arrival. Sucks for those sales reps but I got to my wit's end and f*ck them.
 
2012-07-13 09:33:16 PM

Gig103: MisterTweak: Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?

If you don't like paying 4% in fees, don't accept charge cards. That is your right as a merchant, and it's my right as a consumer to pay however I choose.

I actually always assumed merchants price everything assuming a 100% charge rate, and just make more off the cash people.


I use plastic almost exclusively. If stores start charging me more for it I will go somewhere else. If they all end up doing it I will deal with it but wont shop at the places that did it first.
 
2012-07-13 09:33:34 PM

demonwolf04: Something I've always wondered about (and hopefully someone here can answer); Cards all have processing fees, which are apparently variable. Which sucks for merchants. However, the cash operations of a business aren't free, are they? It costs something to count, process, or deliver cash to a business, right? How does this compare to card transactions?


Well, we have banking fees. But that is miniscule to the processing fees. I think my total for cash deposit and check writing is $30 or so. CC processing is well north of $1000. Not sure I understand your question though.
 
2012-07-13 09:34:49 PM

pounddawg: Speaking as a merchant -- Just assume everyone is going to pay with a cc. If they don't... bonus for you. There. All better.


You go ahead and do that while I undercut your price a little.
 
2012-07-13 09:34:58 PM

demonwolf04: Something I've always wondered about (and hopefully someone here can answer); Cards all have processing fees, which are apparently variable. Which sucks for merchants. However, the cash operations of a business aren't free, are they? It costs something to count, process, or deliver cash to a business, right? How does this compare to card transactions?


Cash cost is probably a hard to define fee. There is a certain amount of time it costs to count the cash and balance the drawers that can be calculated by an hourly rate. But with automated registers that distribute coins and tell the cashier the amount, I haven't found cash any slower than card. The only costs I can assume is that cost of going to the bank however many times a week to turn in cash and checks and withdraw coins and cash for operations.
 
2012-07-13 09:36:48 PM

dugitman: Also, I've told more than a few younger punks that I won't sell them a $1.49 soda on a credit card. They look incredulous, but I explain it to them and they usually understand.


That's reasonable. I usually use my rewards CC for purchases over $20 anyways....I have no interest in hurting the profit margin that a "mom-and-pop" corner store gets, and i always have some cash on hand...
 
2012-07-13 09:36:59 PM

MisterTweak: Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?


Cash isn't free to the merchant. Your bank charges for rolled coin and cash services. Some charge for counting cash deposits. Then there's loss. Cash businesses often factor in a loss from sticky fingers in the register. Lastly, study after study has shown that consumers spend more when they laying down plastic rather than currency. It's why Vegas uses chips.
 
2012-07-13 09:39:13 PM

dugitman: SearchN: //Always ask which is cheaper (depending on the plan) for the merchant. They like that.
///Farking hate that industry after working in it

Yes. It's debit with me by far. And yes the processing industry is the sleaziest bunch of criminal pests that I have to deal with 3 times a day every gotdam day on the phone. It's started slowing down once I agreed to meet with every one of their reps every time and then told him to GTFO immediately upon his appointment arrival. Sucks for those sales reps but I got to my wit's end and f*ck them.


Did not know you were a merchant. Ever heard of Ghosting? Freaks me the fark out and I don't discuss it in public. You have my email address if you are curious.

/The insurance rates for processing companies are insanely high due to the chance you might get Ghosted.
//Sadly, it's not hard to do.
 
2012-07-13 09:39:42 PM

SearchN: But Wait There's More: Is there a fee if it's a debit card instead of CC card?

Yes. The processing fee is put into place on any transaction using plastic and rates vary depending on CC vs Debit.



There's a fee to the merchant for CC that's much higher for CCs. Debit card are much lower for the merchant. The merchant can't set min purchase on DEBIT cards...but can set one on Credit card purchases. A fine point to be sure. Link

And I'm wrong on the cash discount thing..as of Oct 2011 that's fine now. Overruling the MC/Visa contracts. But there's lots of leeway for the merchant for Credit Cards to charge surcharges and set min purchases For CC...not so with Debit Cards.
 
2012-07-13 09:39:49 PM

jst3p: I use plastic almost exclusively. If stores start charging me more for it I will go somewhere else. If they all end up doing it I will deal with it but wont shop at the places that did it first.


That's the thing. Good businesses are not going to start charging you more. We've already incorporated the fees and % into our budgets/bizplans. The extra pennies I would make off your 1 transaction is not worth pissing you off and losing your patronage in the future. The only thing I like to remind people of is to please not charge $1-$2 items on your card at small businesses. That constrained grimace you see on the owner's face is the knowledge he just handed you your coke and handed your entire payment to his cc processor.
 
