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How bad does accepting credit cards hurt small restaurants?

I've noticed that some of my very favorite small restaurants are cash only. This policy can be slightly inconvenient for me at times, but I always figure cash keeps the quality high. Now tonight I went to one of my all time favorites (Ray's Pizza in Lansdale Pa) and was floored to see that after all these years they finally accept credit cards for over 10.00. I thought I would be delighted but I love this place so much that I am concerned. My friend and I think that they might have adopted this new policy to add some flexibility for their customers during these harsh economic times, but only they know for sure why the change in policy. I sure hope it works out for them. I used to go to a gaming shop where the owner reluctantly accepted credit cards but made me feel really guilty every time I used one. Do businesses have to wait for their money once a month or is it the three percent fee (or more) the credit company charges them? Anyone know?

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  1. I'm only guessing, but would think yes and yes to your reason's, plus add that the IRS has a lot more visibility to your cash flow.

    1. pretty much everything gets taxed and there is the fee. all in all cash is always favored. ALWAYS!!!!!! if i don't have enough cash on me when i go out i sure do have enough for at least tipping.

      1. My fiance owns a small business and is counting the days until he can take credit cards. Yes, you are making the government aware of your income (thus you have to pay taxes on it) and yes, the credit card company takes your fee. However, there is HUGE benefit for a small business. Having talked to many small business owners about this over the last year, on average they see at least a 25-20% increase in proftits. Yes, credit when abused can lead to tragedy but at the same time, for small businesses, it can be a blessing. Quite frankly, I am floored when I find a small business, especially a restaurant that does not accept credit cards. They may see it as a cut into the profit, but that is only a short term consequence. With this horrible economy and people eating out less, small restaurants need to do as much as possible to encourage customers to eat their food. Credit is not always a bad thing.

        6 Replies
        1. re: NicoleFriedman

          Amex deposits take 7 days to hit the merchant's account, Visa/Mastercard is 24 hours except on weekends, a saturday sale may be credited as late as tuesday noon.
          Accepting "cash only" removes a lot of headaches and paperwork for the merchant but in this day and age, not realistic for the consumer.

          1. re: superbossmom

            And AMEX and Discover charge more per transaction (at least in my state).

            1. re: Sal Vanilla

              This is true; I was assistant manager of a family-owned bookstore for a couple of years in the late '80s, and the family resisted AmEx and Discover for a long time for exactly that reason. AmEx charges more than Discover; Discover takes longer to transfer funds.

              1. re: jmckee

                They make most of their money from the "float." The fees and interest charges are just bonus.

          2. re: NicoleFriedman

            The benefit depends on location. For a place that has a lot of foot/slow traffic in their area, accepting cards can be a benefit. The benefit also depends on the processing company, some are good, others commit legal robbery.

            For small out of the way places, accepting plastic can be an overall loss in income. In my former restaurant we took a hit in income when we started accepting credit/debit cards as the only thing that changed was our regular customers began using plastic. We put up the signs showing that we accepted cards with the expectation that business would increase - what we didn't realize was that with zero foot traffic in our area, only those customers who already patronized our place saw the change. It took several years to build up enough new business to offset the fees.

            1. re: NicoleFriedman

              As a small business owner I am trying trying to understand how it is short term consequence. I built a "small business" and working on paying off that bank loan. I just stopped taking credit cards last year (after 5 yrs of business), we have not lost any business when I tell them we do not take credit cards then don't mind. Looking back, I could have applied the $25,000 paid over 5 yrs in fees to my loan. That is what people have to realize, that it adds up over time. Most people don't mind and pay by check, and yes, I do report all cash that comes thru this business. By us not paying out people's reward dollars on their credit cards, we get to keep our pricing the same without going up. So many customers did not know that the business accepting the credit cards pays for their rewards. It just depends what they get used to. Some of my fave restaurants in NYC, and here in Louisiana don't take cards. I am more prone to supporting them these days.

            2. In part it's the fee, same reason gas stations give a discount to those who pay cash.

              1 Reply
              1. re: lgss

                oddly, it's the opposite at the station near my workplace...2 cents less a litre if you use your debit card.

              2. It hurts them like any small business. You have to give up some income in fees
                No doubt that a cash business can allow the owner to hide income from taxes.

                2 Replies
                1. re: scubadoo97

                  This thread just reminded me of a funny incident when I was in Amsterdam last year. It was New Year's Eve and none of the ATMs had been working for the last 2 days; myself and my now-fiance were out of Euros. We went to a restaurant on a busy main street. No sign that said cash only- and granted, we should have asked. At the end of a relly good meal, the manager tells us they do not accept credit cards. We had no cash! It took about 30 mins of back and forth for the manager to finally go next door to another restaurant to get their credit card machine- either that or he would just take our word and we would've mailed him a check. (Which we would've done) While funny now at the time it was a huge nuisance!

                  1. re: NicoleFriedman

                    When I travel, I always look for the visa sticker in the front window and I still ask if a credit card is ok before I order. I have found it very common in europe for businesses to not accept credit cards on small amounts, under 10 or 20 euros.

                2. I practically live on a cash basis because I know it helps small vendors, minimizes my reconciliations, and makes my budget management easy.
                  Anecdote #1: More than once at a nice restaurant with a first date, I paid with cash, and my date scored the little receipt. Excuse me, a free meal and my company isn't enough; you want to turn a profit on the deal next April 15? No second date.
                  Anecdote #2: Tiffany's would prefer your personal check instead of a credit card. They are burned less by bad checks than by the cost of credit card fees.

                  9 Replies
                  1. re: Veggo

                    There was a time when I used very little cash and charged everything to Mastercard so I could get the miles. Many items for the business went on that card. Always paid off every month, so it was like using cash with the bonus of ringing up a few free trips.
                    Do you have a broccoli rubber band around your wad of cash?

                    1. re: Scargod

                      Asparagus bands. The Texas tradition for cash wads. Buy a pound of asparagus, get a free wallet.

                      1. re: Scargod

                        Did you know that the the merchant pays a higher fee when you use a miles/rewards/cashback card?
                        Bank acts like they are doing you a favor. All they do is shaft the merchant.

                        Whatta racket.

                        Nice little business you have here. You wanna see any of those customers that we have brainwashed into thinking they are taking a big risk carrying cash around? You gotta cut us in!

                        1. re: atheorist

                          I've been in the restaurant business for thirty years.

                          I've never heard of a merchant paying a higher "discount rate" (fee) for a miles/rewards/cashback card.

                          Sure, the discount rate varies among the card types (AMEX, Visa, Diners') but not among subclasses of cards.

                          1. re: shaogo

                            Actually they do charge higher rates for certain types of cards... look at your statement and you'll see different "tiers" of cards at different rates.

                            1. re: shaogo

                              You really do need to read your statements. After I paid a $22 fee on one client, that was the final straw to accepting credit cards. Hotels and free mileage cards have some of the highest fees....and of cours AMEX is one of the highest.

                              1. re: Ginsin007

                                Ouch Ginsin! The little restaurant I was worried about is still surviving, and several new small places have opened up in my area. All but one accept credit cards. But the most exciting and innovative place, Smoke Daddy's does not. Real good bbq in the north is a rare and splendid thing, so this bbq deprived yank is very happy to hand over the green.

                        2. re: Veggo

                          ok Anecdote #1 is horrible...who does that on a date?

                          1. re: im_nomad

                            Somebody who doesn't get a lot of second dates, for starters.

                        3. I don't think it hurts, I think it helps. If you knew how many personal checks are bad at places that accept them, you would be shocked. With a few exceptions, most people don't carry enough cash for a nice meal. Even low margin supermarkets accept cards nowdays because of bad checks.

                          3 Replies
                          1. re: BN1

                            BN1, for many people, (often the ones in line ahead of me charging purchases as small as $2) ,credit cards seem as essential to life as the air they breathe. I have no doubt that a small restaurant that accepts credit cards has expanded it's universe of prospective customers by a multiplier.
                            Somehow I like it that Tiffany's has a sufficiently honorable clientele that very few customers commit the crime ( and at Tiffany's prices, often a felony) of issuing a fraudulent check.

                            1. re: Veggo

                              Veggo, I know what you mean about clientele making the difference. We like to snowmobile out-of-state in the Rocky Mountains. Snowmobilers are known as big spenders. More than once, I've been asked for a personal check over a card when I was over 700 miles away for home in the middle of nowhere. Shocking for someone from CA where checks are worthless ten miles out of town.

                              1. re: BN1

                                Same with art galleries in Taos, Jackson Hole, and Ketchum. And I can look a little mangy sometimes...

                          2. I don't mind cash only places BUT, the menu prices have to reflect a cash operation and be reasonable. I prefer CC's as I don't lke to carry much green on me at any time, also I believe the CC fee is baked in the menu prices. I believe most businesses get the account credited several times a month from the CC companies.

                            1. My guess (and observation) is that the type of restaurant and especially its location play a heavy role in how much benefit accepting credit cards will bring. If you're in an area where the majority of your lunch crowd is made up of business people on expense accounts, credit cards are your gravy train. I don't think they're that great a benefit if you're a small place that depends on neighborhood clientel.

                              I don't use actual "credit" cards. And I never carry cash. I use a debit card. I have a lifelong history of never being able to remember what I did with all that cash... Three hamburgers and one tank of gas for a couple of hundred bucks? My bank keeps track for me. But there are times when not carrying cash is a penalty to my taste buds. There is a really large Vietnamese community a few miles away from me, and most of the shops have a minimum of $10.00 or more for a credit card purchase. My hips just don't need ten dollars worth of sesame ball pastries! <sigh>. If God really loved women, he would have designed us so we had to overeat to stay thin!

                              1. Without getting too particular, here's how it works:

                                Without counting AmEx, there are a number of different fee structures that any Visa/Mastercard/Debit card falls under.

                                Debit cards usually charge only a "swipe" fee. When I last had a small biz, it was $0.60. That means that if someone paid for a $2.00 item with a debit, that pulled about 27% of the sale in fees. But what if the debit was $100? The 60 cents becomes proportionally minuscule.

                                Now, credit cards charge a swipe fee AND a percentage. The swipe fee is smaller than for debits, because there's that percent charge. And this depends on what kind of card it is- Qualified or Unqualified- there's no way to know by looking at the card, but some are riskier than others to the business owner.

                                These charges are something that each small business owner has very little power over- That's why there's an implication of a monopoly. The small business person chooses a Merchant Services Provider (a bank or other financial institution usually), and that MSP processes the charge, and sends money to your business account, and to Visa/Mastercard. The MSP charges to provide this service, there's no avoiding it. The money hits your bank in a day or two, the lag time isn't the problem. The business has NO power over the charges by MC/Visa, and selects a competitive MSP.

                                So, what does it mean to a small biz? It depends on the check size. The larger the check, The more "insignificant" the fee, but sometimes the percentage is the killer. But to run multiple small charges and debits can end up to be very costly, and much higher than the oft-quoted 3%. 3% is a myth- every transaction is different, and my charges ended up costing me about 5% total.

                                That said, even a business with moderate activity can easily pay hundreds in CC fees per month, and that affect the business' profitability. And Discover Card? Fuggedaboutit. Who do you think is paying for your "cash rewards" offered by the card?

                                So, my philosophy- cash for independent biz and small transactions, credit or debit for corps (who have negotiating power re: fees) and larger purchases.

                                7 Replies
                                1. re: caviar_and_chitlins

                                  thanks for a very clear explanation, c&c.

                                  i think you probably know this, but a class of small merchants have actually banded together to bring suit against visa, MC and a number of MSPs in response to the high rates charged by each.

                                  and also interestingly, perhaps, any business that requires a minimum charge amount to use a credit card is violating the terms of their contracts with the credit card companies, though it's obviously quite a common practice.

                                  so yes, pay cash if you can.

                                  1. re: cimui

                                    You're welcome, and yes, I am aware of the class-action, but was trying to stay on point.

                                    I used to have a minimum charge, and only once did anyone make an issue of it. She told me it was "against the law", which is untrue, it is a violation of my MSP agreement, and I told her to call Visa/MC and report me if she feels so strongly about it. And for her to feel proud to run a small business person out of business, because that's essentially what she was insinuating.

                                    What can I say, it's an issue that moves me. I mean, when someone uses a crap unqualified card on a $5 charge, that could cost me as much as $2.00! So, from a $5 sale, attribute $2.50 to COGS, then rent and utilities, then CC fees.... and it's a negative transaction. I just LOST money by making a sale. That's when CCs really hurt a small business.

                                    1. re: caviar_and_chitlins

                                      Hooray for you for educating consumers! It's amazing the number of consumers who have no clue to the workings of credit cards and their impact on small businesses. But most of all, I do wish the "financial institutions" of this country had never embraced the greed factor!

                                  2. re: caviar_and_chitlins

                                    As a business owner, the CC fees are a part of the cost of doing business so, don't you incorporate that cost in to your menu, whether it be on food and/or beverage costs? It can't be a feebee, CC's are a consumer convienence and there is a cost associated with that so don't you blend it into your costs just like evedryone else does.

                                    1. re: cstr

                                      Well, of course, but that wasn't the question. The OP wanted to know how the scheme worked, and that was what I was trying to explain. Lots of factors go into pricing goods for sale, CC fees included.

