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How about retailers (restaurants, stores etc.) being allowed to charge cc users the cc fee's

jrvedivici Jan 29, 2013 07:02 AM

I don't know how many of you are aware but it was recently passed in all but 10 states I believe that retailers can now charge the customer up to 4% to cover the cost of accepting credit cards. 4% is roughly what most credit card companies charge to a retailer for the use of their service. Now you can see a "service" charge on your receipts of this amount.

Pay attention to your receipts because it's not mandatory so see who is and who isn't passing this fee along to you and save yourself the added expense!!

  1. m
    mpjmph Jan 29, 2013 08:23 AM

    Every retailer that accepts cards passes the fees along to customers. Either the cost of using cards is included in the total price, or it is added as an itemized charge. Either way, you're paying. Doesn't bother me at all to see the actual cost of using a card, especially at smaller, local businesses that operate on razor thin margins. If paying cash or paying a relatively small fee helps my friends and neighbors stay in business, it's fine by me.

    3 Replies
    1. re: mpjmph
      jbsiegel Jan 29, 2013 11:04 AM

      I agree that the retailer passes the cost along in one way or another. The problem that I have, though, is that if the 4% (or whatever) is already built in, then what they really SHOULD be doing is giving a discount for using cash. What will happen now, though, is that they'll just tack on an additional 4%.

      Yes, retailers are certainly allowed to charge what they can get, make a profit, etc. But, on the other hand, accepting credit cards (convenient for the customer) is also a cost of doing business.

      This is one of those ones where I can see both sides of the argument. As a consumer, though, if they're going to tack on 4%, I'll be shopping elsewhere.

      1. re: jbsiegel
        GH1618 Jan 29, 2013 11:17 AM

        People will do that anyway, regardless of how the retailer approaches it. But restaurant food is not a commodity. People look at the cost, but do not usually pick the restaurant with the cheapest meal of the type they are seeking. They choose a place they like and which is affordable. If the price goes up a little, not many will go elsewhere. At some point it may be too expensive, but 4% is not a big increase. Who knows what the profit margin of a particular restaurant is, anyway?

        1. re: GH1618
          westsidegal Feb 7, 2013 11:25 AM

          also, i'd imagine that one factor would be how spread out the restaurants are and the price/difficulty of getting to one rather than another restaurant.

          in los angeles most of us drive almost everywhere.
          the with cost of wear and tear on our cars, the misery of traffic at most waking hours, and the currently high price of gas, it doesn't make sense for us to drive very far to a slightly cheaper restaurant.

    2. carolinadawg Jan 29, 2013 08:30 AM

      I predict very few retailers will actually add a charge for using a credit card.

      3 Replies
      1. re: carolinadawg
        jrvedivici Jan 29, 2013 08:33 AM

        Say it's the skeptic in me but I think the actually will. It's a away of increasing their profits without having to raise prices. Time will tell just keep an eye on those receipts my friends!!

        1. re: jrvedivici
          meatnveg Jan 29, 2013 09:10 PM

          Retailers have had this ability in Canada for as far back as I recall.
          The only ones that ever charge you an extra fee for using credit cards are the small mom & pop convenience stores...and some restaurants/cafes. I can't recall ever being charged the fee by any major grocery chain.

          1. re: jrvedivici
            westsidegal Feb 7, 2013 11:28 AM

            as it is, i normally pay cash at all mon 'n pop places.
            it's hard enough for them to survive, without adding the cost and the cash-flow problems involved in a credit card transaction.

            when i used to lease office/retail/restaurant space, i came to understand how much more landlords will extract from a mom 'n pop operation than they will from a chain for the same amount/quality of space.
            i'd assume that food suppliers operate similarly.

        2. tcamp Jan 29, 2013 08:42 AM

          I'm puzzled as to why this is new news. Retailers have always accounted for those expenses in their prices. Maybe now they can explicitly list the cost as a separate line item like they do taxes?

          4% is high. We used the Square recently for a sale and their rate is 2.75%.

          1 Reply
          1. re: tcamp
            mugen Jan 29, 2013 09:11 PM

            Square's trying to enter the market; I would expect it to be relatively cheap. Very roughly, I think Amex charges 3-5% and Visa 0.5-2.0%.