2012-07-13 09:40:32 PM

nytmare: pounddawg: Speaking as a merchant -- Just assume everyone is going to pay with a cc. If they don't... bonus for you. There. All better.

You go ahead and do that while I undercut your price a little.


Go for it. My service is better than yours so it makes up for it.
 
2012-07-13 09:41:26 PM

RobertBruce: If you pay with a credit card the merchant is charged for it, subby. Often around 1 percent but it varies.


My charges to accept credit cards average just over 3%, after all fees are assessed. Some cards are as little as 1.35% + fees, most are 2.99% + fees (rewards cards, ffolks!).

So. Yes, it "varies"

/feh
//bleagh
 
2012-07-13 09:41:49 PM
It isn't cash! Go for it. Just say 'charge it!'
 
2012-07-13 09:45:34 PM
This is good because it forces the credit cards to compete with cash on a relatively even basis, which means they are likely to reduce credit charges. As someone who pays almost exclusively by credit, I am likely to see a bit of price increase but not as much as seems obvious at first. It also helps the mom-and-pops who are hurt by the current price structure since there is a per-transaction charge (and mom-and-pops tend to make lots of small sales).

The prohibition against surcharging credit card transactions I've always considered to be highly anti-competitive.
 
2012-07-13 09:50:15 PM

dugitman: BobtheFascist: With the Tolstoy version.

I run approx. 700K through annually. When all is said and done my CC effective rate is about 2.75%. That includes all the fees(statements, batchouts, higher rated corporate cards, blah blah shiat they throw in when they've worn you down). Debits come in under at 1%. I wouldn't charge more for someone running a cc because I'd look like an asshole. I'll certainly cut someone a break for cash on a big purchase and see that as part of the price negotiation. Also, I've told more than a few younger punks that I won't sell them a $1.49 soda on a credit card. They look incredulous, but I explain it to them and they usually understand.


The effective rate is a tough thing to make a final judgment on. It's the numbers within the numbers. If you're doing the majority of your trxns as swiped I'd say it's a bit high, but the types of cards you accept the most can have a large affect on it. If you're accepting 40-50% debit it is certainly high. If you're accepting a large number of fleet, corporate, purchasing, etc it's not bad at all since many of those cards have an interchange cost over 2% themselves.

I've never heard of anyone being punished for offering a cash discount. I see it advertised in a lot of gas stations. I know the old regs used to say you could not charge a convenience fee, but you could offer a cash discount. I haven't had a need to look up the new ones.
 
pla
2012-07-13 09:50:22 PM
pounddawg : Go for it. My service is better than yours so it makes up for it.

The lines around the block at the gas station with a mere penny lower than everyone else in the area would like to disagree with you.

Me, I don't even bother looking at the price for gas. The major retailers will all have within a few cents of each other in a given area, and on the rate occasions I fill up at a no-name for a $0.25 more than everyone else, I do so because I got there on fumes at 2am and have no other choices.


SearchN : Ever heard of Ghosting? Freaks me the fark out and I don't discuss it in public. You have my email address if you are curious.

Can we not do that shiat? Really kinda annoying - Make a point, or don't. "Ghosting is a form of identity theft in which someone steals the identity, and sometimes even the role within society, of a specific dead person (the "ghost") who is not widely known to be deceased. Usually, the person who steals this identity (the "ghoster") is roughly the same age that the ghost would have been if still alive, so that any documents citing the birthdate of the ghost will not be conspicuously incorrect if appropriated by the thief now claiming to be that person."

Why, exactly, does that freak you out?
 
2012-07-13 09:50:42 PM

Ed Willy: Cash cost is probably a hard to define fee. There is a certain amount of time it costs to count the cash and balance the drawers that can be calculated by an hourly rate. But with automated registers that distribute coins and tell the cashier the amount, I haven't found cash any slower than card. The only costs I can assume is that cost of going to the bank however many times a week to turn in cash and checks and withdraw coins and cash for operations.


So would you say the outrage from merchants regarding the costs for credit customers is a resistance to change? E.g. paying cash operations is acceptable but paying for the CC processing fees IS NEW AND DIFFERENT AND I WON'T DO IT.

I've seen a (brick and mortar) business or two in the last couple years that went to card only, no cash. Is that a viable option or good business sense?

I only ask because I pretty much only use card anymore. Debit for the most part. But it's much more efficient for me, since I always lose coins, and I lose track of bills frequently, so I lose less cash.
 
2012-07-13 09:52:01 PM

PapaChester: The only places that ever gave me discounts for paying with cash is headshops.

Are we trying to make more businesses in America like headshops?

I approve of this.