                                    2. re: caviar_and_chitlins

                                      C+C--Great explanation! I am in the restaurant biz, and my wife is actually a Merchant Services rep for a very large bank. She said you were pretty much on point with the "non-qual" fees. People would be amazed how much extra expense to a business just for a customer using their credit card over the phone. That is why i will never take a card over the phone (also for obvious identity theft possibilities). Also id a card is unswipeable, and has to be hand-keyed....Extra charge on that transaction now! Visa/MC have their established rates, then there are "points" negotiated between merchant and bank based on various factors. Check avg, sales, machinery, etc. I think general public would be astonished if they knew what it cost a merchant for their business at their favorite places. Thanks again.

                                      1. re: caviar_and_chitlins

                                        and don't forget to tack on the extra fees for hand-entered numbers.

                                        I can't tell you the number of times I've taken a CC from a man (who carries his wallet in his rear pocket, cracking it) and it is so bent, or so worn that it won't swipe. The information has to be hand-entered and it invokes an extra fee from the processing company. When I've politely recommended getting a new card from the issuer, the fellow always says "Oh you can hand enter it--it's good."

                                        I always wanted to say 'Then you won't mind me adding another 2 1/2 % on your purchase to cover the extra fee we get charged for hand-entry."

                                        (Women tend to be more careful about their cards and rarely have I had a woman's card refuse to swipe.)

                                        re: the OP: YES USE CASH whenever possible!

                                      2. In my experience, the places with a minimum credit card transaction are trying to make sure that the fees for accepting them aren't eating up a huge chunk of their profits. That aside, even when I pay my bill with a credit card, I always tip in cash if I can. Servers are required to report their credit card tips, but they have a little more flexibility with cash. What they choose to do is their business, but I feel it's fair to give them the option considering most service industry jobs don't pay all that well.

                                        1. I was in the restaurant business for many years and now work in a different kind of small biz that still involves credit cards. So I have two observations:

                                          1) The idea that tipping the server in cash helps him/her out is not entirely true. I've witnessed waitstaff audits, and what happens is the auditor looks at credit card tips and what percentage those tips were based upon (all credit card slips with no tip added are excluded from this). He then applies that percentage to all sales for the shift and expects that to be about what is claimed. So if a server only gets tipped on one credit card receipt all night and that percentage is 22%, the auditor will expect to see 22% of all sales claimed for the shift. The server doesn't get away without claiming just because tips are in cash.

                                          2) My current employer deals with much larger sales. We have recently had to limit credit card transactions to $1000. Profit margins aren't huge in our biz, and losing $30-50 for every thousand doesn't work. In addition to limiting charges and requiring certified checks or cash instead, we've had to lay off some folks. Every dollar is important in a small business.

                                          1. The really smart small restaurant owner will (1) not accept credit cards but (2) stock an ATM machine on-site.

                                            It's a win-win for the owner. No credit card fees, and a percentage take on the ATM machine.

                                            7 Replies
                                            1. re: ipsedixit

                                              And some formerly cash-only businesses have moved to accepting ATM cards to reduce the amount of cash in their registers . . . and the subsequent vulnerability to robbery.

                                              1. re: Stephanie Wong

                                                Don't know how things go where you live, Stephanie, but here in the DFW area, the local morning news starts about three days a week with coverage of the latest robbery where the bad guys have tied a chain to an ATM machine and driven off... It's pretty rare that I'm familiar with whatever part of town it happens in, but "security" isn't the first thing that pops to mind for me with an ATM machine. In fact, I avoid them because of the amount of crime associated with them in Texas. I have never used an ATM machine in my life.

                                                1. re: Caroline1

                                                  I live in Oakland & we had a string of take-over robberies in restaurants & nail salons (yep!) a couple months ago. Per an owner, the young thugs didn't realize that most of her patrons used ATM/credit cards rather than carrying cash so the thieves scored less than $200 cash from her restaurant and all the patrons.

                                              2. re: ipsedixit

                                                Rays has had the ATM machine for a few years, that is why I was surprised when they decided to take credit cards as well. Thanks for all the informative answers. I'm learning a lot. And I'm so glad I stopped patronizing that one gaming shop. Once I paid sixty dollars for three entry fees to a tourney for my two friends and I and he charged me six percent"tax" without saying a word, even though tax is never tacked on for entry fees at least in PA, and the cash customers didn't have to pay this "tax". I was pretty mad when I checked the receipt. That guy was a crook. When I complained his wife chanted "they charge us, we charge you."

                                                1. re: ipsedixit

                                                  There's a consequence to this though as well- the customer who uses the ATM and has to pay the inflated fee.

                                                  1. re: ipsedixit

                                                    While those ATM machines are somewhat convenient, the fees to use them are incredibly over-inflated for what you get (i've yet to have one show me a balance), and I know far too many people who've had major mishaps with them when they crapped out in the middle of a couple of hundred dollar transaction, followed by a major pain in the arse attempt to get the money back. In addition, i've yet to have any restaurant or store owner take any responsibility for them. They go out, and you regularly get the "oh well, i don't manage the machine" sort of thing.

                                                    Besides which, i'd think it tacky to see one of these in a pricier restaurant, they stand out like a sore thumb.

                                                    1. re: ipsedixit

                                                      The bar that I work in does not accept CCs but has an ATM.

                                                      Visa/MC charges 2.5% and AX charges 4% and that adds up.

                                                      Yes, money is floating around in cyberspace thus preventing lower-priced and/or low volume stores from having liquidity.

                                                      Back in the day I managed a bar where the owner would do the cash out on Friday and make a Saturday deposit at a bank that had Saturday postings so as to pay bills.

                                                      Banks don't do that anymore.

                                                      Multi-unit businesses can adapt but it is very tough sledding for a single unit operator.

                                                    2. Your queston should perhaps have read, " How bad does 'not' accepting credit cards hurt small restaurants?"

                                                      I operate a small service business and have a debit/credit terminal. I have no minimum and do "cash back" as well. It costs me about $70 a month to maintain my terminal and I've often thought of eliminating it. However my little voice says, "Don't!" because very, very few of my core Canadian customers, or my acquaintances for that matter, carry much cash on their person. Most of our larger transactions are paid by debit card. I see far fewer plastic purchases from my U.S. customers. That may be due to stiff cross-border debit charges, however. Credit card transactions are rare in our shop: virtually all purchases are debit.

                                                      I would definitely lose business without my terminal - one or two large, additional sales pay for the service.

                                                      We have three small restaurants in our small town that serve good plain, country food. The two that do plastic grind out money while the cash-only operation does far less well, although the other two are on the outskirts.

                                                      In short: "cash-only" would cost our shop; the cost of carrying my terminal is not onerous; my customers, at least the Canadian ones, expect the service, and the majority of my volume is still on a cash basis.

                                                      "...Do businesses have to wait for their money once a month..." No. The money moves quite quickly. I object to the fact that my personal debits are deducted from my account instantly while, as stated elsewhere, I may have to wait until Tuesday for a sale made on Friday- longer on a holiday weekend. That gives our major banks three days' free use of our total, national debit-sales funds.

                                                      1. While a business may decide not to accept plastic, and most of the sales I see at work are on plastic. Not much cash and right now more credit than debit. What some businesses and customers do not know that a business may not discriminate in accepting a plastic purchase based on amount. Either you accept all plastic purchases or none. Notice the word discriminate. When you are told there is a minimum purchase let your issuing bank know immediately. They are definitely breaking the legal agreement they entered into when buying in to the program.

                                                        4 Replies
                                                        1. re: Candy

                                                          What about my Connecticut butcher, who tacks on a fee (as I recall, $.35), If I buy less than $20 and want to use my Mastercard?

                                                            1. re: Veggo

                                                              Home-made I-talian sausage, veal roast and eggplant parmesan. Sometimes they even have good frozen fish! Jerry's in Seymour, CT.

                                                              1. re: Scargod

                                                                if you're a regular, most shops waive such fees. I would have no problem paying the $.35 if it were under $20.

                                                        2. BTW, the agreements they sign with VISA & MC do not allow them to have a minimum charge. You can (and should!) report them to the VISA & MC folks. If they don't like the bite that the CC companies take then they shouldn't sign the agreement (and thus not take them at all)

                                                          37 Replies
                                                          1. re: jgg13

                                                            Absolutely. Fewer people are carrying cash. I will not have a debit card because of the daily limit, I'd rather write a check. But minimums on a credit card purchase are illegal and should be reported ASAP. Pull out your cell phone with a call to your issuing bank in front of the offender and make it obvious you are reporting discrimination

                                                            1. re: Candy

                                                              They're not "illegal" per se, it is just against the agreement that *they signed* with the CC company.

                                                              1. re: Candy

                                                                Better yet just don't shop there, it's a win-win for everybody.

                                                                1. re: Scrapironchef

                                                                  Or better yet, don't shop there *and* report them. Heck, I've reported places where I haven't even tried to use a CC. When I see a minimum, I make a note of it and if I've got free time I'll call & report them. Sometimes I see those places lose the minimum, but I have no idea if it was my action that was responsible.

                                                                  1. re: jgg13

                                                                    If said restaurant is an independently owned and operated franchise, you could double your fun & call the franchisor. By violating their agreement with the processing company, they are more than likely also in violation of their Franchise Agreement. A franchisor could send them a friendly violation notice from the legal department, demand compliance, monetarily fine them or even terminate their Franchise Agreement.

                                                                      1. re: Scrapironchef

                                                                        Apologizes. My comments were meant to be sarcastic, especially the "double your fun" remark. I found it interesting that someone would make notes and report businesses rather than question the owner directly. When working for franchisors, it would certainly be something I was required to note and address, but as a customer I'd probably just pay cash.

                                                                          1. re: oldbaycupcake

                                                                            I usually do say something if I notice the minimum. 99% of the time, it's someone making minimum wage working a cash register and they don't particularly care.

                                                                          2. re: Scrapironchef

                                                                            Anyone that wants to use their credit card. They're not allowed to set minimum payments, thus anyone who would otherwise be forced to pay cash when they don't want to are being hurt by their noncompliance.

                                                                            1. re: Scrapironchef

                                                                              They are hurting the CC user, the CC company and themselves.

                                                                              The CC users have a contract with their credit card/debit card issuer (and thereby with Visa/MC) under which they pay fees (annual fees, finance charges, lack of interest in a checking account, etc.) in order to have a CC, and in exchange get the priviledge of using the card at the millions of businesses who have voluntarily signed up and contracted to accept CCs, as well as theft protection and convinience. Some people choose a specific card type based on how widely it is accepted (e.g. AmEx isn't accepted as widely as Visa/MC) and my contract with the CC issuer is that using my card is the same as paying cash if I pay by the end of the grace period. They, in turn, prohibit fees for using the CC in order to keep that promise to me. If that promise isn't kept, then I have to carry cash in order to get the "cash price", even though I might not want to or can't (maybe I need the grace period and don't have any cash right before payday, carrying cash increases my risk of loss as CC's have theft/fraud protection but if cash is lost or stolen, it's just gone). Plus, this CC/Debit card fee is often a surprise at the time of payment, which is even more unfair to the patron.

                                                                              The Visa/MC are hurt because if it's more expensive for the consumer to pay with a CC, many won't (either by avoiding the establishment or paying a different way) which takes profit away from Visa/MC. The less profits Visa/MC get from the transactions, the more fees they will have to pass on to cardholders. If an establishment doesn't want to pay the fees and accept the terms of the contract, then it shouldn't sign the contract. The establishment wants all of the benefits of having a CC machine without the burdens, and that's really not fair. The reasons that our own fees are low is because the Visa/MC make most of their money from the transaction fees.

                                                                              The establishment is hurt because some people will simply avoid them altogether, and others will limit their spending either due to the limited amount of cash in their pocket or because it's easier to spend more on credit than in cash. I have had the experience of going to a resto, being seated and seeing on the menu that they are cash only and had to limit what I ordered because I only had $15 on me. Their loss. And I know that of two gas stations on the way home (accross the street from eachother), one charges a $0.70 fee for using a debit/CC, guess which one I go to if I want to buy a soda.

                                                                              I haven't ever, personally taken the time to call Visa/MC about this, but I have thought about it because it is unfair - I have to pay as agreed for the priviledge of having the CC (and don't get to change or ignore my contract because it was a contract of adhesion or due to changing economic times) , so why then should the restaurant get to violate their agreement with the CC company and charge me extra on top of what I've agreed to pay?

                                                                              1. re: akq

                                                                                Okeedokee to continue this "hole in the bottom of the sea" discussion.

                                                                                The merchant then decides that the "Holier than Thou" subset of society is making his life a living hell (pun intended). Since he cannot survive without accepting CC';s and since MC/V threatened to cut him off if he did not stop this heretofore dispicable practice, he decides to adhere to the "take it or leave it contract" with MC/V who now will dictate the merchant's business practice.

                                                                                Since it is not economic for people to use the CCs for less than $10, it institutes a policy of all sales must be at least equal to $10. You can buy anything you want but the minimum check will be $10.

                                                                                He puts a big sign up:

                                                                                "We are sorry. But several of our customers called Visa and told them we did not accept charges under $10 so to treat everyone fairly, we will accept no customer who does not spend $10."

                                                                                What a world we live in. (insert head looking down) :-((

                                                                                1. re: jfood

                                                                                  Why not just institute a policy that "Every patron shall be charged for the price of the most expensive appetizer, entree, dessert and bottle of wine as a minimum service"? Don't we all know that restos make most of their money on people who eat full meals and drink alcohol?

                                                                                  1. re: akq

                                                                                    If you have read jfood in the past you know he is an advocate of the pay as you order philosophy. So he has absolutely no idea what you are addressing. Other posters have suggested such nonsense, though.

