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Extra credit card charges listed on menu

This is a new one for me.

Someone provided a link to a local restaurant on one of the regional boards. When I checked it out, I was amazed to see two sets of prices listed for each item on the menu, a cash price and a credit price. There appears to be roughly a $1 up-charge for each app, and as much as a $3-4 up-charge for each entree if you pay with a credit card instead of with cash. Holy cow. That could really add up if you had a party of 4 & ordered apps, entees & desserts for a party of 4.

Is this legal? Have any of you seen this before?

Here's the link: http://www.divanturkishkitchen.com/

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  1. I am a restaurateur. We accept cards in our establishment - and by doing so are bound by a "merchant agreement." MC, Visa, Discover, and particularly American Express all have a clause in their respective agreements that says that they may rescind my merchant privileges if I try in any way to sway people from using their card. This means anything from setting a "credit card minimum purchase," asking for cash, or imposing credit card pricing - as you describe. Gasoline stations get away with charging a "credit" price because their merchant agreement is different - the card companies make plenty of money off of them.

    Amex, in particular, has people whose sole job is to visit authorized merchants and check that they're adhering to their merchant agreement rules: they check that the Amex sign is on the door and at the cash register, they make sure that there's an imprinter to imprint cards that are de-magnetized and won't "swipe" in the card terminal, and they make sure that there's no "$15 minimum purchase on credit cards" signage.

    Someone's going to catch up with this. What they're charging for credit card purchases is enriching them; the card companies charge no more than 3.5 percent on their receipts. What they're charging the customer seems to be more.

    2 Replies
    1. re: shaogo

      Yep. Good post. I wonder why the restaurant in Q did not simply refuse CC's. Their upcharge seems to be a vendetta against CC companies taken out on the people keeping them in biz. Not too freaking smart of them.

      I refused to take AMEX or Discovery Card. Highway robbers.

      1. re: shaogo

        I don't know. I wonder if this varies by state or regionally, or it depends on how it is staetd. There are many, many gas stations in my area that offer two prices, one for cash, and one for credit, and have been doing so forever (so presumably the cc companies haven't been able to put a stop to it. "Discounts for Cash" just aren't that uncommon, in my experience, though granted I have never seen it in a restaurant (that said, it would be a lot easier to give in a gas station, where the pumps are all automated, than in a restaurant where someone would have to keep track of which is what)

      2. Except for one item: Soslu Patlican (Eggplant with Sauce); lightly pan-fried cubes of eggplant toppe with sauteed fresh tomatoe and garlic.

        Cash $5.90
        Credit Card $4.95


        6 Replies
        1. re: Sam Fujisaka

          Nice catch on the typo. It would be amusing to get a separate check for the Soslu Patlican and charge it, and pay cash for everything else...

          1. re: Sam Fujisaka

            The Coban Salatasi (Shepherd Salad) too!

            Cash: Sm $7.90 Lg $10.90
            Credit Card: Sm $6.00 Lg $9.00
            Add Feta Cheese: $1.00

            Maybe that's their way of doing weekly specials :-)

            Seriously though, these are 20-30% premiums for using a card; way, way more than any processing fee from their credit services vendor. And what about the tip? If I pay with a card one night and then with cash the next for the exact same meal can I leave a smaller tip?

            1. re: kmcarr

              I think the additional markup has something to do with the way that cash sales, somehow, tend not to get taxed at the same rate that CC sales do...

              Philly, and South Philly in particular, has a lot of restaurants and other establishments that do not take credit cards. Yeah, BYOBs have tight margins to worry about, but there is more to it than that.

              1. re: barryg

                There is a big difference between a stated practice of not accepting CC's, and what this resto is doing.

                1. re: barryg

                  barryg - change the word "taxed" in your first sentence to "reported" and you'll get a very clear picture of why some restaurants do not take credit cards!

                2. re: kmcarr

                  Only if you leave the tip in cash.....