Are you asking, I frequently ask if there is a cash discount. Small businesses often will give one, large chains not so much, but I've asked for and been given one at Best Buy on a scratch and dent TV.

Perhaps you don't shop at the giant head shop chain Bongs 'R Us Dude.
 
2012-07-13 09:52:27 PM

sagiphile: MisterTweak: Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?

Cash isn't free to the merchant. Your bank charges for rolled coin and cash services. Some charge for counting cash deposits. Then there's loss. Cash businesses often factor in a loss from sticky fingers in the register. Lastly, study after study has shown that consumers spend more when they laying down plastic rather than currency. It's why Vegas uses chips.


This.
Most of those armor cars rolling around town are cash carriers between big retailers and banks. The armor car companies often count and recount money for their clients. That cannot be cheap. Arguing over pennies that add up is just part of business. Each transaction cost the merchant to carry out no matter which form of payment.

/1.5 cents to make a penny
 
2012-07-13 09:53:23 PM
I'm currently paying off my credit cards. After that I do not plan to use them much at all. Only on emergency basis or a big purchase that I need like if I needed a new laptop. Other than that I am going back to living the old fashioned way- I have what cash I have in the bank and that's it. I'm done with credit card fees.
 
2012-07-13 09:53:55 PM

pla:
SearchN : Ever heard of Ghosting? Freaks me the fark out and I don't discuss it in public. You have my email address if you are curious.

Can we not do that shiat? Really kinda annoying - Make a point, or don't. "Ghosting is a form of identity theft in which someone steals the identity, and sometimes even the role within society, of a specific dead person (the "ghost") who is not widely known to be deceased. Usually, the person who steals this identity (the "ghoster") is roughly the same age that the ghost would have been if still alive, so that any documents citing the birthdate of the ghost will not be conspicuously incorrect if appropriated by the thief now claiming to be that person."

Why, exactly, does that freak you out?


Think larger, much much larger. There is the normal ID theft. There is another level. EIP, feel free to ask.
 
2012-07-13 09:58:36 PM

BobtheFascist: The effective rate is a tough thing to make a final judgment on. It's the numbers within the numbers. If you're doing the majority of your trxns as swiped I'd say it's a bit high, but the types of cards you accept the most can have a large affect on it. If you're accepting 40-50% debit it is certainly high. If you're accepting a large number of fleet, corporate, purchasing, etc it's not bad at all since many of those cards have an interchange cost over 2% themselves.

I've never heard of anyone being punished for offering a cash discount. I see it advertised in a lot of gas stations. I know the old regs used to say you could not charge a convenience fee, but you could offer a cash discount. I haven't had a need to look up the new ones.


The 2.75 I listed is for the credit cards only. My debit card runs at the bulk minimum which I cant remember exactly (.05% + .20 maybe?). Nearly 100% is swiped. I figure the effective rate as total CC$/ total CCpullout on my statement. So if I did 10K in CC sales and was charged $275 on the 1st of the month. For clarity, I throw all the statement/batch etc fees into the CC formula. I just run the debit card total alone. The biggest problem is making sure my employees run it through as debit every time and reassuring customers into doing it. They don't like putting in their pin, dont know it, think they will get charged, whatever.
 
2012-07-13 10:00:24 PM

MisterTweak: RobertBruce: If you pay with a credit card the merchant is charged for it, subby. Often around 1 percent but it varies.

I believe Wal-Mart pays 2%. A mom-n-pop is lucky to clear 91 cents on the dollar. Hell, my credit/debit card rebates me 1.5% of every transaction, no exceptions - so I'm guessing 4-6% is average.


Our garden center is technically a "mom and pop" -- literally owned by my parents.

We introduced PIN debit this year, which recently had the fees capped. Combined with good rates on CC processing we're running about 1.9% in fees for all electronic purchases. Lower than ever before, even though we're now taking AMEX and Discover which cost more. AMEX is the worst. If we dropped them it would be even better but we're probably not going to be that penny pinching about it. Wouldn't hurt us much if we did though. Only one sale was dropped last year (out of 120,000) because they didn't have a Visa/MC alternative.

GAT_00: And why would they do that? People will walk away.


Yep. Plus there are huge benefits to dealing mostly in electronic transfers. Cashiers can't steal that money, you aren't sending a guy to the bank with gobs of cash that can be stolen, less time is spent counting money when a cash drawer is changed out at the end of a shift because there's less cash in there, and you don't have people needing a "clean" drawer in the middle of their shift because the one they started with got full.

Plus it's just faster. Shortly after rolling out our new POS system (open sourced, I wrote some of it) we noticed an average of a 6 second delay on receipt printing. Pretty small. But when we ran the numbers that 6 seconds added up to 10 man hours on a busy day. Eliminate that and we can pay somebody to open up another lane to make checkout faster, or put them on the floor to answer questions. So, I fixed it.