                                                                                    But jfood is always trying to mentor others, so he will give you a better analogy to help your cause.

                                                                                    Every patron will be charged a payment processing charge of $0.50 plus 3% of the cost of the meal. That is the charge Visa wanted to charge Jfood when he was the Finance Director of a Charitable organization. Silly huh?

                                                                                    And as far as jfood is concerned the restaurant can charge whatever it wants for liquor since jfood does not drink and it keeps his meal more reasonably priced.

                                                                                    Likewise he does not believe that the restaurant makes the most money per dish based on the cost to the consumer.

                                                                                    Beddy-bye time. Meetings tomorrow then a flight into the hugs of mrs jfood. Long freakin' week.

                                                                                    Thanks for the dialogue. Enjoyed the repartee.

                                                                                    BTW - the housekeeper gave jfood 2 extra chocolates. Jfood hopes noone turns her in since jfood is back at the hotel next week.

                                                                                    1. re: jfood

                                                                                      My point was simply that if a resto would decide not to allow any diners to order less than $10 because it only wants to serve the more profitable customers, why not just only serve the *most* profitable customers? The answer, of course, is that most people would be turned off by it and they would lose business. I go to a resto with the expectation that I will be charged for only what I order and the price I am charged for what I order is the same price they will charge the guy at the next table. There are lots of reasons that one person may be more expensive for the restaurant (someone camps out for 3 hours, drinks 15 cups of coffee, plugs his laptop in, etc.) but we are still charged the same. Method of payment shouldn't change the charge either.

                                                                            2. re: jgg13

                                                                              You got to be kidding. Report them?

                                                                              Let them alone, and focus on making the day a little better. Gain pleasure out of someone else getting in trouble? And all they are trying to do is make an honest living running a restaurant.

                                                                              Jfood thought we were chowhounds looking for the pleasure in the food people present, not trying to put restaurants out of business.

                                                                              1. re: jfood

                                                                                Look, a contract is a contract. If they don't want to take the bad with the good, they don't need to sign on the dotted line.

                                                                                1. re: jgg13

                                                                                  so hypothetically, you would go in, see a minimum for CCs, contact Visa/MC and franchisor if applicable, they then would change policy, raise prices, lose business. and then be forced to close possibly creating another bankrupt company and maybe family as well (if they were a personal garauntor on any loans), thusly putiing a family in turmoil. Obviously I have stretched this to an extreme, but curious, jgg--how would that make you feel? Would you feel like you have won? "Vindicated"?

                                                                                  1. re: Rob83

                                                                                    "they then would change policy, raise prices, lose business. and then be forced to close possibly creating another bankrupt company and maybe family as well (if they were a personal garauntor on any loans), thusly putiing a family in turmoil."

                                                                                    Perhaps they should have thought of that before they signed on the dotted line?

                                                                                    1. re: jgg13

                                                                                      LOL--What-- thought that a tool would be so upset at them about trying to stay afloat in a CHANGING MARKET that they would be reported???? When you sign the dotted line as a small business owner, you believe in your concept and your abilities. But no one can account for a changing market and depending on what changes, how that would affect your business, how long it would affect or potential outcome. Your take on this matter is beyond selfish...I'm not saying you shouldn't be irked by a minimum, but to go the route that you say you have gone in the past , is down right spiteful. Why not solely do what others here have stated, and do not patronize that business again? Just leaving it at that.?? Why go the extra mile??

                                                                                      1. re: Rob83

                                                                                        "When you sign the dotted line as a small business owner, you believe in your concept and your abilities. But no one can account for a changing market and depending on what changes, how that would affect your business, how long it would affect or potential outcome."

                                                                                        Why is this my problem? They agreed to accept credit cards with particular restrictions put in place, and then they choose not to deal with those restrictions.

                                                                                        1. re: jgg13

                                                                                          Again, you have not answered my real question....Why go the extra mile? Why report them and possiibly--er probably cause pricing issues, which in turn will cost us and YOU more money?? Defeating your original purpose BTW. ??????

                                                                                          1. re: Rob83

                                                                                            Well there's no need to respond when the answer is obvious. Everyone needs something in life that makes them feel important.

                                                                                            1. re: BeaN

                                                                                              I was starting to think along those lines, BeaN.

                                                                                              Some people need to boss waiters, et al, around for the same reason

                                                                                  2. re: jgg13

                                                                                    jgg, your respect for the contract is all good and admirable. but consider this: this contract is often not a negotiated document given that the terms from the credit card company are oftentimes sent after the small biz has already signed on with the merchant services provider (which may make CC company / small biz agreement an unenforceable adhesion contract) and given the massive disparity in bargaining power between the small business and a large credit card company like visa / MC. very large businesses (say, Macy's) have the opportunity to negotiate the rates they pay; small businesses do not.

                                                                                    you can keep harping on the primacy of contract, but keep in mind that even in contract law, there are many reasons why contracts might be found invalid.

                                                                                    1. re: cimui

                                                                                      "this contract is often not a negotiated document given that the terms from the credit card company are oftentimes sent after the small biz has already signed on with the merchant services provider"

                                                                                      That's the fault of the merchant for allowing that to happen.

                                                                                      "given the massive disparity in bargaining power between the small business and a large credit card company like visa / MC. very large businesses (say, Macy's) have the opportunity to negotiate the rates they pay; small businesses do not."

                                                                                      That's not my problem.

                                                                                      "there are many reasons why contracts might be found invalid."

                                                                                      Indeed. As I've intimated elsewhere, it's a shite state of affairs. If they don't like the situation, perhaps they could bring suit against the CC company to try to invalidate the contract. But the fact of the matter is that if they signed it, and don't see fit to challenge the CC company, it isn't *my fault*, and I don't have sympathy for those particular merchants. They made their bed, they need to lie in it.

                                                                                      1. re: jgg13

                                                                                        if it's a shite state of affairs, why would you actively help perpetuate it by calling in to report a small business?

                                                                                        you may actually be helping to break contract law, even as you are attempting to enforce it.

                                                                                        btw, i don't intend to attack you; i just want to challenge your premises a little. i'm hoping you'll consider these points -- just as an intellectual exercise.

                                                                                        1. re: cimui

                                                                                          Basically I think that these people should view their situation in one of three ways:
                                                                                          1) Accept the agreement in it's entirety
                                                                                          2) Don't sign the agreement at all (don't accept CC - I go to several places like this)
                                                                                          3) Sign it and if they feel they've been mistreated, take legal action to sort it out (which would determine if indeed these contracts are somehow illegally managed)

                                                                                          Essentially I don't recognize option #4 (ie 'sign the contract and then break it's rules') as a viable path to take.

                                                                                          1. re: jgg13

                                                                                            In the first place, why is it any of your business? And even if it were your business, why would you care? And finally, it is a viable path.

                                                                                            Contracts are legal agreements, not moral codes. And parties are supposed to break their contracts when it's in their best interest to do so. When cost of performance exceeds liability for damages, a rational actor breaks the contract and pays the damages. It's called the doctrine of efficient breach.

                                                                                            In another thread you adamantly claimed that people shouldn't defend an employee who's being abused by an employer because it's none of their business. At least there's a moral component involved there. If you're going to advocate people minding their own business, this would be a good place for you to start practicing what you preach.

                                                                                            1. re: alanbarnes

                                                                                              In this case, their refusal to hold to their end of the bargain can negatively impact myself as a consumer. In the case of the employer/employee dispute, that's between them.

                                                                                              I'm really making the same argument in both cases. The merchant/employee can decide if the pros vs. cons of the CC company/employer are worth it.

                                                                                              Similarly I can choose if the pros vs. cons of being a customer of a particular business is worth my money. However, there is nothing wrong with making it known to the CC company that a particular company isn't upholding their end of the CC deal, just as there's no harm in reporting to the authorities if they were committing some sort of fraud, etc.

                                                                                              1. re: jgg13

                                                                                                Logically, no, nothing wrong. Morally yes. Your comparison here is infounded. They willingly tell you there is a minimum CC charge, no fraud there. And you said it--you can decide if being a customer of a business is worth your money. In these instances, that is all you need to do--nothing else. To report these small business owners, almost hoping they will get into trouble (by the tone of your first post on this), You are helping the decay of this economy. Small business and their owners are a large part of the backbone of this country's business society. You actions chip away at that bone, little by little.

                                                                                                1. re: Rob83

                                                                                                  "They willingly tell you there is a minimum CC charge, no fraud there."

                                                                                                  However, that statement is one that hey are *not* allowed to make!

                                                                                        2. re: jgg13

                                                                                          But must you be the one to tuck them in ---permanently??

                                                                                          1. re: jgg13

                                                                                            This economy is causing people to lose their homes, file for bankruptcy and lose their businesses. Yes, TECHNICALLY they violated their contract. However, if you had a family to support and a business that was not successful in a scary economy, perhaps you would do the same. If I had the choice between following my CC contract to a tee and losing my business or violating it but be able to keep my business and my mortgage, the choice is clear! I'm not saying that this is definitely the situation for this restuarant, but the fact is that YOU DO NOT KNOW. Obviously their policy bothers you so you have a choice- do not go back! Tell other people to stay away! If enough people agree with you the restaurant may change their policy. But why on earth, unless you are truly vindictive would you report this? Report child abuse. Report corruption. Report crimes. But report this? Use some priorities and common sense- who is it really benefitting??

                                                                                    2. re: jgg13

                                                                                      Do you also sit alongside the road with a radar gun and a video camera? Since when is it your job to enforce a contract between two strangers?

                                                                                      1. re: alanbarnes

                                                                                        >>Do you also sit alongside the road with a radar gun and a video camera?

                                                                                        don't give him any ideas. ;)

                                                                                        1. re: cimui

                                                                                          We seem to be reacting to the disproportionate harshness of jgg's actions in reporting the offense. It's something I wouldn't do, so I had the same reaction.

                                                                                          But, if we agree that jgg's moral compass won't allow him to stand idly by while this is happening, and if we agree there are a lot of jggs in this world (which can be observed all the time with people in other people's business where they don't belong), then one might make the argument that his actions are preferable to the other option we've offered, which is to take his business elsewhere.

                                                                                          In other words, if he turns in a store owner and that owner is forced to comply with the contract and remove minimums, thus giving the jggs of the world the opportunity to return to the business and purchase there again, then that may benefit the business owner vs the business lost by people who boycott places with minimums.

                                                                                          Yes, prices will have to be adjusted upward. But, the existence of chowhound proves there's demand for a superior product, and we are willing to pay the premium. We may be a minority, especially in this economy, but we're also the target market of a small business owner with a better product.

                                                                              2. i absolutely don't have any problem with the ice cream shop, the coffee house, the pizza slice place, or the small bar, with average purchase under $5, refusing credit cards or tacking on a service fee for small purchases. people should not think that a $2.00 charge is in any way good for a small business, yet i witness people asking to pay for $3 worth of tomatoes at outdoor farmer's markets with a credit card--yikes! it's a little spooky when people think ccs are the *same* as cash, or are in the habit of not carrying *any* cash-- what happened to that $20 hidden behind the photos in people's wallet for emergencies/cabfare? what do people do when the computer goes down?

                                                                                this summer we've noticed that we had a lot of difficulties with cc companies and customers' deposits for large-scale catering. despite the fact that these folks had in some cases obtained the cards specifically for the fees related to a single event (example: wedding), the cc companies would put long-term holds on the funds and refuse to release the payment without a lot of runaround. a couple of times this led to the awkward situation of the party (bride & groom) believing they had made a required deposit in good time, yet the funds not being released, so that we essentially were holding the date, ordering food, doing the staffing, rentals, etc. in good faith, because the deposit had in fact not been paid to us. this of course negates the whole point of a deposit--since we can't use the funds for special food orders or other expenses, and represented a huge risk for our business each time. i believe we even bounced a couple of checks because we thought the funds were available, when they were not. then we get the overdraft fees and the credit blowback. then when the bride & groom would pay their balance on the day of the event, again with the same cc, and despite fully knowing the situation, the cc company would again put a 2 week hold on the funds, which would be extended until the couple came back from honeymoon to answer their home phone to confirm the charge, and we'd have to pay the temp staff of the event out of pocket, including any tip the b&g put on their charge card. . . and call the cc company back every business day thereafter for 2 weeks between 9-5, sitting on hold for up to an hour, so you can't tie up the business phone, you have to use your cellphone minutes and you're standing there with a phone headset and your cellphone clipped to your apron, chopping carrots, and eventually you accidentally drop your cellphone into the produce sink full of water as you're pulling bunches of spinach out. . . and then you get to decide who to sit on hold with for an hour, tying up the business phone-- the cc company, or the cellphone insurance company. . . and a customer comes in and asks, snarkily: "hey, if you're done talking on the phone, would you mind if i got some food, you know, what you guys are here for? if it isn't too much trouble, sorry to bother you while you're on the phone. . ." and that customer may go and talk some smack about you being on the phone and not taking care of customers at your establishment, and *that* hurts my small business. that and the $800+ that we had to pay, that we didn't get a chance to make back, on someone's happy day, so the bookkeeper has another time-consuming mess to figure out at $50/hour and lots of questions that need to be answered at 11:59 am, & we'll just have to raise the per head costs again next year again, even though customers complain about high catering costs, yet everyone insists on paying by cc. . . hurray for modern technology.

                                                                                i do realize that these days nobody is saving for their wedding any more, they rely on the cards in the envelopes to pay for it. . . but hey if you're doing a big family reunion or 50th wedding anniversary or something at your favorite local indie, consider having mercy on some poor schlep and paying your deposit by check or money order. you'll save someone more stress than you can imagine.