              2. Shaogo is right. Setting different prices or minimum prices for credit card usage violates the standard contract terms between restaurants and credit card companies... but my understanding is that the rule is very seldom enforced. I see minimum amounts of credit card usage everywhere in NYC.

                At least the restaurant is upfront about the different charges. I agree that the price difference is pretty hefty. You can avoid eating there if you want!

                5 Replies
                1. re: cimui

                  The restaurant is just being up front about their breach of contract. The price differences are indeed hefty and ILLEGAL if the resto has entered into a contract with the card companies (thieving bastards that they are.)

                  In the interest of multi-cultural sensitivity, perhaps the owners are not aware of the legal ramifications of this breach of contract. My brother spent some time in Turkey and restaurants there are a unique experience. The surcharges may be intended as a polite (albeit startling) incentive for patrons to pay cash without full knowledge of what their legal consequences may be. Maybe they could be informed in a proactive manner.


                  1. re: Chefpaulo

                    yeah, definitely violates the contract. but unless there's special, local legislation that allows third parties to sue the restaurant for violating its contract with the credit card company (i don't know of any, but i don't claim to keep up with such legislation, either), customers can't really do anything, directly. they'd have to convince the credit card company to take action (or just do as shaogo did and write messages to the restaurant / take their business elsewhere).

                    1. re: Chefpaulo

                      Not ILLEGAL as in prosecutable by the man, just a violation of a civil contract that would have to be resolved in civil (not criminal) court.

                    2. re: cimui

                      It's also a difficult rule to report someone breaking without using your CC.

                      There's a specialty grocer in my hood that charges a 20% surcharge for CC use. The first time I came across it, I scraped together all my cash to pay for what I was buying, and never went back again. When I got home I looked up the rules (in NY state - it varies by state) and in order to report them, I would have had to send in a receipt showing the additional charge. Well, I wasn't about to spend that there, so oh well.

                      1. re: irishnyc

                        Oh, very interesting, irishnyc -- I had no idea that NY state had any sort of law about it. What happens to the contract-breaking merchant if they're caught red handed?

                        20% is potentially a lotta dough! (and if i were a clever, contract-breaking merchant, i wouldn't mark the credit card charge as an additional, separate charge on the receipt; i'd just increase the charge for each item.)

                    3. I think I'd check with the attorney general's office in your state and report them if they're in violation. And I would certainly never eat there. Sheesh.

                      1 Reply
                      1. re: c oliver

                        This is a civil and not criminal matter as it is between two parties in a contract. The attorney general's office wouldn't care unless statute law of some sort was broken - ie a state law forbidding dual pricing.

                      2. A state's attorney general, I'm sure, has bigger fish to fry. Contact your credit card company to make a complaint. (I _guarantee_ you that if you tell Amex they'll send one of their auditors to find out what's up.)

                        I had to laugh at all the typos people have noticed. The restaurant's not only greedy, but careless. I not only proofread our menu prints myself, but I give 'em to 2 others to proofread. That's because I made a serious pricing mistake on a menu *and* website once, and it created havoc (the customers wanted a steak appetizer for $2.95 and the price was actually supposed to be $12.95).

                        4 Replies
                        1. re: shaogo

                          All I can say is THANK YOU for proofreading your menus 3x before printing/putting up online. I cannot tell you how many times I see mistakes in menus with misspelled words. Drives me nuts. I can only imagine how the pricing error wreaked havoc on your restaurant until it was corrected!

                          1. re: LindaWhit

                            It drives me nuts when they misspell potato as potatoe. When I was a kid there was a restaurant up in Miami that advertised on TV. Part of the commercial had the owner talking while a list of their food/sides scrolled across the screen. They misspelled potato. I refused to go there when the family went out to dinner and would lobby heavily to go elsewhere. When it finally closed in the 90's (soooo many years later) the obit for it was written up in the Herald. I was in my own restaurant at the time and recalled my ire to the bartender. She was not as riled as I was... naturally... but I think it cleared up why I was so nutzo about the special board.

                            If you cannot spell it, do not serve it.

                            1. re: Sal Vanilla

                              They must have went to the same school Dan Quayle went to.