          2. t
            thimes Jan 29, 2013 08:43 AM

            Our local liquor store started adding this fee in January. It ticks me off - some things are just the cost of doing business and not the customer's problem. We as customers have little to no bargaining leverage with the credit card companies to impact this fee, but vendors do. I can see some of the larger stores start using this "fee" as another profit stream and upcharging the fee . . . .

            1 Reply
            1. re: thimes
              westsidegal Feb 7, 2013 11:33 AM

              <<We as customers have little to no bargaining leverage>>

              it seems to me we have absolute leverage.
              if we stop by our ATM and pay with cash al the time, the credit card companies will make NOTHING.
              also, by paying with cash, we wouldn't be holding the shopkeepers and restaurant owners hostage in this battle.

              truly the only parties that have any real leverage are the consumers and the credit card companies.

            2. t
              thimes Jan 29, 2013 08:58 AM

              The accounting for this fee has only somewhat been accounted for in the past. Retailers don't list "cash" versus "charge" prices (okay years ago this was common at gas stations) - so does this mean that those of you who assume this fee has always been part of pricing just assume that you are actually paying 4% more when you pay cash since the price already includes the charge fee?

              With this new change do you expect all your retailers to drop their prices by 4% since the charge will no longer be included in the list price?

              To me it seems like this change is just a masked 4% price increase for retailers who can then just raise their hands and say "it isn't our fault".

              And I agree that 4% seems high, which makes me wonder if retailers will negotiate a lower rate with the card companies but still pass through a 4% fee since that is what customers have been told to expect. . . .

              1 Reply
              1. re: thimes
                carolinadawg Jan 29, 2013 09:06 AM

                I'm pretty sure the new law only allows retailers to charge percentage equal to the actual fee they themselves pay.

                I belive we will see many more retailers offering a discount for cash payment, rather than adding a "service charge" for credit purchases.

              2. g
                GH1618 Jan 29, 2013 10:04 AM

                If they don't bill it to credit card users, then cash customers are subsidizing the credit customers. Why is that a good thing? It just depends on how you pay. People prefer whichever is in their own interest.

                One of my hangouts does not accept credit cards. That avoids the controversy.

                6 Replies
                1. re: GH1618
                  hyacinthgirl Jan 29, 2013 10:26 AM

                  Because as I understand it, most businesses have been accounting for this fee for years and have adjusted the costs of all goods to pay for it. As prices for cash and credit users are the same, cash users have in some ways been subsidizing the credit card users.
                  For that to stop happening, the companies should lower their prices first to remove the already built in fee for card users and THEN pass the 4% along to credit card customers only.
                  However, it is unlikely that a business will use this as an opportunity to lower prices. Therefore, the fee will continue to be paid for in the already higher prices across the board and the merchant will make an additional 4% off of credit card users.

                  1. re: hyacinthgirl
                    MGZ Jan 29, 2013 10:43 AM

                    "Because as I understand it, most businesses have been accounting for this fee for years and have adjusted the costs of all goods to pay for it."

                    Larger businesses maybe, but a lot of little Mom & Pop's don't.

                    "However, it is unlikely that a business will use this as an opportunity to lower prices. Therefore, the fee will continue to be paid for in the already higher prices across the board and the merchant will make an additional 4% off of credit card users."

                    Then stop using credit cards. It'll be good for everyone in the long run.

                    1. re: MGZ
                      hyacinthgirl Jan 29, 2013 11:00 AM

                      I wasn't actually complaining about it, I just thought GH's point that if they don't charge the additional percent to credit card users then cash users would have to subsidize was possibly flawed.
                      Good to know about the Mom & Pop's. The smaller retailers and vendors that I personally know have accounted for the cc charges, but that sampling is in no way meant to be representative of the whole.

                      1. re: hyacinthgirl
                        westsidegal Feb 7, 2013 11:36 AM

                        the cash customers have been subsidizing the cc customers all these years because having only one set of prices was part of the contracts of adhesion that all the cc companies required the shopkeepers/restaurants to sign.