Simply making change easily takes more than 6 seconds. Somebody writing a check? *shudder* That takes for ever. Credit/Debit goes so much faster and if you can put more people through a lane that eliminates the cost of building another one which is kind of costly.

So, there's less vulnerabilities and a reduction in labor. Plus, like you (kinda) said, that's just how people want to pay and they won't stand for being punished for it.
 
2012-07-13 10:06:44 PM

scottydoesntknow: Huh, Specs Liquor has done this for years. Doesn't really bug me.


Damn shame that the downtown Specs is in downtown and has shiatty parking. That need to move that to katy yo.
 
2012-07-13 10:09:19 PM
As a store manager who's been following this very closely for the past couple o' years, I'd like to point out that it's the Credit Card companies who are claiming that retailers can now charge more if you pay with plastic.

They just lost a big fight, and they're pissy about it.
 
2012-07-13 10:10:15 PM
The local hobby shop for games (Warhammer, magic, ect.) just posted a sign, saying cards will add a 5% surcharge to all purchases. I told him, instead of driving customers away (because really, at a hobby shop, 95% of all purchases are impulse gotta-have-now purchases) with a sign saying "you will be out more money using the magic plastic money card", he should just add 5% to everything he sells. That way you don't have the whole "Oh, well, I'll come back tomorrow with cash." or what is actually happening "It's cheaper online."

Reminding customers they are spending money they shouldn't doesn't seem wise to me. If it's a grocery store or whatever, you kinda need to eat, so it's not as big a deal.
 
2012-07-13 10:11:35 PM

GAT_00: And why would they do that? People will walk away.


WinCo Foods doesn't accept credit cards and they kick the crap out of everybody. Not even WalMart can compete with their prices. Just don't buy their fried chicken. Really, don't. It's chicken garnished with rusty pallet rack flakes
 
2012-07-13 10:17:09 PM

pla: pounddawg : Go for it. My service is better than yours so it makes up for it.

The lines around the block at the gas station with a mere penny lower than everyone else in the area would like to disagree with you.


You get service at your gas station??
 
2012-07-13 10:18:07 PM

demonwolf04: Something I've always wondered about (and hopefully someone here can answer); Cards all have processing fees, which are apparently variable. Which sucks for merchants. However, the cash operations of a business aren't free, are they? It costs something to count, process, or deliver cash to a business, right? How does this compare to card transactions?


During our busy season we have one guy that's pretty much dedicated to handling cash at our place. He counts drawers, cleans them, does deposits, etc. Rough guess he handles 18% of our gross income. And we trust him.

The CC processor does about 80% of our money.

The two cost the same amount, annually. Plus the accountant works year round doing general farm labor.

If we went cash only we'd have to find 2-4 more guys like him, that we can actually trust, and probably have to keep them year round.

No thanks. Costs less to let the CC processor do their thing. Cash takes labor, and it's risky.
 
2012-07-13 10:25:18 PM
Huh, funny. I had a guy today who didn't want to run me as credit and "accidentally" tried it as debit and I told him I didn't know the PIN and he played the "oh goof!" card. And this was on a transaction approaching $100. Then a cutie bimbo employee of his tried to figure it out, only I figure she was goofing too. Because she apparently had no idea how credit cards work. Except then he pointed out that credit transactions hit your account immediately, more or less, while debit may take longer. After reading this thread (and not having thought about the distinction in years) I can see that he was definitely encouraging me to do the debit transaction.

Most merchants don't give you shiat on a transaction of that size. At least he was nice and sneaky about giving me shiat over $0.25 or whatever.

But I will definitely consider doing transactions as debit if in fact I don't get additional fees for it, which, last time I looked, it was, though perhaps that was only cash withdrawals.
 
2012-07-13 10:25:19 PM

demonwolf04: Ed Willy: Cash cost is probably a hard to define fee. There is a certain amount of time it costs to count the cash and balance the drawers that can be calculated by an hourly rate. But with automated registers that distribute coins and tell the cashier the amount, I haven't found cash any slower than card. The only costs I can assume is that cost of going to the bank however many times a week to turn in cash and checks and withdraw coins and cash for operations.

So would you say the outrage from merchants regarding the costs for credit customers is a resistance to change? E.g. paying cash operations is acceptable but paying for the CC processing fees IS NEW AND DIFFERENT AND I WON'T DO IT.

I've seen a (brick and mortar) business or two in the last couple years that went to card only, no cash. Is that a viable option or good business sense?

I only ask because I pretty much only use card anymore. Debit for the most part. But it's much more efficient for me, since I always lose coins, and I lose track of bills frequently, so I lose less cash.