                              1. re: Sal Vanilla

                                potatoe is a valid, if archaic, spelling

                          2. Interesting that they price out each item at varying rate instead of a simple flat charge of x% extra for credit. I encountered many businesses in SE Asia who would charge 3% extra to use credit, but that was presumably to cover the fees and was at times worth it for the convenience of not having to carry that much cash.

                            Here in the US where just about everybody takes credit, I would absolutely not be willing to pay 30% more to use credit, and have a hard time believing anyone would.

                            1. I just perused the website. There's a tab you can click on to "Contact Us." I just sent them an email telling them that their policy is greedy and out-of-line. Perhaps other CHs would like to.

                              Now, I'm not from Philadelphia - but these folks are an embarassment to restaurateurs (yeah, I'm one of those).

                              2 Replies
                              1. re: shaogo

                                Yeah, I wrote in on their contact sheet. Good idea. What rip off artists.

                                1. re: Sal Vanilla

                                  I'd be interested to hear what they have to say if they get back to you; keep us posted!

                              2. it's strange how different dishes are charged at differing rates, some are nothing more, some 95c more, some $3 more and so on. I guess their idea is to make it very unattractive to pay with a credit card albeit illegal. They would be better off to say no credit cards at all.

                                1. I'm trying to figure out what is more appalling to the previous repliers: their effrontery (and illegality!) in charging extra for credit cards, or their total ineptitude in executing it systematically!!!

                                  2 Replies
                                  1. re: Cachetes

                                    Varies by jurisdiction it has nothing to do with the merchant/credit card company agreement.

                                    This past year Connecticut enacted legislation allowing gas stations to charge a higher price per gallon for credit card purchases.

                                    It has always been legal for a coin dealer in CT to charge a % on bullion purchases.

                                    I was a retailer for 27 years. The merchant agreements are not set in stone. They can be negotiated. It may be possible tyo have a minimum credit card purchase and/or offer a cash discount and not violate a particular merchant agreement. What I have never seen waived is a threatr of pulling the agreement if you steer a customer away from a particular card (asking for something besides AZmex, because the others have a lower fee).

                                  2. Maybe the "typos"are not "typos". Maybe the rest. people are just plain stupid.

                                    1 Reply
                                    1. re: chaz

                                      yes I once saw a great sign outside a liquor store on a chalkboard.

                                      Great Offer - Champagne, 11 bottles for the price of 12.

                                    2. OK I had to rethink this. Restaurants actually have agreements with the bank they get the machine thru. There is no individual agreements per se with the actual card companies.

                                      What restaurants CAN do is charge more for their food in general and then offer a discount for cash payment. THAT is perfectly legal. But it may piss people off. CC charges are the cost of doing business.

                                      CC's charge varying amounts to restaurants for the privilege of accepting their cards as payment.

                                      2 Replies
                                      1. re: Sal Vanilla

                                        Lots of businesses do NOT use a machine they get from a bank. The have a cash register that has a place to swipe the card and verify using a service such as ICVERIFY.
                                        They may deposit to a specific bank and have fees withdrawn from the account, BUT before any of this happens they need to set up merchant accounts with the credit card companies. The establihmant's bank may serve as an agent for Master and Visa, but it is highly unlikely that the bank can sign up Discover or American Express.
                                        Merchan Agrements are necxessary, but processing may be done by a host of companies.

                                        1. re: Sal Vanilla

                                          I think bagelman is right about there always being a direct agreement between the merchant (restaurant) and credit card company.

                                          This is an interesting statement, though: "What restaurants CAN do is charge more for their food in general and then offer a discount for cash payment. THAT is perfectly legal."

                                          How do you figure that? (I'm just curious; not challenging the statement as untrue.)

                                        2. Are people SO addicted to credit cards that they question the lawfulness of a vendor offering a cash discount? If one knows in advance that the meal will cost 20% less by paying with cash....what is the issue? It's a no-brainer. I am frequently annoyed, delayed, and overcharged, because so few people have real folding money in their pockets.
                                          It works.