                                                                                18 Replies
                                                                                1. re: soupkitten

                                                                                  "absolutely don't have any problem with the ice cream shop, the coffee house, the pizza slice place, or the small bar, with average purchase under $5, refusing credit cards or tacking on a service fee for small purchases."

                                                                                  I absolutely *do* have a problem. They signed the agreement, they should hold to it. If they don't like the fine print, they can choose to not sign the agreement.

                                                                                  "people should not think that a $2.00 charge is in any way good for a small business"

                                                                                  Who cares? If they sign the agreement with the CC company - they *ARE OBLIGATED* to take those small charges. If they don't think it is worth it in terms of their biz, they don't have to sign the agreements.

                                                                                  1. re: jgg13

                                                                                    To be competitive small businesses have no choice but to agree to these terms, there is no other option, no competition offering choices.
                                                                                    I care that people who use plastic for small purchases are driving up the cost for everyone.
                                                                                    Others should also.

                                                                                    1. re: hannaone

                                                                                      "To be competitive small businesses have no choice but to agree to these terms, there is no other option, no competition offering choices."

                                                                                      That is *their* problem. They most certainly have a choice - they can either:
                                                                                      1) Sign the agreement, deal with the small purchases and accept the influx of more business due to accepting cards


                                                                                      2) Avoid the problems w/ small purchases and lose out on other sales due to no credit cards.

                                                                                      Those are the *only* options. They are allowing credit card purchases as a *privilege* from the CC companies (MC, Visa, etc) - it isn't a god given right that they can accept credit cards.

                                                                                      1. re: jgg13

                                                                                        we have a difference of opinion. credit cards are in fact *not* legal tender, as cash is (i would argue that *using* credit rather than legal tender is a privilege, not a god-given right).

                                                                                        small businesspeople may choose to accept credit cards as a convenience to their customers, but they should still be able to make a profit on their products, and people need to realize that the street hot dog vendor will not make a profit on a sale paid for by cc, whereas the jeweler's storefront s/he stands in front of will certainly profit from a diamond ring sale by cc. the high end restaurant next door, which has cc fees built into their pricing (making everything more expensive for everyone, as Hannaone points out) will also profit from cc sales. buying a $2 cup of coffee with a cc is not a reasonable transaction, it's abuse of the service the proprietor offers-- the coffee proprietor should be able to charge $.50 to the customer to cover the cc fee for the small transaction, as well as discourage their use for small transactions--small cc transactions are also very inefficient in terms of a small shop's efficiency/worker time. the ice cream shop lady should be able to choose to offer the little league coach, buying treats for the team, the convenience of using a credit card, as she will make profit on $25 worth of ice cream, but she should also be able to ask me, in line behind them, to pay with cash or accept a service charge for the convenience of paying for my $2 cone with credit.

                                                                                        folks who are attached to their credit cards at the hip will doubtless respond: "and i'm free to take my patronage to *only* places that accept ccs." true, but that is voting against all of the important small-scale folks, who choose to sell the real specialty items, the one delicious cheap product that they do really well-- just fresh ice cream, not full meals, shops where you can still by artisan truffles by the piece, street food vendors, beach taco huts. . . when everyone starts to adjust their pricing models based on larger purchases to cover the cc fees, you effectively squeeze the small-transaction independents out. on another thread folks were complaining that buying pizza by the slice is not an option in their area. appalling, huh? but chances are if you talked to the pizza makers, they'd say they can recoup their cc-related costs from a whole pie, but not from feeding people slices during the lunch hour. i want to see the small ice cream and coffee shops in my area stay open and stay independent, and i want to be able to buy pizza by the slice in five years, so i do what is right and pay for my $2-$5 snacks with legal tender (cash).

                                                                                        1. re: soupkitten

                                                                                          "i would argue that *using* credit rather than legal tender is a privilege, not a god-given right"

                                                                                          In a sense, yes. OTOH, if a place signs a contract with a CC company they must follow *ALL OF THE RULES OF THE CONTRACT*, which for at least all major CCs states that they may not impose a minimum purchase.

                                                                                          This would be no different than if we had a contract that said that you could enter my apartment but not eat my peanut butter - and then your proceeded to eat my peanut butter. You'd be in breach of contract.

                                                                                          "but they should still be able to make a profit on their products"

                                                                                          That's between them and the CC company. If they don't like the rules that a particular CC company, they're free to vote with their wallets and perhaps try to find a CC company that doesn't have such restrictions. If there is not one of those, perhaps they could start their own CC company.

                                                                                          "olks who are attached to their credit cards at the hip will doubtless respond: "and i'm free to take my patronage to *only* places that accept ccs.""

                                                                                          Personally I find the "plastic only" people to be fairly annoying to deal with, I've had to avoid places/lend money/etc due to friends who never seem to carry more than a cuople of bucks on them. BUT, the point is that THE STORE OWNERS SIGNED A CONTRACT - if they don't like the terms of the deal they shouldn't SIGN THE CONTRACT.

                                                                                          I feel bad for the people in the situation but I don't see *any* grey area here. The contract they signed says that they are not allowed to impose a minimum, thus they can NOT impose a minimum and people should not feel obligated to pay cash for small purchases (I typically pay cash as it's easier to pull out a few bucks than to swipe a card, sign a slip, etc - but I feel no obligation to do so out of pity ... they signed the gd contract)

                                                                                          You people who argue that minimums are acceptable are flat out wrong and there is no possible way to explain it otherwise. You might say "well I don't think people *should* make small purchases", and that's a defensible position - but supporting minimums imposed by the vendor *IS NOT* defensible unless you also defend breaking any contract one chooses.

                                                                                          1. re: jgg13

                                                                                            I agree. People who run a small business presumably have some sort of business model on which they base their pricing. It's their responsibility to factor the CC costs into that model just as they do ANY OTHER costs. If the net effect is to increase the price of a slice of pizza, say, by 15 cents in order to maintain their desirable profit margin (balacing cash receipts and charge receipts in order to achieve the price that will account for the margin while not dissuading purchasers), then that's what they need to do.

                                                                                            They decided to contract with VISA or MC in order to do more business (why else would they sign up). There's a cost to that, and it's purely their responsibility to take that cost into consideration when they make the deal.

                                                                                            I use my card wherever businesses take it; it's a lot more convenient than carrying a wad of cash around, and far more secure than carrying and using checks (I do generally use cash for amounts under $10 but not at major chains like Walgreens, etc.) - but that's my choice. Taking credit cards is theirs.

                                                                                            1. re: Striver

                                                                                              it makes sense for some businesses to do an across-the-board markup, sure. others would find their business hurting as a result. for example, a new independent coffee shop close to a college campus where all the students habitually use debit cards for all purchases no matter how small, will mark up every item--coffee, muffin, sandwich, tea bag-- let's use the more realistic fifty cents, not fifteen. yes, they'll get folks walking into their shop who will snort and stew at the thought of a $3 coffee or $2 rice crispie treat--those people may refuse to patronize the shop due to high prices-- but the business will likely be more successful at the higher price point given the "card carrying" majority of its customers.

                                                                                              open the same coffee shop near a community library in a residential area, where most patrons pay cash, there is a mixed patron crowd of small groups and families and single patrons, and maybe 5-10% want to pay with credit. the shop owner's in a tough spot. if she takes credit cards, she has to raise prices on her products 40% in some cases, and risks pricing herself out of range for part of her customer base--the families will walk across the street to the gas station for sodas and ice cream treats to save themselves $3-$4. she may make the decision to not accept credit cards, and lose the patronage of a similar percentage of customers, they'll run straight to starbuck's in response to evil small-business owners who refuse to acknowledge their god-given right to pay with plastic. knowing that her independent shop can't compete vs corporate coffee in advertising, and that her business' odds of staying open for more than a couple of years are 17/1. . . this business owner may consider keeping prices lower for the majority of her patrons, but having a service charge or minimum for those who choose to pay with credit.

                                                                                              seems like asking the minority of folks who use a service (credit, in this case), to pay for it, rather than asking the majority who don't, would make sense, and would enable the shop owner to keep her prices low, which should keep most of her customers happy. i know most habitual coffee drinkers in my area would rather pay $2 in cash for coffee every single day than pay $3 by credit, and maybe have to cut back on their java habit due to belt-tightening. lots of people prefer the corporate set-up, obviously. if you ever do visit an area where there are a lot of independent small businesses though, you might want to check one or two out-- they sometimes have a lot to offer (in addition to lower prices than the chains).

                                                                                              i'm thanking my stars that i don't sell coffee, ice cream, or pizza slices, and that folks in my area are supportive of small indies, so i can still get these products-- this thread is quite the eye-opener about how it must be elsewhere!

                                                                                              1. re: soupkitten

                                                                                                Oh, some of the businesses I patronize are cash-only - but again, that's their choice. I can only assume that if a business chooses to accept credit cards, they've thought it through, determined that it will increase rather than decrease their profits (and if they charged for the service, the loss of custom might effectively wipe out the profit margin entirely - aside from being a violation of their CC agreement), and adjusted their pricing accordingly.

                                                                                                Basically, it's their decision, not mine - but once they've decided it's in THEIR interest to accept credit cards (they sure don't do it as a personal favor to me), they forgo the right to charge a differential to the customers they may have attracted by taking CCs. That's an essential part of the bargain they have chosen to make. If they don't like it, they can go back to cash-only; that's also their choice.

                                                                                                All I'm saying is that they can't have it both ways - accept CCs AND charge a differential to the CC customer. That's not the way it works. Just remember: no one forces the choice upon them.

                                                                                                1. re: Striver

                                                                                                  This is effectively my point as well. Do I think the situation kinda sucks for the samll business? Yes. But if they decide to sign on the dotted line w/ the CC companies, they have to adhere to the contract that they signed - no if's, and's or but's.

                                                                                                2. re: soupkitten

                                                                                                  I totally agree with you soupkitten. I am glad that I am no longer in business.
                                                                                                  In my current job people use plastic for $0.95 purchases, a LOT of people.
                                                                                                  I also see a lot of customers who present unsigned cards and then get indignant when I refuse to accept their card because it isn't signed or has some statement like "See ID" written on the signature line.
                                                                                                  Then I gleefully point out the printed statement from the card issuer "Authorized signature. Not valid until signed." that is present on every card I have ever seen.

                                                                                                  1. re: hannaone

                                                                                                    Hah, nice. Those bozos annoy me about as much as the places who have a minimum charge.

                                                                                                    1. re: hannaone

                                                                                                      I am one of those people that *always* writes "ask for ID" on my debit and CC cards. Sometimes I sign it as well and sometimes I don't. And you darn betcha I get annoyed when this gets ignored. I have worked in a variety of small places, and I *always* would ask for an ID.

                                                                                                      Don't these businesses even care if someone is using a stolen card? We've had cards stolen where the thief charged thousands of dollars, even after we reported the card missing; at least some of this theft would not have happened if the cashiers had taken a brief moment to ask for an ID.

                                                                                                      Who, of course, pays for these thefts even when the CC company places a $50 limit for the card holder? We *all* do.

                                                                                                      A simple sign will of course not get everyone hunting for an ID, but some will and it will allow the cashier to point to it.

                                                                                                      You can imagine how annoyed I get at those idiotic commercials where a line of people just swipe and run. *I'm* paying for any thefts.

                                                                                        2. re: jgg13

                                                                                          Do those agreements apply to gas stations that charge less for cash? Is that a violation of terms?

                                                                                            1. re: jgg13

                                                                                              Not true, you cannot charge more for CC--but you can give cash discount to anyone at anytime. Got that from the horse's mouth.

                                                                                              1. re: Rob83

                                                                                                Ah, that actually does sound familiar. I had to go aorund poking about the "setting different prices" thing as I couldn't remember the technicalities on that one.

                                                                                                And in one of the two links I posted, they even noted that not all of the CC companies have rules about the differential pricing.

                                                                                            2. re: phantomdoc

                                                                                              simply, don't like minimums somewhere, remember the almighty dollar!!

                                                                                            3. re: jgg13

                                                                                              They are willing to break their written word. Makes me wonder what else they are lying to me about.

                                                                                          1. It should be beneficial, as people will spend more when using a credit card than they will when using cash. MacDonald's did a study and discovered that customers will spend 25-30% more when using plastic. It's a mental thing, pulling a Benjamin out to pay for dinner hurts a lot more than scribbling your John Hancock on a slip of paper.

                                                                                            9 Replies
                                                                                            1. re: btneast

                                                                                              That works in places that have pricing schemes for individual items. In places (like many ethnic restaurants) that have a set price for a complete meal, it doesn't increase per customer spending. People won't purchase a second or third meal just because they're using plastic.

                                                                                              1. re: hannaone

                                                                                                And how many restaurants have a set price plan? I would say that the overwhelming majority of restaurants across the country are a la carte.

                                                                                                1. re: btneast

                                                                                                  My former restaurant for one. Most Thai and Korean restaurants that I have been to.
                                                                                                  A large number of diners and other small mom & pop places that I have been to over the years.

                                                                                                  The point I was making is that the statement does not apply as a universal truth. For some there is a definite increase in sales, for others it doesn't happen.

                                                                                                  1. re: hannaone

                                                                                                    No, not a universal truth, but an overwhelming truth? I would easily say the vast majority of restaurants across the country are a la carte.