About 35% of my daily intake is cash, attempting to go card-only would literally put me out of business. Many businesses could likely tolerate such a change much better but I can't imagine a brick-and-mortar retailer that wouldn't see an immediate and measurable decline in overall revenue as a result. Even if it were only temporary, it would still occur.

Credit / debit card processing has been a thorn in the side of retailers since the first card was issued. The fees for processing services and equipment can be outright comical, card issuer agreements and policies can wind up dictating how you run your business and overly broad consumer protection clauses can result in the nullification of your own terms of sale.

I've got several great stories about just how well American Express cardholders can get over on an honest retailer by simply claiming deception and abandoning broken equipment on doorsteps. Several.

Sure, I'd love to charge more for having to deal with all that bullsh*t. It costs me money to take those magic cards everyone carries in ways far beyond simple monthly fees on a business account and payroll used by employees managing cash deposits.
 
2012-07-13 10:28:28 PM

MisterTweak: I believe Wal-Mart pays 2%.


I suspect it's even lower than that. Rumours are that they had PIN transactions down to a couple cents. But, really, nobody who knows is going to say. Pretty serious trade secrets there. My assumption comes from the fact that Walmart is big enough to legitimately threaten the CC companies. Sam's Club won't take Visa or AMEX now and at one time only took Discover (presumably at something under 1% discount). Likewise Costco is in bed with AMEX. If Visa got too far out of line, the threat of "no Visa at mainline WM" would chill any vein.
 
2012-07-13 10:32:10 PM
When even if the store can start charging customers the fee that the cc charge them(as in this lawsuit let the store out of that part of the contract) I don't have to worry bout it. In Maine its a state law that business can't charge someone using a debt/credit card the fee that the cards charge the store.
 
2012-07-13 10:38:21 PM

sseye: Huh, funny. I had a guy today who didn't want to run me as credit and "accidentally" tried it as debit and I told him I didn't know the PIN and he played the "oh goof!" card. And this was on a transaction approaching $100.


That's known as debit steering, and it probably wasn't him, it was the software.

Once you swipe your card the software can do a quick lookup to see if your card falls within a debit card range. If it does it'll prompt you for a PIN. Retailers kinda sorta try and force you to go the PIN/Debit route because the rates drop to less than 1% on those transactions.

By insisting that you do it via credit and not debit you cost the retailer around $1 or $2 on the transaction.
 
2012-07-13 10:42:24 PM

optikeye: It's part of the contract a biz owner signs to accept debit and charge cards. For Charge Cards they can set a minimum--I think up to 35 dollars for charge card, for debit cards they're supposed to accept debit/bank card for even small purchases.


The Cash Discount thing is a red-herring as if the VISA/Master Card found out about that---the merchant would get yanked (in theory) for breaking their contract with VISA/Master Card.


One customer complains to Visa or Mastercard that you do that, and boom, you're shut down. AmEx allows you to set a minimum, and Discover might - I don't remember - but Visa and Mastercard explicitly require you to take cards right down to 0.01. You can just turn the customer away if he says he can only pay with the card beforehand, but you can't ask them to pay cash instead. If you've already rung him up, you're boned.

Visa?MC contracts are very anti-business, because it costs too much money not to sign them. Small/medium business has no leverage.
 
2012-07-13 10:46:22 PM
As a person who has the Square reader for his iPhone, here is my typical process

1) I'm trying to sell something
2) Person wants to buy something but says they don't have any/enough cash (talk me down in price)
3) I state that I have my Square reader and that I accept credit/debit card
4) I make sale even though I will lose ~3% in fees.

At the end of the day, 97% of $50 is still greater than 100% of $0.
 
2012-07-13 10:46:54 PM

dugitman: BobtheFascist: The effective rate is a tough thing to make a final judgment on. It's the numbers within the numbers. If you're doing the majority of your trxns as swiped I'd say it's a bit high, but the types of cards you accept the most can have a large affect on it. If you're accepting 40-50% debit it is certainly high. If you're accepting a large number of fleet, corporate, purchasing, etc it's not bad at all since many of those cards have an interchange cost over 2% themselves.

I've never heard of anyone being punished for offering a cash discount. I see it advertised in a lot of gas stations. I know the old regs used to say you could not charge a convenience fee, but you could offer a cash discount. I haven't had a need to look up the new ones.

The 2.75 I listed is for the credit cards only. My debit card runs at the bulk minimum which I cant remember exactly (.05% + .20 maybe?). Nearly 100% is swiped. I figure the effective rate as total CC$/ total CCpullout on my statement. So if I did 10K in CC sales and was charged $275 on the 1st of the month. For clarity, I throw all the statement/batch etc fees into the CC formula. I just run the debit card total alone. The biggest problem is making sure my employees run it through as debit every time and reassuring customers into doing it. They don't like putting in their pin, dont know it, think they will get charged, whatever.