                                          17 Replies
                                          1. re: Veggo

                                            Good slant, Veggo. They're not marking it UP for CCs, they're marking it DOWN for cash. Very good slant in fact.

                                            1. re: c oliver

                                              Discount for cash is both legal and (until the cc companies get wise) not in direct violation of standard restaurant merchant services agreements.

                                              Not only that but what could be better than rewarding guests who are sparing an owner a hasle and an expense?

                                              It is not the restaurants that are greedy- it is the credit card processers.

                                              1. re: quovadis

                                                Should the credit card companies allow the establishments to use credit card processing machines/systems for free?

                                                And as shaogo said above in the first response to the OP, "MC, Visa, Discover, and particularly American Express all have a clause in their respective agreements that says that they may rescind my merchant privileges if I try in any way to sway people from using their card. This means anything from setting a "credit card minimum purchase," asking for cash, or imposing credit card pricing - as you describe."

                                                If the establishment chooses to accept credit cards, they they abide by the signed agreement with that credit card company....not pass along the fees to their customers, which is essentially what they're doing when they charge a higher price for items paid by credit card.

                                                1. re: quovadis

                                                  The question becomes, what were they charging before they set up this two-tiered pricing, or what is a reasonable charge for these dishes in that market, and is this in fact a discount for cash paying customers or a penalty for card-paying ones. Moreover, the 20-30percent difference b/w cash and credit is quite a bit of expense to foist on card users just to save owners a bit of hassle and expense.

                                                  Quite simply, if owners don't want the hassle and expense, they don't need to accept credit cards. But they do b/c they want the business. If they want to play, they have to pay - they can't have it both ways.

                                                  1. re: Cachetes

                                                    Sure, they can have it both ways. I respect that all their pricing is in plain view, and customers can make their choice. I wish more retailers would embrace the same principles.

                                                    1. re: Veggo

                                                      If they've chosen to sign a contract with the credit card companies, and that contract said they cannot attempt to influence the purchaser by promoting cash over credit card use, then no, they can't have it both ways.

                                                      1. re: Veggo

                                                        Sure they are being open, and that's to be commended. But the fact is that they want to lure customers by accepting credit cards, but then punish them for using them. (I think that charging 20-30% more on some dishes is simply out of line.)

                                                        If you don't like credit cards and the hassle and expense, just don't accept them, it's that simple.

                                                        1. re: Cachetes

                                                          "Luring" customers by accepting credit cards. I'm laughing, but I suppose that's how America works, or as of late doesn't work.

                                                          1. re: Veggo

                                                            I think it's silly to be cynical about this. Credit cards have been around for many years, and many people use them as a matter of convenience. To be sure, banks many a big profit off of them. But businesses also offer them b/c they know customers like to use them. No need to overload that act with meaning it may not have.

                                                            1. re: Cachetes

                                                              I'll sign off and save my rant for economic forums. Thanks for your balanced perspective.

                                                              1. re: Cachetes

                                                                Luring seems apt. Why can't you carry a little cash in the wallet so you can make the best decision possible, NOT based on whether you can float a loan for it with a CC?

                                                                1. re: Scargod

                                                                  I never said you can't. In fact, if you read earlier in the thread, you'll notice that I'm the one who used the word "lure" to describe the nature of the transaction. Despite my having hassled Veggo, I am incredibly cynical about the abuses of corporate capitalism in the U.S., and even moreso abroad. Finally, the issue is totally unrelated to whether people should be paying with credit card (i.e. are they financially sound enough to do so).

                                                                  My only point is, if you are going to offer the credit card service, do it in good faith (both the to company you contracted with and to the clients you serve). If you are an owner and don't like the hassle, expense, the cut of the jib of the card company spokesperson or feel of plastic against your fingertips, then just accept cash. Otherwise, in my opinion, you are trying take advantage of the benefits of offering credit cards, without having to deal with the disadvantages. To pass off the burden onto the customer in a usurious way (e.g. 20-30% markup) is simply bad business.