                        1. re: westsidegal
                          chowser Feb 7, 2013 12:26 PM

                          Not necessarily. People buy more on credit card than cash so the overall profit might be higher. Stores have the option not to accept credit cards, no one is forcing them to do so. The ones that have must find it profitable or they'd stop. If you've ever worked a store like McDonald's, the time it takes to count out change, have customers count pennies, etc slows you down, considerably. At a coffee shop, it's such a headache being stuck behind a person looking for pennies or having the counterperson count it out rather than just slide the card. It's more efficient. And, at a high end place, people don't always want to carry $500 or so in cash.


                          "In fact, a Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. And McDonald's found that the average transaction rose from $4.50 to $7 when customers used plastic instead of cash."

                          1. re: chowser
                            westsidegal Feb 8, 2013 05:10 PM

                            good points

                2. shaogo Jan 29, 2013 10:35 AM

                  The new negotiated fees are much lower than the fees we paid even ten years ago. The processing companies -- even the reliable ones -- are very competitive. We perform an analysis of our fees every year, and every couple of years we're pleasantly surprised with the reduction. I remember when Amex was 5%, Discover was nearly as high, and the rest were about 3%. Now, Amex leads the way at 1.8% and the rest are smaller.

                  1 Reply
                  1. re: shaogo
                    tcamp Jan 29, 2013 11:21 AM

                    That is interesting! I wonder if mobile technology and products like Square have played a role in driving costs down. Nothing like a little competition to force pencil sharpening.

                  2. MGZ Jan 29, 2013 10:37 AM

                    Personally, I hope that every company that accepts credit cards charges the highest fee that they are now allowed to. It benefits society by reducing the use of credit card and thereby reducing the amount of money funneled to the banks. From a consumer point of view, it's super silly to pay both 4 percent on the purchase and up to 20 percent more when the bill comes due.

                    4 Replies
                    1. re: MGZ
                      carolinadawg Jan 29, 2013 10:41 AM

                      But if you pay the bill off when its due, you pay no interest. Plus you may be earning some type of reward points.

                      1. re: carolinadawg
                        MGZ Jan 29, 2013 10:46 AM

                        That's why I want the surcharge to be universally adopted. Anything that dissuades is better for society - in the long run.

                        1. re: MGZ
                          carolinadawg Jan 29, 2013 10:54 AM

                          My point is that paying off the bill in full each month eliminates the paying of interest, which I assume is your primary objection to the use of credit cards.

                          1. re: carolinadawg
                            mugen Jan 29, 2013 09:32 PM

                            I think that the problem is more that the issuers are taking a relatively large proportion of the value of transactions, and the ultimate bearers of that impost are consumers, as the cost is passed through by merchants in the form of higher prices.

                            It is especially bad for consumers who elect to use debit cards or cash, because they're effectively forced to subsidise those who use credit cards.

                            Given that the merchant fee is incorporated into prices but the overwhelming majority of merchants, the rational strategy is not to pay with cash; it is to pay using credit card - because you'll be paying for it anyway - and to take advantage of the interest-free period and rewards programmes, to off-set the cost.

                            Even then, it will only be a partial off-set: the value of the interest-free period is (average balance outstanding)*(cost of funding)*(average days interest-free)/365. Throwing some basic numbers into it (e.g. cash rate of 1 or 2% and average days of 27, or half of a 55-day interest free period), the value of the interest free period is probably something like 0.15%, whereas merchants are probably incorporating something like 1-2% into prices to recover the merchant fees.

                            It's actually a brilliant business - taking a clip of innumerable billions of dollars of transactions, without the consumer noticing or with the consumer actually thinking that he's gained something (e.g. interest-free periods) - and it's only likely to become more pervasive.

                            Cash is only sensible if merchants use this as the prompt to actually reduce all prices (by excluding fees), then only charge the surcharge to those who use cards. That's not likely to happen, so might as well give in and take out a low-fee platinum card, to at least recover as much of the cost as you can.

                    2. f
                      fourunder Jan 29, 2013 10:44 AM

                      Cash is King......

                      1 Reply
                      1. re: fourunder
                        MGZ Jan 29, 2013 10:47 AM


                      2. j
                        jbsiegel Jan 29, 2013 11:18 AM

                        The nickel & diming of the consumer continues. It's like the airline industry.