If it's swiped as a credit card, the maximum liability for fradulent purchases is capped at $50 by federal law. If a PIN is input, and someone manages to steal/hack it, the liability is infinite. They can drain every account of mine in the bank.
 
2012-07-13 10:49:13 PM
jbuist:
The two cost the same amount, annually. Plus the accountant works year round doing general farm labor.

If we went cash only we'd have to find 2-4 more guys like him, that we can actually trust, and probably have to keep them year round.

No thanks. Costs less to let the CC processor do their thing. Cash takes labor, and it's risky.

Hypothetical Imperative:
I've got several great stories about just how well American Express cardholders can get over on an honest retailer by simply claiming deception and abandoning broken equipment on doorsteps. Several.



Thanks guys! Really interesting stuff. Seriously. I guess the bottom line is everyone is trying to fark everyone else over any way they can.
 
2012-07-13 10:55:46 PM
Lots of misinformation here, and I'm getting a kick etc. I have worked for several different card processors, and I can provide a little insight:


Merchants pay 2 kinds of fees: Discount, which gets paid to your credit card processor, for maintaining the hardware, help desk, accounts, etc; and Interchange, which gets paid to the card issuing banks, for maintaining the network.

Interchange is by far the higher of the two, and depends on 3 factors: Business/industry type (riskier businesses pay higher fees), Merchant behavior (swipes are cheaper than hand keyed, etc.) and card type (rewards cards cost more than plain cards, corporate cards more than check cards, etc.) Interchange is set by the bank networks, not the processors/acquirers."

It's usually cheaper for a merchant to go directly to a processor, instead of an Independent sales office. ISOs have to make residuals, so the acquirer will say "You can sell this a count for 1.2%", and the ISO will say "I can sell you this service for 1.5%". then they get to keep the .3% difference per transaction.

All merchants pretty much pay the same interchange within their category.

Visa and Mastercard do charge fees as part of interchange, but they're like .00125% per.

The reason behind the surcharge ban was simple: It's in the card industry's interest to keep cash and cards on a relatively level footing. Why should they disincentivize cardholders from using their cards? The government decided it was an undue influence, so now your corner grocery can tell you "$10 minimum and it will cost you .50 to use your card."
 
2012-07-13 11:04:41 PM
The ones I wonder about are the retailers that pretty much require you to use a credit/debit card.
Airlines are going to love this. 5% credit card processing fee. Don't want to pay that? You can buy your ticket at the airline counter for a $50-100 buy in person fee (which they already charge).
Most online retailers won't stick it to you like that, but I'll just go ahead and plan on the airlines doing it, because FARK YOU, THAT'S WHY!
 
2012-07-13 11:34:54 PM
Where's the Spiffy tag? Having the option of not paying credit card fees (which are currently baked into the price regardless of whether you use a card or not) is a good thing.
 
2012-07-14 12:11:56 AM
Yeah, until places start getting hit up late at night because of all the cash they have on hand...then things will change again.
 
2012-07-14 12:19:25 AM
Pigs. At. The. Trough.
 
2012-07-14 12:22:38 AM

Gig103: If you don't like paying 4% in fees, don't accept charge cards. That is your right as a merchant, and it's my right as a consumer to pay however I choose.

I actually always assumed merchants price everything assuming a 100% charge rate, and just make more off the cash people.


If you thought they were charging for it already, why would you object if they actually do?
 
2012-07-14 12:32:14 AM
We're running into a new unique situation for us at work. Got a client who needs about $8,500 in equipment and our CC processor won't allow us to make the sale. They say that the guy can make a chargeback and they need verification that we have $8,500 on-hand in our account in the event of that chargeback or they won't authorize. Unfortunately we're a small business (under $100k/year at our store) and with the cost of the parts to build the guy's order, we don't have $8,500 in the business account to verify the sale. So I've got a customer who wants to buy stuff and deal with us and we can't even run the card.

We ended up using the Square reader, which hit us for 2.75% ($234 in fees), but it was better than taking $0 and pissing off the customer.
 
2012-07-14 12:53:26 AM

midigod: Gig103: If you don't like paying 4% in fees, don't accept charge cards. That is your right as a merchant, and it's my right as a consumer to pay however I choose.

I actually always assumed merchants price everything assuming a 100% charge rate, and just make more off the cash people.

If you thought they were charging for it already, why would you object if they actually do?


Because up until now the playing field was even for cash and credit, which didn't force me to place a value on the benefits I receive from my credit cards.
 