                                                                                                    1. re: btneast

                                                                                                      Must be a difference in experience. I rarely see a la carte except in chains.
                                                                                                      But I admit my experience is mostly in small town USA.

                                                                                                  2. re: btneast

                                                                                                    When you say a la carte, do you mean that each course is ordered separately, or that each item (meat, vegetable, bread) in each course is separate? If it's the former, I agree with you, most restaurants are a la carte in the sense that each course is priced/ordered individually. If it's the former, then I disagree, I can only think a 1 restaurant I've ever been to that priced each meat/veg/bread individually, and that was K&W cafeteria...

                                                                                                    I think that you and hannaone are talking about the same thing, but in different terms.

                                                                                                  3. re: hannaone

                                                                                                    I know a bunch of folks who actively avoid places if they can't use a CC. Part of the increase of business is also tied to accounting for those folks who would be spending $0 at your establishment otherwise.

                                                                                                    1. re: jgg13

                                                                                                      See my post http://chowhound.chow.com/topics/5657... in this thread regarding increase in traffic.

                                                                                                      1. re: hannaone

                                                                                                        Fair 'nuff, I'm just speaking anecdotally (FWIW) in that I come across a bunch of folks who actively avoid cash-only establishments.

                                                                                                        BTW, lost in all of this is a flip side. I think it is the responsibility of the customer to find out ahead of time if a place is cash only and to not blow a head gasket at the establishment if they hadn't done their homework. There's a chinese eatery near where I live that is fairly popular, and they are cash only. I'd say that at least 10% of the time that I'm there, there's invariably some dude who didn't realize it was cash only and makes a giant scene about it.

                                                                                                        While it is the establishment's responsibility to adhere to the entire contract that they signed, it is the patron's responsibility to do their homework ahead of time.

                                                                                                2. I'm guessing the benefits do outweigh the drawbacks for many places. I work in a business that is not retail/food traffic. We bill people and expect them to pay. But for the last several years we've accepted credit cards. Why? Because whatever percentage we loose on that deal (usually the transactions are in the hundreds of dollars so the swipe fee isn't that big a deal) is made up for the fact that when people do want to pay with a credit card, we get the money right away. Cashflow is king.

                                                                                                  Personally, if I'm in a place I know is a local small business, and I care about it, I try to use cash for a small purchase if I happen to have it on me. I don't go out of my way to have the cash on me, I don't get out my ATM card and use debit even if they take those too, but if it's 5 or 10 bucks and I have cash on me, I pay cash. Just my way of helping out a little bit extra. I know I don't have to. Most likely they are doing okay anyway. The people who ring it up usually don't care. But it doesn't hurt me much and maybe it helps a tiny bit.

                                                                                                  1. In Canada, (Toronto at least), it's not unusual for small convenience stores to charge a fee to use a debit card for small purchases. It's not much - $0.25-$0.50 - and I understand that the store is just passing on the swipe fee.

                                                                                                    My understanding, from working in the restaurant biz for a few years, was that MC/Visa charge lower percentage fees than Amex, but that Amex customers tended to spend more money per meal, so it was worth it to accept them. And what ever happened to Diner's Club?

                                                                                                    But what really sticks in my craw is "white label" ATM's (those not associated with a major bank). I made the mistake of using one once, and was astonished when my bank charged me $2.50, and the ATM owner charged me $5. $7.50 in charges for a $40 withdrawal?! I'll never use one again.

                                                                                                    1 Reply
                                                                                                    1. re: KevinB

                                                                                                      A couple years ago all Diners Club cards issued in the US (in the US, Citi is the issuer) also became MasterCards. The practice may vary by issuing country. I looked at the UK site, and it says that UK Diners Club cardholders can use them as MasterCard in the US. Not sure if that's true for all cardholders worldwide, but it appears that at least on some level it's no longer necessary for US merchants to accept Diners Club specifically as MasterCard pretty well covers it.

                                                                                                      A former partner in the company I work for used to carry and use one all the time. Many moderate restaurants as well as upscale ones and all airlines and hotels tended to accept Diners. Also in some parts of the world it used to be more accepted than Amex, though I'm not sure that's been true for years.

                                                                                                    2. A small business that understands the flow of CC payments being deposited into their bank account & are aware of their fixed and controllable costs would not be adversly effected by taking credit cards as payment. The fees associated with accepting credit cards should also be included in their general overhead, just like paying for electricity or insurance. It's simply a cost of doing business. The problems occur when a small business owner doesn't completely understand their own finances in general and has a cash mentality in a credit card world.

                                                                                                      While working with a super premium ice cream franchisor they started taking credit cards No minimum purchase required. System wide they saw an increase in # of transactions & avg.$ per transaction. Most franchise owners also saw a decrease in cash shortages over time. They were also able to increase their catering sales. Most corporate catering is paid for by credit card, especially the pharmaceutical reps who almost exclusively use AmEx. Point being, by taking credit cards not only did they see an increase on the store level but they were also able to tap into a whole new revenue source.

                                                                                                      6 Replies
                                                                                                      1. re: oldbaycupcake

                                                                                                        Yes--good point. But one thing to remember from your earlier post and the other persons' that touched on calling to report someone in violation. I personally think that anyone that "reports" a merchant on violations concerning minimum purchases is pretty sad human being. More than likely this would be the same person who would be first and loudest to complain when minimums were removed, but with substantial increase in pricing. Merchants and/or public can't have it both ways--nor should they try.

                                                                                                        P.S. If a place you frequent has a minimum---why not just use cash instead of taking time out of your day to report merchant?

                                                                                                        1. re: oldbaycupcake

                                                                                                          There are a lot of Banks out there that don't spell out their additional charges during initial agreement or when monthly statements arrive...Many hidden costs. My wife deals with that on a regular basis when she is trying to earn a merchant's biz. They say they have this great deal already, but when my wife sees their statements--they had no clue the additional charge they were being hit with. I blame both sides there. Merchant provider for incomplete disclosing , and the merchant for not paying closer attention to statements and asking questions.

                                                                                                          1. re: Rob83

                                                                                                            And to expand on that - many (by no means all) reps from third party merchant service providers do not provide the VISA/MC merchant agreement nor the fee schedule at the time of contract signing, advising the owner that these will come included in a mailed welcome package (My first Terms and Agreements package arrived 3 months after signing the dotted line).
                                                                                                            The reps come into a business armed with glowing reports and studies that show the (potential) sales growth a business owner can anticipate. They all but actually guarantee the business will do well by accepting plastic. They do verbally touch on fees and costs, but do so in a way that emphasizes the qualified purchases and relegates everything else to footnote status.
                                                                                                            They do not mention that businesses with no or limited foot traffic, places off the beaten path, or places located in certain non or low card using areas will probably not see any sales growth for quite some time, if at all.
                                                                                                            Meanwhile the owner signs the contract, often non cancelable for at least the first year, believing that what the rep has illustrated with all those reports and studies is going to come to pass.
                                                                                                            And I won't stray into what these type of reps do when talking to English as a Second language business owners.

                                                                                                            1. re: hannaone

                                                                                                              Absolutely. My wife refuses to work for a 3rd party provider. She has done this for 6 years now and only for 2 of the top 5 banking companies--for a variety of reasons--number 1 being ethics on both sides of the table.

                                                                                                              1. re: hannaone

                                                                                                                And you would sign a contract without reading or understanding the details of the commitment? That's just bad business, buyer beware.

                                                                                                                1. re: hannaone

                                                                                                                  "And I won't stray into what these type of reps do when talking to English as a Second language business owners."

                                                                                                                  Those people should be sued into oblivion.

                                                                                                                  I don't have much sympathy for people that enter agreements based on shady statements by shady reps and not having a lawyer go over the actual legalese of the documents, and otherwise doing their DD.

                                                                                                                  That being said, I have complete and utter disdain for the bozos who are intentionally trying to mislead these merchants.

                                                                                                            2. It's the % fee. It eats small businesses alive. It ends up being a LOT of money. Most customers are ignorant and oblivious to this fact.

                                                                                                              9 Replies
                                                                                                              1. re: uptown jimmy

                                                                                                                As a customer, it's simply not my job to second-guess the business decisions made by the owner. The OP's question could just as well have been phrased "How bad does NOT accepting credit cards hurt small restaurants? ".

                                                                                                                I don't worry about their cleaning costs or their fuel costs or their rent. I assume they factor this into their model and price their menu accordingly; I also assume they do the same for their CC fees when they choose to accept cards.

                                                                                                                If taking credit cards actually hurts their business, they should stop taking them. If they do accept them, I think I'm justified in assuming that they figured out that the cards increased their profits rather than otherwise. Or should I just assume that they don't know their business or how to run it? Don't know about others, but I prefer to credit people with intelligence.

                                                                                                                1. re: Striver

                                                                                                                  As anybody who's run a small business knows, "factoring" credit card fees into their model is not quite so easy. Yeah, they do it, but along with "factoring " in credit card fees that are higher than those paid by chain restaurants, they factor in a lot of other higher costs that can start to make one wonder just how fair and equitable this "free" market of ours really is.

                                                                                                                  The main story here is "small businesses" vs "corporate chains". Corporate chains enjoy many advantages in this face-off, one of the primary ones being what we call "economies of scale". Because corporations negotiate massive purchases for all their raw goods and services, they enjoy steep discounts on same. Small businesses ALWAYS pay far more than corporate entities for the same products and services, perhaps especially in the hospitality industry, whether we're talking paper cups and coffee beans for a coffee shop, or plates and cutlery and cuts of meat for a sit-down restaurant. And, of course, the same holds true for credit card fees.

                                                                                                                  American consumers have spent decades now assuming that it is "simply not their job to second-guess business decisions" made by owners. That's one of the primary reasons ours is now a culture almost completely defined by mega-corporate chains and franchises and big box stores.

                                                                                                                  And it is simply not an option for most small restaurants to refuse to accept credit cards, at least not until recently. That might be about to change. Many things seem about to change....

                                                                                                                  1. re: uptown jimmy

                                                                                                                    >And it is simply not an option for most small restaurants to refuse to accept credit cards...

                                                                                                                    But that's my point: refusing to take credit cards will cost most businesses - in the long run - more than accepting them will. When they come to the conclusion that they can be more profitable by NOT taking credit cards, I trust that they'll make that decision. If I like the place, I'll go there; credit cards don't factor into my dining decisions.

                                                                                                                    There are many reasons - both economic and sociological - why big box stores and chain restaurants have been so successful in the last few decades. Economies of scale is certainly the main economic factor, but I'd think the lower cost of their goods (to them and ultimately to their customers) factors into their pricing and growth to a much greater extent than their negotiated cc fee structure (based, in no small part, on the volume of business they provide).

                                                                                                                    People ultimately make the choice to patronize these stores or not; while I personally prefer a greater breadth of options, and virtually never eat at a chain resto or shop at a big box store, I can understand why others do. Even in my hometown of NYC, where there's an enormous variety of restaurants at all price points, the tourist area around Times Square has a Red Lobster, an Applebees, a Hard Rock Cafe, a Bubba Gump, etc., etc. - and they all do plenty of business. Many people obviously want these places to be wherever they go, for a wide variety of reasons unrelated to credit cards - or, particularly in this case, to pricing.

                                                                                                                    1. re: Striver

                                                                                                                      "People ultimately make the choice to patronize these stores or not;"

                                                                                                                      And that is precisely my point. The vast majority of American consumers have been making tragically uninformed choices for a long time now, and the effects upon our society have been, well, tragic.

                                                                                                                      There's an old saying, that you get what you pay for. The fact that most of us have chosen the cheaper option for so long is directly to blame for our culture, and our food culture, being so cheap and shoddy.

                                                                                                                      The basic approach to consumerism that has so many people blithely and blindly choose corporate restaurants (and thereby makes small independent restaurants a sketchy business model at best) is the same attitude towards consumerism that chooses tho shop in big box retail stores that sell clothing and other products made half-way around the world in factories that provide goods once made in America, all of which of course is a big reason why so many of us have such drastically compromised expectations for the future compared to the previous few generations.

                                                                                                                      We as a people need to start being just a little more conscious about our consumerist decisions from now on, or else risk becoming the banana republic we so closely resemble already. Thinking that we have the right to dismiss the struggles of small business-people as being none of our concern is irresponsible and self-destructive to us as a nation. That sort of laizzes fare mentality has helped produce the staggering inequity in wealth and ownership in this society. Thomas Jefferson would be horrified.

                                                                                                                      Economies of scale are the result of now-outmoded business models, especially when it comes to relative ephemera like credit card fees. Bits and bytes ain't cases of toilet paper, and the outrageously inequitable discrepancies between those fees paid by small businesses and those paid by large corporations are merely one example amongst many of how credit card companies have been preying on consumers and businesses for the last few decades. The fact that these matters are even being considered for Congressional investigation is a miracle, given the corruption and cronyism between Congress and big corporations.

                                                                                                                    2. re: uptown jimmy

                                                                                                                      Okay, this thread has really bothered me and I am going to respectfully submit my opinion as one that works with BOTH independent & chain restauranteurs.

                                                                                                                      First, the majority of "chain" locations are independently owned and operated by members of your community, not corporate owned. They are either a licensee or franchisee. My comments will refer to that segment of the chain community.

                                                                                                                      Three year failure rate of an indie restaurant is 61% and franchise 57%. Those are similar numbers for a group with such "perceived" benefits of being part of a chain.