                        1. enbell Jan 29, 2013 02:34 PM

                          If I am correct these states are exempt: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma & Texas
                          I am bummed over gas and groceries the most because CCs make it so easy. I do plan on making a conscious effort to return to checks and cash though.

                          4 Replies
                          1. re: enbell
                            KrumTx Jan 29, 2013 03:10 PM

                            Plus the way I understood it (I read it yesterday and have slept since then), if a chain can't charge the fee in a state where it isn't legal, they can't charge the fee in any state. So Kroger, for example, can't charge the fee in any state because they can't here in Texas.

                            1. re: KrumTx
                              enbell Jan 29, 2013 07:11 PM

                              Very cool, thank you for the additional info.

                            2. re: enbell
                              shaogo Jan 30, 2013 08:05 AM

                              Connecticut although they allow gas stations to charge different prices for "cash" and "charge" is also exempt. And it's also against CT law for a merchant to charge a minimum purchase amount for credit card use, or dissuade a customer in any other fashion from using a card instead of cash. Now, that doesn't mean that every merchant abides by that rule; we still see minimum purchase requirements at stores all over the place.

                              1. re: shaogo
                                enbell Jan 31, 2013 07:33 PM

                                Great info; funny what merchants try to and do get away with though!

                            3. Midlife Jan 29, 2013 05:35 PM

                              From what I heard on the news..... this does NOT apply to AmEx charges. It's apparently the result of a lawsuit against Visa and Mastercard only. Here in California we won't be seeing this locally, but I can't wait to see how it effects on line purchases from other states.

                              2 Replies
                              1. re: Midlife
                                sedimental Jan 29, 2013 09:06 PM

                                I wonder if more places will now take AmEx. Some smaller places refuse AmEx because they say the fee is too high. I use it for everything ( rewards) so maybe this will help those of us that use it for personal and business use.

                                1. re: sedimental
                                  julesrules Feb 8, 2013 05:25 AM

                                  Why would more places now take AmEx?
                                  In Canada, those rewards (and I love 'em too) come out of higher fees charged to merchants (even within Visa for example, different Visas have different fees). I don't really care when it comes to bigger businesses or large purchases such as my furnace, but I don't use my CC at small local businesses anymore. Really the rewards I was getting on small purchases weren't worth much and I'd rather not penalize the businesses I'm trying to support to keep my local community vibrant.


                              2. chowser Jan 30, 2013 07:01 AM

                                It should just be reflected in the price, as with everything else. I don't want to have a plate charge, fork charge, etc. and they all cost the restaurant, too. Consumers should have a pay cash only time and companies will figure out how much time it costs their employees when people pay with cash and they have to make change in pennies. It'll take forever in a high volume coffee shop/take out places to count down to pennies for change. They've also shown that customers order more on credit cards so there will be less business, too.

                                With the new law, the companies have to tell you that there is a surcharge so it's not going to be hidden.

                                I wonder how people who've said 4% is no big deal would feel if the government decided to add 4% tax to everything we charge.

                                1. s
                                  Sal Vanilla Feb 7, 2013 01:17 PM

                                  I agree with the folks saying they don't see many adding the charge.

                                  I buy more if using my CC. I am not limited by the funds on hand. They know that.

                                  Retailers (incl. restaurants) know and accept the fees as a cost of doing biz. Additionally, retailers can negotiate the fees charged (except for AMEX and maybe Discover).

                                  If they want a way around this off putting add-on, they can simply offer a cash discount. It is not the amount (most of the time), it is the feeling that we are already paying it and now they are tacking on yet another fee. I think if I saw it being charged, I would walk out.

                                  1 Reply
                                  1. re: Sal Vanilla
                                    chowser Feb 7, 2013 01:21 PM

                                    You know, I was thinking about this today and it's funny mentally that I'm okay with a cash discount but would balk at paying more for using a credit card. It really is the same thing. If retailers were smart and wanted more people using cash, a "discount" incentive might be a better way to go. I just want the price to be the price--I really hate those "resort" fees added onto the price of the hotel, AFTER you've seen the printed price. Just add it in.