2012-07-14 01:31:12 AM

Zeromus-X: . So I've got a customer who wants to buy stuff and deal with us and we can't even run the card.

We ended up using the Square reader, which hit us for 2.75% ($234 in fees), but it was better than taking $0 and pissing off the customer.


I wouldn't ask except you brought it up,but how does that Square fee compare to your normal processing fee?
 
2012-07-14 01:41:07 AM
It depends on the type of card a customer uses -- we don't accept AmEx on our regular card reader because they're over 3% plus swipe fees, but if someone wants to use one and has no other option I'll usually use it on the Square reader which is a flat 2.75%.

I believe our standard processing fee is around 1.9% for non-reward cards and as high as 3.8% for corporate reward cards. We always try to encourage people to pay with a check since we're not a high-volume place where there will be a line you're holding up. To us, checks are the best of both worlds -- no need to worry about cash disappearing out of the drawer and no processing fees.

If I see someone paying with a business card and it's branded with an obvious rewards card (such as a Southwest or Delta Skymiles card), I'll typically bust out the iPad with Square reader, just to play it safe. Our markup is enough to cover any of the cards that come through the door, but the more profit we make on a sale, the more money goes in my pocket at the end of the day.
 
2012-07-14 01:47:01 AM
Very interesting, thanks for the insight. I didn't know about rewards changing the merchant fee. I always thought the rewards were between the card company and the subscriber (and were 'paid for' by interest fees and whatnot)
 
2012-07-14 02:01:53 AM

AppleOptionEsc: The local hobby shop for games (Warhammer, magic, ect.) just posted a sign, saying cards will add a 5% surcharge to all purchases. I told him, instead of driving customers away (because really, at a hobby shop, 95% of all purchases are impulse gotta-have-now purchases) with a sign saying "you will be out more money using the magic plastic money card", he should just add 5% to everything he sells. That way you don't have the whole "Oh, well, I'll come back tomorrow with cash." or what is actually happening "It's cheaper online."

Reminding customers they are spending money they shouldn't doesn't seem wise to me. If it's a grocery store or whatever, you kinda need to eat, so it's not as big a deal.


This is up there as the dumbest marketing move I've ever heard of.
 
2012-07-14 02:23:33 AM

dugitman: The biggest problem is making sure my employees run it through as debit every time and reassuring customers into doing it. They don't like putting in their pin, dont know it, think they will get charged, whatever.


Which reminds me, why the hell is it taken for granted that all gas stations can charge for debit? (Now $.50-.60 in most places.) Why are they so special that their average transactions are for $40-50, in which case debit already costs them less than credit, but they get to charge extra anyway when other merchants don't? Now there's some parity in credit fees where some stations charge $.10 a gallon extra, but oddly enough just as many with the same prices that don't. I guess I'm just ranting here.

Sim Tree: If it's swiped as a credit card, the maximum liability for fradulent purchases is capped at $50 by federal law. If a PIN is input, and someone manages to steal/hack it, the liability is infinite. They can drain every account of mine in the bank.


This is no longer true in all states and with most large banks. Oddly enough, it's the smaller ones that will screw you now if you have your PIN stolen. Federal legislation is on the horizon to fix this gap soon.

Zeromus-X:

You just have an awesome name. I think I remember a Golbez on here at one point, too.
 
2012-07-14 02:42:40 AM

foxyshadis: Which reminds me, why the hell is it taken for granted that all gas stations can charge for debit? (Now $.50-.60 in most places.) Why are they so special that their average transactions are for $40-50, in which case debit already costs them less than credit, but they get to charge extra anyway when other merchants don't? Now there's some parity in credit fees where some stations charge $.10 a gallon extra, but oddly enough just as many with the same prices that don't. I guess I'm just ranting here.


It depends on the area. I noticed it's horrible in NJ, with everyone charging two rates and I have no idea how they are allowed to get away with it from Visa/MC.

In AZ where I moved to, very few actually do the cash/credit price variation. I get 3% cash back on fuel, which is about $0.11 a gallon so I use my card even in those situations (or better yet, find a competitive place that takes credit for their cash price).
 
2012-07-14 02:43:27 AM
What will happen is that prices will be jacked up slightly and then merchants will advertise that they DON'T apply the surcharge, unlike that evil store down the street.

But you'll still be paying more.
 
2012-07-14 03:22:36 AM
Defenestrate the farkers already

dead banker bounce
 
2012-07-14 05:47:23 AM
Than heavens the dumb farking giantic dickhead progressives got involved to pass laws to fark over the working people even more. They are the government and here to help us, fark them!
 
2012-07-14 06:33:50 AM
Good. Now stop using credit cards.
 