                                                                                                                      Often those benefits of a chain are offset by paying royalty, marketing and other fees to a parent company, on average 7-10% of sales. Plus, being part of a chain usually means turning over purchasing/pricing control to the parent company. With that in mind, just because a parent company negotiates the pricing on products and services doesn't mean they do a great job nor does it mean that they are vigilant in regular analysis of those prices. Parent companies may also benefit from manufacturer rebates, which can be significant amounts (e.g. fountain drinks in a QSR setting are big) as long as it's disclosed in the UFOC and FA. Owners may also be contractually required to update decor, equipment or product by the parent company regardless of their financial situation. Often chains require use of "private label" ingredients or products which prevents franchisees from shopping those items for better pricing. The parent company is ultimately concerned with making money & they get paid royalties if a location is profitable or not, every single month.

                                                                                                                      My comments are in no way to be taken as a defense of the chain restaurants. I just think that it's important to have the full picture and wanted to point out that being part of a chain may have some advantages but also has a number of disadvantages not faced by an independent & vise versa. My experience has been that it's basically a wash and they have equal opportunity for success and failure.

                                                                                                                      I have no desire to do so, but if I were to open my own restaurant tomorrow, I'd do it independently. Personally, I'd want to have full control over my destiny. Oh and I'd use research & the resource of my state or local Restaurant Association to ensure that I was getting discounted and fair pricing on services like credit card processing from a BBB approved provider!

                                                                                                                      1. re: oldbaycupcake

                                                                                                                        "First, the majority of "chain" locations are independently owned and operated by members of your community, not corporate owned."

                                                                                                                        I would need really hard numbers on this. I doubt the truth of it. Perhaps many fats food joints are franchises, but that would be the extent of it. And I've been around a while, and seldom if ever seen a fast food joint close within a year of opening, but I'm willing to read the hard data, like I said.

                                                                                                                        But in truth, I was referring generally to proper restaurants and cafes, both of which, as business models in general, have come to be dominated by corporate chains that most certainly not franchised in any traditional sense of the term. Unless I am very, very confused....

                                                                                                                  2. re: uptown jimmy

                                                                                                                    To tag onto what jimmy said- when you start out with a Merchant Services Provider, it's often incredibly difficult to know how the fees will impact your bottom line. And you won't know until you get your monthly statement. Yes, you can make adjustments, but you can't look at a card and know whether it's a qualified or unqualified card- you just can't. Some months I would get only a couple, other months, lots, and the unqual rate and swipe fee are significantly higher than for a qualified card.

                                                                                                                    If you are a small business trying to make a fair profit at a fair price, this can hit you pretty hard. It's not about intelligence.

                                                                                                                    1. re: caviar_and_chitlins

                                                                                                                      Look - all I'm saying is that I assume business people are rational actors, and take credit cards because their own analysis shows them that overall it results in more profit, not less. If that's an unjustified assumption, I'd like to know what part of it is incorrect. Oh, and if they're relying on the cc salesman's "promise" of soaring profits, the same caveat emptor applies to them as it does to anyone else. I also assume that a "fair price" and a "fair profit" take all incurred expenses into account; no one goes into business as a charitable act, and I expect that whatever I pay takes all expenses into consideration. IOW, I don't expect the same "fair price" in the city as I do in the burbs; expenses vary and prices vary correspondingly.

                                                                                                                      Incidentally, for several years I managed a small business which took credit cards (not a restaurant, though). We'd have gone belly-up pretty quickly if we didn't.

                                                                                                                    2. I pay with credit cards much of the time for three reasons 1) it makes it easier to see what we're spending money on at a glance, 2) my husband likes the rewards our cc offers, and 3) the main reason... years ago when I was single, I was the victim of a purse-snatching (leaving a grocery store) and a mugging at gun-point (leaving work late). Carrying cash doesn't prevent that from happening, but I can tell you that between both incidents, I lost less than $20 at a time when I was having trouble making ends meet. These days, I'm able to carry a little more cash. We have more, so I can afford to. Plus, I'm not out late a lot without my husband also being there.

                                                                                                                      That said, I'm not one to pay for something less than $5 with a credit card (but I will at a Starbucks or McDonald's or some place like that). But, this is the first time I've ever heard of the venomous contempt some small business owner might be seething for me over my choice to pay with a credit card they accept (while giving them my business). I never knew. And they were standing there with a smile on their face thanking me for doing business with them.

                                                                                                                      Striver said it best when he said that "as a customer, it's simply not my job to second-guess the business decisions made by the owner". I would never knowingly cause a business to LOSE money on my transaction. I play fair. But, you can't call me ignorant just because I've been going along all these years paying with credit cards where they were accepted. And expecting that the cost-benefit analysis was done and pricing was adjusted to ensure they can accept credit cards and keep their business afloat. I wouldn't take pleasure in it, but a poor business person should go out of business. Even if they make really good cookies.

                                                                                                                      1. Geez. Wouldn't have thought that this thread would become such a hot topic for a few posters. Personally, I use my credit card for purchases when they are corporations (eg. Duane Reade, Whole Foods), more expensive restaurants, anything that I deduct from my taxes, and when I just plain forgot to bring enough cash. I use my credit cards because I get cash back with every purchase (in case of the tax deductions, it makes it easier for me to track). But when it comes down to small businesses (including restaurants), I do try to pay in cash whenever possible. As I said before, sometimes I forget, and I need to pay with a credit card. And I've seen imposed minimums many times. I have no problem with them as long as they are reasonable -- ie. $10-20 minimum purchase for a small restaurant. If I see a minimum credit charge of $50 in a restaurant where the average entree price is $10 -- well, I then would have a problem with that. As a person who accepts credit cards in my line of work (not food-related), I can definitely tell you that the business owner probably would lose money on a transaction less than $5 if one would use a credit card. And I've seen it -- a woman once tried to pay for a freakin' pack of chewing gum with a credit card! I don't chew gum, so I'm not sure how much they cost anymore, but I'm sure it's probably less than a dollar.

                                                                                                                        It seems that a couple of posters are preoccupied and portray quite an inflexible attitude with the "morality" of adhering to ethics, rules and regulations. All I can say is to try to see the larger picture here. If you don't want to give them any business, fine. But I think reporting businesses for imposing minimum charges is quite petty, and I'm sure your energy can be used in a more productive manner.

                                                                                                                        3 Replies
                                                                                                                        1. re: Miss Needle

                                                                                                                          I don't chew gum either, so I know I'm not the woman you saw doing that. But, I can tell you that if I'm the person in line behind her, or possibly the cashier, I'd far prefer her to pay with a credit card rather than writing a check or digging correct change out of the bottom of her purse. And, to further defend this woman, I can be pretty sure there was no maliciousness involved in her decision. I don't believe her evil plan is to buy a pack of gum every day with a credit card until she's run the poor owner out of business.

                                                                                                                          There are times when ignorance isn't an excuse. But, this isn't in that realm. We have a right, as the consumer, to expect that our purchases, including those with credit cards, contribute some sort of profit to the business, and not to worry that they've lost money on our transaction.

                                                                                                                          1. re: stephanieh

                                                                                                                            Right, some of the points that have been getting pushed here are the reporting of minimums. I think that is selfish. If you really like a biz's goods or services, then you will remember next time to bring cash, or buy the minimum. If their goods/service doesn't natter to you--you can go somewhere else. Keep in mind this, when thinking about whatever frustrations jgg might have here. You go to cleaners to pick up clothes, and they don't take plastic or checks...very common here. So you have to go to a bank and get cash, hopefully it is close by, and it is your bank to avoid a possible 2-3 dollar service, drive back and try again. If your bank is close-great. If not, time and extra expense now, solely because of no CC acceptance. Just food for thought. I like what Family Video started doing....10 dollar minimum with CC--but if you don't spend 10--the diff goes in their computer and you have that much credit now on your account. That is taking a smart approach to rising costs of CC accepting.

                                                                                                                            1. re: Rob83

                                                                                                                              My favorite coffee shop has a similar system. $5 minimum for cards, but if you aren't buying $5 worth of stuff you can get a gift certificate for the difference to use the next time you're there... Pretty much a low tech version of Starbucks cards.

                                                                                                                        2. givemecarbs - To answer your questions directly

                                                                                                                          Some small businesses are hurt by converting to accepting plastic, others benefit from it. It depends on the traffic and the card use patterns in their area.
                                                                                                                          Merchant deposits to the business can take anywhere from 48 to 72 hours (+24 hours in the case of holiday weekends)

                                                                                                                          The fees they have to pay depend on their sales volume, but they WILL pay higher fees than the chains do, the small business owner can not negotiate the fees.

                                                                                                                          More and more small businesses will be forced to accept plastic in an attempt to stay competitive with chains, as consumer demand for convenience has become more of a driving force in the choice than increased sales.

                                                                                                                          1. yes-- to return to the op!

                                                                                                                            i tried to give a couple of examples of the types, and the instances, in which using cc *can* hurt small restaurants. other posters gave other examples. since there are scads of different restaurants offering unlimited menu items, different business models, etc. it's hard to generalize. it's safe to say that the smaller the restaurant, the more limited the menu, the more independent, the lower the price point, the more likely it is that using cc is having a greater impact on the restaurant's profits. in many cases, and i hate the phrase, but "the ethnic restaurant," where the proprietors are immigrants from societies that are cash-based to a greater degree than credit-based, as the u.s. is-- i.e. everywhere else in the world-- may also be exploited to some greater degree by the cc companies, which are, depending on your point of view, virtual monopolies who cut deals with other multinational megacorps for the lowest rates, but squeeze smaller companies with higher rates and discriminatory policies with virtual impunity.

                                                                                                                            it's a sign of the times that so many posters state that they would prefer to patronize a food business run by mbas and not by skilled culinary professionals. i feel very differently, as some of the most incredibly gifted chefs i know have backgrounds like phds in philosophy or psychology, in the fine arts; or they have very little formal education, but they have years of training from the bottom up in the biz. these chefs have dedicated their lives to fine foods and the well-being of their customers, but it appears that the old models of hospitality and food quality are more and more obsolete, and that mbas and marketers are now expected to be running the show in every u.s. restaurant. imho these slick-tie-wearing folks aren't connected to the food the way the cook who touches it is, and they aren't connected to the customers the way that the owner who knows their names, and who caters to the comfort and the little individual needs of different people all day, every day.

                                                                                                                            when gifted cooks, family restaurateurs, great confectioners, cookie bakers, what have you; open a small business, they are typically thinking about a great product or service they can provide, that nobody else is doing. they may see themselves as envoys for vibrant but underappreciated cultures and cuisines. they may just have a great family recipe for molasses cookies. these folks want first, to share their delicious gifts with the world, and secondly, they want to simply make a living for themselves and their families. mbas in the same position are thinking of the way they can make the most money off of the most people (at the lowest cost to themselves)-- a recipe for the proliferation of chains selling low-quality mass-produced dreck. i know who i'll be buying by cookies from.

                                                                                                                            it should be no surprise that many posters in this thread are saying that no matter the quality of food or service they provide, that it's a good thing that small businesses are failing due to market pressures that are beyond their control. yet this attitude shocks me--it seems to go against everything we hold dear here on this site. do we really want every restaurant in the country to work on the McOlive/Applebee's model? what happened to valuing the independent entrepreneurial efforts this country was built on? it also never occurred to me in my wildest and most paranoid fantasies that there were citizens on the street going out and doing vigilantism designed to hurt and terrorize small businesses-- but i guess i learn something every day.

                                                                                                                            16 Replies
                                                                                                                            1. re: soupkitten

                                                                                                                              "since there are scads of different restaurants offering unlimited menu items, different business models, etc. it's hard to generalize"

                                                                                                                              Exactly right. But then you go on to generalize and state that the smaller, more independent, lower price point places are hurt most by accepting credit cards. That's problematic - how do you know that the increased volume of business by people who would otherwise avoid a cash-only place, not make impulse purchases or who would spend less money there paying cash rather than using credit doesn't exceed the cost of the credit card fees, and end up in a net benefit to the restaurant? A lot of posters seem think that the same people will come to the restaurant whether they are cash only or not, but if they are not, then the resto will lose money because people will switch to credit cards - which isn't always true - cash only deters some people who would otherwise patronize the establishment, or former cash payers to come even when they don't have cash and otherwise would have gone somewhere else.

                                                                                                                              It seems that to value the independent entreprenurial efforts this country was built on, we should be less paternalistic about second-guessing the establishment's decision to enter into contracts and also hold small businesses to the same standards we'd hold larger businesses to including minimum wage laws, health codes, non-discrimination, quality of food/service and fair dealing (including not violating contracts they freely entered into. How would you feel if you bought a gift certificate from an independent restaurant and later the restaurant said it wouldn't honor the certificate because times are hard or said that they'd instituted a new $5 fee for using the gift certificate? We don't give independent businesses a free pass on violating contracts.

                                                                                                                              If people are worried about their actions and patronage hurting small restaurants, why isn't the thread about how damaging is it for patrons not to order an app, entree, dessert and at least two alcoholic drinks? Does anyone really feel like failing to have a cocktail or a dessert is actually hurting a restaurant and feel guilty about it? Just because a restaurant might not be making as much money off you as it could be making (either because you pay with a card or don't order booze or cake), doesn't mean you are hurting the business.

                                                                                                                              To me the bottom line is: whether accepting credit cards is harmful or helpful to an independent business is a business determination that they alone can make, but in making that decision they may not choose which terms of a credit processing agreement (or any other agreement) they will and won't abide by without agreement from the credit card processing service to modify those terms.

                                                                                                                              To the OP: I don't understand the gaming shop owner - if someone gives me a hard time when I am trying to patronize their business, it's weird. If he'd rather me not buy anything that buy something with a credit card, then don't accept credit cards.