                                  2. KaimukiMan Feb 7, 2013 07:08 PM

                                    many businesses will still hide the fee, dealing with cash is a big pita. for many its worth it to pay the fee and have a lot of their 'tabulating' done automatically.

                                    1. John E. Feb 7, 2013 09:47 PM

                                      What I would like to know is why was a law needed for retailers to tack on this service charge. I always thought a business could price their goods and services as they wish.

                                      1. jmcarthur8 Feb 8, 2013 01:34 AM

                                        My hairdresser has always charged 3% more if you use a credit card, so I just write her a check.

                                        As an independent kitchen designer and cabinet seller, my clients generally pay with a check. Now and then, one pays with a credit card. I find it very hard to say, "That will cost you 3% more", but it's a big bite out of my income when my transactions are generally in the 10k - 25k price range. I really haven't figured out how to handle it. If I bid the job at 4% higher to include the fee, I could lose the job to a lower bidder. Perhaps quoting a credit and a cash price would be the way to go. That still seems awkward to me. ( I love the design and project management part of the job. Hate having to sully that with talk of money.)

                                        3 Replies
                                        1. re: jmcarthur8
                                          chowser Feb 8, 2013 03:32 AM

                                          Upfront just give them the two prices. I wouldn't have a problem w/ it.

                                          I know someone who would negotiate at the car dealer. After getting the final price, he'd pull out his AmEx w/ no limit and tell the dealer he'd put the car on his card, or they could split the 3% and not deal w/ AmEx. He said the car dealers always took the latter.

                                          1. re: jmcarthur8
                                            Hobbert Feb 8, 2013 06:35 AM

                                            I agree with chowser. I'd just quote 2 prices and explain why. If anything, it would come across as getting a discount for paying cash even though its the same for you.

                                            1. re: Hobbert
                                              chowser Feb 8, 2013 10:19 AM

                                              As a psychological thing, I'd probably give the credit card price. Then, add that you do give a discount for cash. It makes me feel better, like I'm saving money. I'm easy to fool.;-)

                                          2. p
                                            Panini Guy Feb 8, 2013 05:43 AM

                                            I owned a cafe for 7 years and we paid closer to 5% per CC transaction including both CC and swipe fees.

                                            For us to offer a discount for cash would've been very complicated. Most POS systems aren't designed for this and even if the programming can be done, the transaction gets nutty - having to ask if cash/charge in advance, then making sure the customer actually has the cash before ringing up the lower price.

                                            As a business owner, I'd rather just build my average cost per transaction into the price and have the quickest transaction.

                                            Now, as a consumer, since I know the CC fees and the swipe fees for the major POS systems, if I were using an Amex card at a store that used Bank X for its credit card processing, I know that 4% doesn't cover all the costs, so I'd be OK with that.

                                            However, if I were using a Visa at a place that used Square, I'd balk at 4% because in that case the store was making money off the transaction, not just covering costs.

                                            IMO, putting a 4% fee across all CC transactions seems like opening a Pandora's box to me.

                                            2 Replies
                                            1. re: Panini Guy
                                              jrvedivici Feb 8, 2013 06:01 AM

                                              No offense but every POS system allows for a multitude of manager discounts. You set up the POS with the higher prices then just have 1 or 2 custom discount's of 2/3/4/5% based on your processing fee. No questions asked up front your covered if they pay cash you discount it at time of payment. If paid by cc the price is built in.

                                              1. re: jrvedivici
                                                Panini Guy Feb 8, 2013 11:55 AM

                                                None taken. You are correct as far as the software being able to put in an overall discount. In reality, customers ask for prices by item, "How much is the 16oz latte if I pay cash?" That's a pain in the rear.

                                            2. r
                                              rasputina Feb 8, 2013 06:40 AM

                                              illegal in my state

                                              1. Motosport Feb 8, 2013 10:16 AM

                                                We just had dinner at Benjamin in Kips Bay (NYC). They give a 10% discount for cash on any bill over $40.
                                                I thought it was a nice deal and paid cash.
                                                I did leave the tip based on the non discounted amount. What a guy!!

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