2012-07-14 07:16:36 AM

MisterTweak: Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?


this. As long as there are other forms of payment available then I`m ok with this. If it is just another way for businesses to increase profit by restricting customers to only credit cards then saying there is an extra charge for that then I`m not ok with this. I want to go back to the old days where you could say "Any discount for cash?" 3% sounds fair, win-win.
 
2012-07-14 07:58:26 AM
It's a "cost of doing business" and it provides some very clear benefits to merchants. If it didn't, they wouldn't accept the cards.

Accepting cash is not free. Cash is where deliberate and inadvertent "mistakes" (by cashiers and customers) *always* leave the store with missing money. It makes you a target for robbery. It has to be physically moved to be deposited.

Checks are not free. They're slow, they can be lost, and through deliberate and inadvertent "mistakes" they aren't always paid. Recently, they don't always need to be physically moved to be deposited, but scanning a days worth of checks doesn't sound "free" to me either.

All aside from the biggest feature - credit cards are incredibly convenient for customers and give them virtually unlimited flexibility for spending money. I saw an article recently about a furniture store owner complaining about how high the card fees were for a $3500 transaction. Yeah, good luck going with cash or checks there.

Merchants pay for all kinds of crap that many customers don't use. Advertising, a parking lot, entertainment for kids, furniture, just about everything.

That said, I think Visa and MasterCard in the US were flagrantly colluding on pricing and merchant access and absolutely deserved a financial asskicking over that. But the idea of merchants selectively "passing on costs" for them is stupid. Some may try it, but I think successful businesses will stick with making money by selling stuff. Visa/MC have been doing them a favor by forbidding surcharges.
 
2012-07-14 08:12:17 AM
Great. So the few places that take plastic here in SE CT will now stop (like my favorite bakery has). There's already a $0.10 to $0.20/gal cost at the majority of gas stations here. Oops, I mean "Cash discount" (a phrase not posted anywhere on the pump).

I hate this state.
 
2012-07-14 08:50:30 AM

david_gaithersburg: Than heavens the dumb farking giantic dickhead progressives got involved to pass laws to fark over the working people even more. They are the government and here to help us, fark them!


Yeah! It says right there in the Constitution that big-enough corporations have the right to collude and dictate the pricing structure of smaller companies, preventing them from even mentioning payment-method-based surcharges to their customers. Freedumb!
 
2012-07-14 08:55:37 AM

Gyrfalcon: What will happen is that prices will be jacked up slightly and then merchants will advertise that they DON'T apply the surcharge, unlike that evil store down the street.

But you'll still be paying more.


No they won't. Well, most wont. As I said in an earlier post, we already have the fees and % figured into our transactions/budgets. It is one of the costs of doing business. From a customer standpoint you won't see any difference at all(nor should you). Also as someone else mentioned-- this whole surcharge "scandal" is being publicized by the processing/banking industry. The same industry who for years added rewards points on and told the general public to "make sure you tell retailers to run your card as credit, not debit". Why? So they could stiff us with $2 in credit card processing fees(as opposed to .25 in debit) and give you back 10 cents in rewards money. They're pissed their little scam is over, and they're trying to figure out a new scam.
 
2012-07-14 09:47:44 AM

But Wait There's More: Is there a fee if it's a debit card instead of CC card?


The merchant pays a fee; usually the same % as a similarly titled credit card. That is, 2.2% for a Visa card, either debit or credit. Amex is usually a percentage point or two higher. That's why some merchants do not accept Amex.
 
2012-07-14 10:50:00 AM

foxyshadis: This is no longer true in all states and with most large banks. Oddly enough, it's the smaller ones that will screw you now if you have your PIN stolen. Federal legislation is on the horizon to fix this gap soon.


Excellent. I did not know this. I'll have to start using my PIN more.
 
2012-07-14 03:15:02 PM

foxyshadis: AppleOptionEsc: The local hobby shop for games (Warhammer, magic, ect.) just posted a sign, saying cards will add a 5% surcharge to all purchases. I told him, instead of driving customers away (because really, at a hobby shop, 95% of all purchases are impulse gotta-have-now purchases) with a sign saying "you will be out more money using the magic plastic money card", he should just add 5% to everything he sells. That way you don't have the whole "Oh, well, I'll come back tomorrow with cash." or what is actually happening "It's cheaper online."

Reminding customers they are spending money they shouldn't doesn't seem wise to me. If it's a grocery store or whatever, you kinda need to eat, so it's not as big a deal.

This is up there as the dumbest marketing move I've ever heard of.


He is just a bad business owner. He tells everyone in ear range how he is only keeping the business open out of spite, because of the local slum lord. It's a noble enough idea, I guess. Ironically enough, it's how he is the only hobby shop in a town of 75k because he is willing to run at a loss. The other new stores can't compete.
 
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