                                                                  1. re: Cachetes

                                                                    It's common practice in tourist spots in Mexico (Puerto Vallarta, specifically) multiple sets of prices in shops offering merchadise (jewelry, pottery). There is the stated price on the item, the price they will quote to you if you pay in cash, and maybe a second quote if you pay cash with US dollars. There is also another price that they will give you if you agree to sit through one of the ubiquitous time-share presentations shilled by time-share locusts. All of these prices are also subject to the haggling factor, should you like to play that game. I suspect that there are also Mexi prices and Gringo prices, since I always get a better deal when my Mexican relative to do the transaction.

                                                                    I never experienced a similar multi-level pricing scheme in PV restos, though. Seeing the double set of prices on the menu at a resto at home just took me aback. Since I am aware of the pricing upfront, I am OK with giving this place a try. Can you imagine, however, going there & not having been informed first? My inclination would be to walk out.

                                                    2. re: c oliver

                                                      Thanks, c, but rather than 'slant', which is not always a neutral word, maybe we could call it "arbitrage 101", and determining what is the cheapest way out the door. When I live in Mexico I carry pesos and dollars, and different situations favor one currency or the other.

                                                      1. re: Veggo

                                                        Instead of "slant," how about "perspective"?

                                                        In Brazil they won't accept dollars but many stores will give a discount for cash. Didn't see it in restaurants but most of the dives we hung out in didn't even take credit cards.

                                                        1. re: c oliver

                                                          I'm good with perspective. Mechanisms that enable electronic fund transfers in developing countries, until recently, were limited to only high-end tourist venues. But there is something incorrect about a comida fonda with a Visa sticker.

                                                  2. A lot of gas stations I know have 2 different prices, a cash price and a credit price. I think its fine because they are not hiding it and I have the choice to do business with them with whatever form of money. Maybe its not ideal, but not necessarily terrible. Their house, their rules I feel. Besides, cash is good for me! I tend to spend a lot with credit cards!

                                                    1. As the person who originally posted the rec., I had a few thoughts. FTR, I can't remember if it used to be cash only--it may have been. I went there 4 or 5 times last year and loved it, so this menu change is kind of odd to me and a little off putting since I am usually a cc user. I live in South Philly. There isn't a bank on every corner and I prefer to walk as much as possible, so I don't want to drive to Delaware Ave just to get cash.

                                                      Even though I don't like the policy, I think it's a little overblown to impute evil motives to the owners. OTOH, this will dissuade me from going there as often as I used to, which makes me sad.

                                                      As for the 'legality' I would be surprised if the gov't has laws relating to this. Its main concern is with sanitary, liscensing and discrimination regulations (which are not crimes in the legal sense). On the criminal side there would be tax laws, but they don't care what you charge so long as they get their share.

                                                      2 Replies
                                                      1. re: feklar42

                                                        I am the OP on this thread.

                                                        I really don't think there are any "evil motives" here, I just thought it was odd. Especially since the mark-ups (mark downs?) are not consistant. I think it IS off-putting, and I would be very upset if I went there looking forward to having good dinner using my cc, and got blind-sided by the double pricing.

                                                        I know that there a lot of resto's that have a cash only policy. There's one in Atlantic City, called Chef Vola, that has a mystique about it part of which is the cash-only deal. Your check is brought to your table in a beautiful, woodern box, lined with felt, and you put your cash in the box to hand it back to the waiter. I guess it's supposed to play off the Atlantic City, old Italian, friends of the 'family" aura.

                                                        One resto in South Philly was at the forefront of that cash only movement: Ralph's. As the years went on, they got VERY cagey, and even installed an ATM in their place, do doubt getting a cut of the ATM fee.

                                                        1. re: PattiCakes

                                                          PatiCakes--I thought you were very even handed in your comments, but some of the comments here do seem to be a little overblown. As someone who liked the resto and has recced it to others, I'm disappointed and a little embarrassed. It's like sending a friend on a blind date with someone who turned out to be a clod. Not evil, but rather rude. :-)