                                                                                                                              1. re: akq

                                                                                                                                kay, i'll quote my own post and add emphasis around the words you may have missed on the first read:

                                                                                                                                it's hard to generalize. it's safe to say that the smaller the restaurant, the more limited the menu, the more independent, the lower the price point, ****THE MORE LIKELY IT IS**** that using cc is having **A GREATER IMPACT** on the restaurant's profits.

                                                                                                                                it's the littlest restaurants with the lowest prices, with the highest swipe fees and the lowest avg ticket, that stand to be hurt by cc usage. it is even possible for them to *lose* money on very small transactions unless they employ a service charge. overall, this will be true, but won't be true in every single case. i chose my words above to avoid generalization. will a single person order more artisan truffles by the piece from the wee chocolate shop if s/he can pay with credit rather than cash? very possibly. will s/he order more fresh hot momos from the momo cart? uh, no-- just as many as s/he can reasonably expect to eat by her/himself.

                                                                                                                                now, suppose the momo dude chooses to accept credit cards (he & his wife own an authentic tibetan foods catering company) for platters, large purchases and internet shipping of frozen momos to places where these foods are not available. what a wonderful service, great food, gets it to interested folks who otherwise can't experience this food. . . how "chowish." *unitil* you want to go up and order the "four assorted momos with dipping sauce," a light snack, and the momo dude informs you that there is a $10 minimum purchase for cc purchases, or alternately he can charge you $.50 to cover his swipe charge. so-- what exactly has changed? is this guy is now evil incarnate, just because he wants to make his regular margin on the momos? is he morally obligated to donate his labor on your order for free, or even to reach into his pocket (or his wife's pocket, or his daughter's pocket) for a dime (representing his loss on the sale), and slide that across the counter to you along with your credit card slip? doesn't work for me-- the momo dude's service charge is totally justified in my book, and when the existence of cc companies has brought back legal slavery, & folks are providing goods and services for free or at a loss to the card-holding elite-- well, that's wrong, and hopefully illegal.

                                                                                                                                whatever the cc company told you about "credit card is the same as cash," it's obviously not true for everyone. the business owner will not receive the same amount of money for the transaction, and it may be subject to holds. it will require more worker hours to collect and record the transaction, there are other associated fees that come right off the top and affect the business' bottom line. many small transactions can lower the small business' average cc transaction fee, which will increase the cc company's arbitrary holds on any large cc transactions, which can cripple the small business' growth.

                                                                                                                                the business owner is not legally required to accept any non-legal tender form of payment that will adversely affect her/his business. it's kind of like going up to a business owner and trying to pay for a meal by bartering a 6-pack of soda. you can say that you purchased the sodas for $.75 each from the machine, but that he sells them for $1 each in the restaurant, so that a) the sodas are worth $4.50 and b) really he's coming out ahead on the deal-- but it doesn't actually work that way, does it? quite luckily (and logically) it's the restaurant owner's house, and s/he can decide what payment method to accept (no soda-bartering accepted), and whether minimums apply. customers have feet, and some "customers" apparently have visa corporate on the cellphone speed dial. report that dastardly momo dude to corporate headquarters, pronto! vitriol assuaged! pissing match over! on to expose the next dastardly family owned restaurant! (oh wait, why aren't there any momo shops in this town again?)

                                                                                                                                1. re: soupkitten

                                                                                                                                  I didn't miss your language, I just don't think you chose your words as carefully as you seem to think. Perhaps you mean:

                                                                                                                                  it's safe to say that the smaller the restaurant, the more limited the menu, the more independent, the lower the price point, the more it impacts the PROFITS PER TRANSACTION.

                                                                                                                                  Your logic breaks down, however, when you try to extrapolate the impact of the lower profit per transaction to lower OVERALL PROFITS.

                                                                                                                                  Example: cash based business does only 10 transactions per day, each costing it $5.00. The profit per transaction is $5.00 and the overall profit for the day is $50.00. The business decides to accept credit cards which costs the business a processing fee of 10% per transaction (for ease of math). If the business still only has 10 transactions of $10 each and ALL TEN of the customers use credit cards, then the cost per transaction is now $6.00, profit per transaction $4.00 and the overall profit for the day $40.00. However, if, instead there are 13 customers, all using credit cards, all with transactions of $10, COGS $5, 10% transaction fee, the overall profit is $52 for the day. By increasing the number of transactions, keeping the gross transaction amount the same, even if everyone uses credit cards, the net effect is to INCREASE overall profits. Further, what if the resto only gained 1 new customer, who decided to use a credit card, and one existing customer switched from cash to card? The net effect on overall profits is a $3 net increase (9*$5 + 2*$4 = $53) from the all cash overall profit!

                                                                                                                                  What if the transaction amounts with the credit card user(s) went up a dollar? I could go on and on.

                                                                                                                                  My objection to your statement is that you are assuming that a lower profit per transaction is equal to lower profits overall, and that's not necessarily correct, which is pretty much the reason that businesses decide to start accepting cards - even though each transaction with a card costs them more than that same transaction with cash, the potential increase in volume and transaction size may net a higher overall profit.

                                                                                                                                  To address your other points - no, the restaurant is not required to accept my credit card. As pointed out by many posters, many businessness decide that it's not worth it and make the business decision not accept cards. Other businesses decide that it *is* worth it, and sign up with a credit processing company. That's their choice. What is not their choice is to try to have the best of both worlds - to "accept" credit cards, but violate the credit card agreement and charge me for a service he isn't supposed to charge me for. He doesn't charge more to the people who sit in his shop longer or use more napkins or who drink more water or who use the bathroom, or who bring in unruly kids (or adults) who may irritate other patrons even though they all cost him more than someone who doesn't - why are credit card fees different than all that?

                                                                                                                                  1. re: akq

                                                                                                                                    I will throw a monkey wrench into this.......To the people that think "Credit is the same as cash" Well why does it cost a ridiculous amount of money (via either additional cash or most cases an extremely higher interest rate) to pull cash out on your card? CCs double dip you, costs to get it out, and interest to boot. And when you read the fine print, some of these can change at will, by CC company, without notification......Hmm but darn those small business owners!!

                                                                                                                                    1. re: Rob83

                                                                                                                                      Using your card as payment is the same as cash (meaning that neither the card issuer nor the merchant will charge a fee over the cash price of the meal for the use of the card as payment). Cash advances from a credit card have specific terms detailed in your credit agreement.

                                                                                                                                    2. re: akq

                                                                                                                                      You can toss all the numbers in there that you wish, but it still shows a fundamental lack of understanding of the real issue, despite the efforts of myself, soupkitten and Rob. All of your analogies are patently false.

                                                                                                                                      I'll say it one more time- You cannot assume what the cost of the charge will be- EVER. You'll learn at the end of the month, and only if you are super keen, with no other pressing issues on you plate, will you decipher which cards are qualified and which are not, and which customers are presenting them. And can you do anything about it? No.

                                                                                                                                      You also assume that Merchant Service Providers are completely forthcoming when they sign you up. Not so.

                                                                                                                                      You have also failed to account for the cost of the hardware. I had a bank "offer" me a lease of a machine for a mere $900/year for a 3 year minimum. I passed on that one, and received harassing phone calls for months afterwards. I bought the same machine off of Ebay for $300, and used it for years.

                                                                                                                                      I was VERY keen on the details on my MSP agreement, and found what I still believe to be the best deal available to me, but taking cards cost me tens of thousands of dollars per year. That's a fact. And I was a very small biz.

                                                                                                                                      If you want to help small businesses that have risked their financial lives to provide something good for you, support them by paying cash when you can, especially for small purchases.

                                                                                                                                      1. re: caviar_and_chitlins

                                                                                                                                        I felt compelled to respond after showing your post to my wife, who as previously stated sells Merchant Services for a major bank. She gets paid on signing deals and an EXTREMELY small % of what gets sold via CCs...She runs into your situation almost daily. Her primary amount of her commission comes from selling the equipment --especially through a lease. But telling a small business owner that a lease would ONLY cost about a $1000 for 1 year..It doesn't matter how you break it down, that is still a good chunk of change per month. She has become ethically torn--She wants to make money, but knowing that there is cheaper equipment out there, she has a hard time telling owners that that is their best route to go. She has, much to the chagrin of her bosses, were they to sit in on a call, agreed with most owners and in fact helped them find cheaper equipment and just sell them on the services, internet banking for them, etc. This is one reason that she is seriously wanting to move into the corporate card or high dollar merchant services area. To the naysayers, this is nothing more than a change to their convenience...nothing else. You can color coat it any way you want...contracts, laws, whatever...Bottom line is it alters their lifestyle a bit, and they can't have that happen!!!!

                                                                                                                                        1. re: Rob83


                                                                                                                                          It's unfortunate isn't it- that to thrive in the MSP business, you are encouraged to dupe your customer into selling them something that not only do they not need, but will hurt them financially. I wish your wife the best in finding a more ethical line of work, it sounds like her job pains her a bit, and that's no good.

                                                                                                                                        2. re: caviar_and_chitlins

                                                                                                                                          In my post I assumed a flat 10% per transaction fee, in part to cover the additional costs you are talking about. That said, my numbers were (obviously) extremely simplified to demonstrate a fundamental point - lower profit percentage per transaction does not necessarily mean lower overall profit amount, which a lot of posters seem not to understand. It seems patently obvious to me that if accepting credit cards meant financial ruin to buisnesses, none would accept credit cards. The only way to explain the wide acceptance of credit cards is that (two sides of the same coin) either (1) switching from cash-only increases the merchant's bottom line due to increased volume and/or transaction amounts, or (2) being cash-only and not switching to accepting credit cards may actually drive customers away and/or lower transaction amounts. You say that accepting credit cards cost you tens of thousands of dollars a year...how much would it have cost you to *not* have accepted credit cards?

                                                                                                                                          If one had the time and inclination, a better forecast model could be built taking into account all the costs you mention and more. I don't have the time nor inclination nor data to do so as it would be a calculation and forecast specific to an individual merchant.

                                                                                                                                          You will never know the actual profit or costs for any month until the end of the month (or later, depending on when actual cost figures arrive, etc.). You can budget they best you can for a month and then someone calls in sick and you have to pay someone else overtime to cover, or someone quits and you have to find and train a replacement, or there is higher than expected breakage of glasses to replace, or a plumbing problem or not as many customers as you thought there will be or not as high average checks as you expect, or your suppliers raise their prices. All you can do beforehand is budget and forecast - a best guess and reservation of resources to cover unexpected costs. I am not sure how that demonstrates a fundamental lack of understanding on my part. There are a lot of gambles in business, and rational people with a profit motive (i.e. typical business people) choose a course that they believe will have the outcome of higher net profits overall, whether that means offering a coupon or a special or serving alcohol or extending business hours or accepting different forms of payments. Those are all gambles and you won't know whether they pay off until after you've tried them. If, for instance, you try extending your hours and after a few months you see that the increase (if any) in gross receipts does not cover the increased overhead (thereby lowering net profits overall), a rational person would take another track and maybe go back to the previous hours. Same with a credit card machine - if the merchant thinks that accepting credit cards will increase gross receipts enough to cover the extra expense (thereby increasing overall net profits) he or she will try that. If, as you say, it doesn't pan out, stop accepting them. I don't really think I am saying anything revolutionary and I certainly don't understand your hostility.

                                                                                                                                          You end your post saying that if I want to support small businesses I should pay in cash when I can and especially for small purchases. Would you go so far as to say that if I want to support a small business I should go elsewhere when I can't pay in cash, especially for small businesses? The question posed by the OP was, in effect, how much do customers who use credit cards at small businesses hurt those businesses? If the choice is between a customer going to a small business and using a credit card or going elsewhere, should they just go elsewhere for the sake of the small business?

                                                                                                                                          1. re: akq

                                                                                                                                            alq, either you didn't read the other posts I made, or you didn't understand them. I thought I was done with this post, but you have introduced the well oiled "slippery slope argument". Let's take it further- how much more $ would I have made if I served dogs? Aliens? Toss in the hyperbolic "what about the children!!!!" and your argument will be complete.

                                                                                                                                            Small businesses lack the power of negotiation regarding cost of goods, credit card fees, everything. Large competing chain businesses have the might and purchasing power to negotiate effectively for all of these. This leaves the little guy without recourse, and competing against an entity that can, and does, do what it can to "outprice" the small business.

                                                                                                                                            And you say "I assumed" and "it seems" and other such statements, reinforcing the notion that you have no real idea what you are talking about. You are talking about your convenience as a customer, I am answering the question about the cost to small business re: what credit cards cost a small business. These are conflicting points of interest. Small biz is all about trying to rein in costs of all kinds- This post is about credit cards, not plumbing, ill employees, etc.

                                                                                                                                            Oh, and as for stopping the CC acceptance. There's another assumption based on ignorance- the contract requires for you to accept CCs for the period of the contract, often 3 years. That's a LOOONG time in small biz world, especially those first 3. I also do not understand your hostility when people attempt to explain another point of view on the issue.

                                                                                                                                            Yes, to support your favorite small business, please pay cash, especially on small purchases.

                                                                                                                                            1. re: caviar_and_chitlins

                                                                                                                                              I said that "I assumed" a particular interest rate, which is standard language in mathmatical calculations when you don't have actual figures - I was explaining that I used a higher rate for conservatism.

                                                                                                                                              I said "it seems" patently obvious to me that if accepting credit cards meant financial ruin to buisnesses, none would accept credit cards. I guess I could have said "Obviously, if accepting credit cards meant financial ruin to businesss, none would accept credit cards." Same diff.

                                                                                                                                              Asking how much you'd gain (or lose) from having a credit card machine vs. how much you'd lose (or gain) from not having one is not a slippery slope argument. It is the basic data you need in order to determine the effect of accepting credit cards on your bottom line and to make a rational decision about continuing (or discontinuing) acceptance of credit cards. Costs are a two-edged swords - there's the cost to do something, and also the cost *not* to do something. I don't like personal attacks (a la "you have no real idea what you're talking about"), otherwise I'd suggest more than just that you might be well served by taking some business courses.


                                                                                                                                      2. re: soupkitten

                                                                                                                                        Why do you assume these owners are stupid? I assume that they're intelligent, and choose to accept or not accept credit cards based on their knowledge of their business and their customers. I don't assume that somehow they've been manipulated into doing something that decreases their profits.

                                                                                                                                        Let Mr. Momo add 25 cents to his base momo price to cover the swiping cost for those who pay with a credit card. Spreading expenses across the board has to be part of his business model...and if he (or she, of course), doesn''t understand the way business works, he shouldn't be in one.

                                                                                                                                        MBA's are not required; I've known successful business people with no more than a HS education or a few years at a Community College. What is required is common sense and an understanding that there's no such thing as a free lunch for anyone (restaurant owners included). You want to take credit cards to increase your business (why else would you?) - then you're obligated to take them for all your business - not just at the price point you prefer. Don't want the obligation? Don't take credit cards. Maybe if what you're offerring is good enough, you don't need to.

                                                                                                                                        I'm not one to go complaining to the CC companies about minimums; as a rule, it's just not worth my time - but I've got a contract with the CC companies I patronize, and that contract says that my card is good for all purchases at a vendor using that CC - not just the ones the vendor wants to accept. on any given day .

                                                                                                                                        On the general subject, recently, a gas station that I used regularly decided to stop taking AMEX, which is my preferred card. No problem - I found another one that does. It was his choice and my choice - which is the way it should be.

                                                                                                                                        1. re: Striver

                                                                                                                                          You have a good theory for a business owner to try, but again, a small mom and pop that 25 cents (which, depending on how many low dollar swipes they have, won't do much for them) across the board might help--but again, then people start complaining about higher prices and the cycle perpetuates.....I honestly wish minimums would be legal as it soon will be. I would love to hear from some of these people then. If someone (like a frequent poster to this whole contract thing) wants to get technical...There are many states where if you get stopped and have no cash on your person, you could be considered a vagrant. Just a funny thought. Society wants their cake and eat it too....then eat the other guy's as well. Here is a suggestion for people that upset with minimums. You could counter some of that expense to a resto by bringing your own doggy bag, or own bag for take out or call in. Paper is a HUGE expense to restos.

                                                                                                                                          1. re: Striver

                                                                                                                                            i hate to kick this dead horse-- but, more than a little irritating-- it's really common for folks on chowhound to repeat that small restaurants should just roll *all kinds* of costs (complimentary bread/chips/popcorn/starters, website, composting, string quartet, custom origami takeout containers) into their pricing, and that customers will cheerfully continue to pay, they won't even notice. the attitude seems to be that the momo guy, chili's franchises, and per se can all use the same exact business model and pricing system and enjoy success!-- it just isn't so. each small business owner needs to be able to make her/his own decisions about the littlest details of ambiance, menus, pricing, sourcing, staffing, etc.-- why should cc contracts-- a BIG deal, be one-size fits all? cc companies attempt to broad-brush all restaurants (indeed all businesses) with their policies, which is why they don't work for everyone, and often the smallest businesses will have the most issues with their cc contracts.

                                                                                                                                            let's say that the momo dude already raised his prices last year when he got his website done, to defray the costs of that, and while he was already raising prices, he decided to offer a homemade chutney and relish bar (with purchase) and roll that into the price hike. his regular customers grumbled a little that their $3.50 momo special went up to $4-- but they could plainly see that they were getting an added value with the chutney bar, and he lost few customers, and indeed saw higher register receipts as a result--and, his establishment saw new customers as a result of increased web visibility. momo dude hopes that the increased name recognition in the community will help his family open a permanent restaurant in a few years, so they can stop operating out of his brother in law's restaurant kitchen. he starts to put some savings aside for this plan.

                                                                                                                                            then, a setback: earlier this year his wife, who does the business' books, called an emergency meeting. it was plain, she said, that the establishment would have to raise prices as a result of rising food costs and fuel surcharges out of the company's control. most of the neighboring businesses were also raising prices. again the momo stand raised prices across the board to cover ingredient costs-- now the momo special is up to $4.50, and folks are *definitely* grumbling-- that's a whole buck increase in a year, more than 25%-- what are these dastardly momo people pulling?

                                                                                                                                            currently the momo dude is following the u.s. economic news with great interest, and his wife reviews the establishment's receipts daily to monitor costs and profit. with the current belt-tightening in the momo dude's area of the country, further price increases would certainly have a negative impact on the establishment's sales. the business owners know this, they speak to their own customers, after all. folks are getting laid off, folks who once came in regularly now visit once a month and pay for their momo special with small change. momo dude's wife decides that the family must reduce their draw until the register receipts improve. she stops cashing her own paychecks (50 hours/week). the new website has resulted in catering gigs at the local university and a buddhist cultural center, and she has started teaching cooking classes, which brings in some much needed cash flow. she is optimistic that the family can keep up with their mortgage and hold on to their home. the economy must improve sometime, right?

                                                                                                                                            so, despite your expectation that the momo dude should bend over backward to again raise prices for all of his customers in order to cover the fees associated with "cc same as cash" for your own convenience, he could give you a long list of reasons why that would not be a good thing for his business, a long list of his regular customers that he's more inclined to give a price break to, and a long list of improvements he'd like to make to his business, if he thought for one second that he could get away with another seemingly arbitrary price hike. you'll reply that he's obviously an idiot, he and his family suck at everything they do, and that "if he doesn't understand the way business works, he shouldn't be in one." he'll say, well, you don't have to be insulting about it, you don't have to pay the surcharge, and you don't have to eat my momos, watch out for that tricky top step, now. . . and we're back at square one.

                                                                                                                                            it seems to me that a small business owner who sells a product at a low price point, with a cc minimum or surcharge, is already telling you everything you need to know:

                                                                                                                                            $.50 surcharge for credit card transactions under $10. translation: "hi, my name is small business owner. i don't sell foie gras, truffles, fine wines or smartcars-- i sell coffee, or momos, or cookies. i'm not part of a franchise, i don't keep a business attorney in the dry storage room. i'm locked into a 3-year contract with a credit card company that is not to my advantage, and after my own costs of bringing you this delicacy, i make only pennies on the dollar. i need to charge you a surcharge for your $2 purchase, because otherwise i'll lose money every time i take credit cards, and i'll soon go out of business. you are welcome to pay cash, or walk away from the purchase, but i'm just telling it like it is. thanks for your support and understanding."

                                                                                                                                            ime it's never the guy in dusty carhartts that ever complains about a cc minimum, it's the lady in the fur coat and the mercedes. carhartt guy says: "hey it's fifty freakin cents, everybody's got to make a living," but she feels picked on-- after all, at this rate, it will take her an extra week of shopping to get enough miles for her next vacation on the riviera. poor thing.

                                                                                                                                        2. re: akq

                                                                                                                                          You lost me on the first paragraph or two, but you started to make a ;little sense. My point has been at the time the small biz signs on for CC processing, they have NO idea what will happen in the future with possible rate and/or exchange fee changes. Those are market-determined. But a small place doing 800-1000 a day--and 60-70% is CC.......that could be a huge percentage of profit gone depending on check avg. But if so many of these businesses stopped accepting CCs---This OP would be "Why don't more places accept CCs...this is so inconvenient for me" I find this almost funny--how spoiled we are, and how much society is me, me , me no matter what the cost. But that will change soon. Like I said, the people in the know I have talked to have said don't be surprised within a year or 2 that minimums will be completely legal and up to business owner's discretion. It's coming......

                                                                                                                                          1. re: Rob83

                                                                                                                                            I totally understand the fustration with minimum purchases on credit cards and I represent a processing company in the industry. Over in Europe they have different regulations for the credit card associations and the merchants can have a minimum purchase. The way I would get around the rules in the U.S. is not to charge a surcharge, but offer cash discounts. Unfortunately you can not surcharge your customers for using a credit or debit card, and if a merchant gets caught they can be fined or even be shut down from accepting credit cards. If you have a majority of low ticket items I would contact your current processor and ask to be on a small ticket program and also ask them to use interchange plus when billing you, because it gives you the very best rate and transaction cost per card instead of paying high mid and non qualified surcharges.

                                                                                                                                      3. As a small business owner, I can honestly we want to stop credit card processing. The 3% of our income that we pay a year is a lot of money. We are small dog boarding facility and yes, we I charge $22 a night and a majority board for just weekends, when you see $4000 a year go to fees....it is way too much!!!! We don't pay ourselves much, and have loans, food, utilities, the list is endless. No we don't wait long for the funds, but the fees and the time involved in entering into Quickbooks, etc, not really worth it for us.

                                                                                                                                        5 Replies
                                                                                                                                        1. re: Ginsin007

                                                                                                                                          It's a fairly simple business proposition: accepting credit cards costs money, but increases revenue. The costs tend to be similar, but the benefit greater in some industries (eg hospitality) than others (eg commercial construction). If taking cards costs more than it brings in, just stop taking them. I did.

                                                                                                                                          1. re: alanbarnes

                                                                                                                                            How did you measure how much taking credit cards brought in? I'd think it would be very hard trying to guess, if you're established, who will not use your business if you don't take cards?

                                                                                                                                            To Ginsin007: Maybe announce a small rate increase and offer to keep the same rate for cash? 3% of $22 a night is just $.66. (BTW- $22 a night is HALF what we have to pay where we are). That should sort it out in a hurry.

                                                                                                                                            The issue will then shift to checks. Unless you're in a very small town and know your customers well, you'll probably need to start paying for a check approval service, if you don't already.

                                                                                                                                            1. re: Midlife

                                                                                                                                              I'm not sure, but I'm reasonably certain it is a violation of a CC's contract to charge anything more - a cash vs. CC cost, a fee or whatever you you want to call it - for CC cards customers. You don't get charge less for cash customers.

                                                                                                                                              1. re: Richard 16

                                                                                                                                                This particular subject is debated frequently here and elsewhere. Most sources I've seen say, as you do, that it is against most CC contracts to charge MORE for credit. Then the same responder goes on to say that the law allows you to give a discount for cash. Sounds like circular logic, but if a business raises it's prices, who's to say why?

                                                                                                                                                Here's what one apparent industry website says about it:


                                                                                                                                                If this is good and current info, it CAN be done within merchant contracts. It seems to be a matter of chickens and eggs. You just have to treat all the chickens equally.

                                                                                                                                                1. re: Midlife

                                                                                                                                                  Another issue used to be (perhaps still is) for places that wanted to either charge more for AMEX cards than other types, (AMEX traditionally charged a substantially higher fee than most other cards) or telling customers you prefer to take Visa or Master or Discover, or what have you, to avoid having to take the AMEX card for the sale and their consequently higher fees.

                                                                                                                                                  Gotta treat all the cards the same. Offering a discount for cash is perfectly legit as long as the prices are marked/disclosed before hand, and the discount for cash is taken off of those marked prices and not an "upcharge or surcharge" imposed on a credit card sale.

                                                                                                                                        2. I personally do not know a single restaurant or bar that does not take credit cards, this must be a regional thing. My restaurant caters to 18-35 year olds and does about 45% liquor to food sales here in Texas. I have taken credit forever, and when my father was alive his steakhouse took all credit cards except american express and discover, but gave some sort of discount for cash and dinners club for groups over 8.

                                                                                                                                          I personally run about $3,500 during the week and with maybe $500 - $800 of that being cash. In fact i have to keep cash on hand in order for my waitstaff to be able to pull their tips at the end of the night. I am probably the only person in town that still takes checks, and honestly very few of my mostly college age clients have them, they for the most part either use thier own debit card or their parents (who often live thousands of miles away) credit cards.... i still take checks because the only people that still write checks are the parents who come along with the college kids and they are usually old enough that they dont write bad checks. (i have not had a bad check in 5 years or more)

                                                                                                                                          As to fees, it really depends on who you go through. Some places pay a flat rate a month, some pay a percentage. I use a local credit union for my bank, and they provide me with my credit card processing for only 2.7% (this may be lower than most because my micros system has built in credit card terminals) I have all charges posted to my account within 72 hours even on holidays.

                                                                                                                                          1. There's an article on http://www.creditreport.org which talks about how small businesses can benefit or be hurt from accepting credit card payments. Sometimes it can even mess with their own credit if mistakes are made (which are more common for small places - human error.) Hope this helps if anyone's still looking for more info :)

                                                                                                                                            1. If you can fill your restaurant while not accepting credit cards, it's the smart thing to do. In theory, you may lose some business from the credit card people, of which I am one, but the reality is that all the seats are taken anyway so... why accept cards? Then, there is the IRS. You show me a "cash" business that is declaring all their income and I will show you the only honest man in the world.
                                                                                                                                              If you're not filling the seats, then you absolutely have to accept cards. Bottom line: you need all your seats filled and turning. More power to you if you can do this with cash only.