Fee For Paying With Plastic? Decision Nears

The US Justice Department is said to be close to a decision on whether credit card companies can continue to forbid merchants from charging extra to customers who use credit cards to cover the cost of the credit card processing fees (usually 1-5% of the price).

The JD seems to be leaning towards letting the prohibitions stay in place, a setback for merchants groups, and, potentially, consumers. Unable to discriminate against more expensive shoppers, store owners are forced to raise prices on everyone, including those who pay in cash.

Visa, MasterCard Antitrust Decision by U.S. Said to Be Near [Bloomberg]

UPDATE: Amex Slapped With Antitrust Suit, Visa & Mastercard Settle

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  1. EarlNowak says:

    That’s the argument. On the other hand, I’ve seen shops and restaurants either switch from accepting CCs to cash-only or drop the more expensive cards like Amex, and I haven’t seen prices go down in either case. And with credit cards, you get a large amount of consumer protections, like chargeback rights, you don’t get if you pay cash. So it’s no wonder merchants don’t want to accept credit cards.

    • SPOON - now with Forkin attitude says:

      There is a hidden price – the price merchants eat before. This simply eats less. If a merchant is Really lucky, he will keep 20 % of the standard retail price (which isn’t set by the merchant in most cases) for other expenses like rent and electricity and employees. the REST simply eats processing fees and wholesale costs. unless you can achieve some sort of critical velocity of sales, it is very difficult to stay in business as a retailer.

    • trentblase says:

      Plus, even if the merchant charges a credit card fee, some credit card users will be subsidizing (those with non-rewards cards or who have an annual fee) other credit card users (those with high rewards and no fee). These cards actually carry different costs to the merchant (http://truecostofcredit.com/). So is the next step to swipe your card and THEN have the merchant tell you what the fee will be based on the type of rewards card you have? The system will never be perfect, but I think more cash discounts is the best way to handle the issue. The fact that there are very few cash discounts suggests to me that merchants are really more concerned with nickel-and-diming the credit card users.

      • frank64 says:

        There are few cash discounts because up until the new law passed a few months ago, they were not really allowed(they were extremely cumbersome for all but gas stations) in the user agreement. This is one thing the merchants fought for and you should start seeing them.

        • trentblase says:

          Cash discounts were always allowed. Cumbersome? One sign: “cash discount: 2%”. Unless you have some ancient register that can’t perform a percentage discount, I don’t see the problem.

          • frank64 says:

            That is the point, they were NOT allowed to do this. Now they can. If they were allowed to, why was it a big part of the new rules?

            • Conformist138 says:

              They could give cash discounts, they just couldn’t put in card fees. It’s sort of a matter of semantics, but you can charge less than listed price for a cash transaction, but you can’t charge more than listed price for a credit transaction. i’ve been to plenty of gas stations that do this.

              • frank64 says:

                They could give cash discounts, but the rules were very cumbersome on how they could actually do it. That is why they fought for the rule change. WHY THE NEED FOR THE RULE CHANGE?

      • jamar0303 says:

        That and I’m in Hong Kong and noticing a curious thing: Shops here actually give CC discounts. Yes, they give you a lower price if you pay by credit card. Which goes against everything people here say about processing fees and whatnot. So what’s the difference?

        • Blueskylaw says:

          If you live in a “bad” part of the city, which would you, as a business, rather have, alot of cash on hand or credit card payments already deposited to your account?

  2. nbs2 says:

    Because these kind merchants are going to lower prices for cash paying customers? Right.

    • pecan 3.14159265 says:

      I’ve seen some mom and pop stores offer a slight discount to cash-paying customers, but if these prohibitions end, there’s no reason to think that stores will suddenly rejoice and cut prices for everyone. They’ll just stop giving cash customers a discount and then everyone gets to pay the same price.

  3. ianmac47 says:

    Credit Cards offer many advantages over paying in cash, like not having to carry cash, ever. Not only that, credit cards offer theft protection and better return policies than many stores. As soon as credit cards lose the level playing field– like allowing extra fees to pay with plastic– all these benefits go away.

    • Alvis says:

      How is not having to carry cash an advantage? Is lugging around a few strips of paper such a hassle?

      • Dover says:

        But then you spend the paper and you don’t have it anymore and have to go to bank to get more before you can obtain more goods and services. It’s also riskier as the paper can be stolen or turn out to be fake. Plus, using paper sometimes results in the acquisition of metal which rattles around annoyingly.

        • Alvis says:

          I find ATMs no more difficult to locate nor use than pay phones. Cash is king. Can’t pay for strippers or drugs with credit.

          • InsaneNewman says:

            You can still find pay phones? I can’t remember the last time I saw one.

            • coffeeculture says:

              I know right…I always wonder what disease lurks on that receiver that people touch and put to their faces. yuck.

          • Destron says:

            Meh, my local drug dealer accepts paypal, and we both have android phones so we just bump phones and its all good….

          • jesirose says:

            What’s a pay phone?

          • jamar0303 says:

            On the other hand, they cost money. Depending on where you are, a good deal of money (Citi charges 3% to withdraw cash in Hong Kong if it’s a Citi ATM; 3%+US$5 if it’s not a Citi ATM). And depending on your card, you pay less at certain shops due to cashback or even sometimes the store will extend special deals (I saw a restaurant attached to a hotel that offered 15% off to anyone who paid with Visa, and more that had similar deals with AmEx).

      • Jeff_Number_3 says:

        No, but running out and having to get more is.

      • caphis says:

        If I lose my cash-filled wallet, I’m out that much money. If I lose my cards, I’m out $0.

        Cash doesn’t give me rewards for using it, either.

        Using my card usually means I can pay before the cashier is done ringing up my items.

        My bank provides a nice history and summary of my purchases and spending trends automatically, cash does not.

        Etc, etc.

      • george69 says:

        write back after getting mugged.

        • Griking says:

          /shrug

          I’ve never been mugged before and prefer to pay for things with cash. The way I look at it is if you’re unlucky and going to get mugged then you’re going to get mugged.

          • frank64 says:

            It is probably the use of cards that has kept muggings down though. Cards mean people don’t need to carry cash and muggers know this. Think if everyone going shopping or out to dinner needed to keep hundreds of dollars of cash on them. Supply and demand tells me there would be many more muggers out there!

          • BlkSwanPres says:

            Yes if you are going to get mugged you get mugged, but if you have $100 in cash in your wallet you loose that cash. If you have only Credit/Debit cards you loose nothing. That the difference. If some one takes my wallet I am out a wallet. If some one takes your wallet what did you loose?

            • pecan 3.14159265 says:

              I’m nitpicking here, but it’s “lose” not “loose.” “Loose” is something unrestrained (or loosen a knot). “Lose” is to be devoid of something.

      • trentblase says:

        No, it is not. Neither is planning a special trip to the bank when you want to buy something that costs more than the amount of cash you usually carry, paying the occasional ATM fee when you don’t plan your withdrawals well enough, rolling up all your loose change and taking it to the bank, showing your receipt at walmart, handwriting everything instead of using computers, making your own soap at home for profit, cranking your engine by hand, and beating your rugs instead of vacuuming. I’m glad that you, like me, strive to shun technology and make everything harder than it really needs to be, just so you can feel like a king with all your cash.

        • Alvis says:

          I use plastic for some things, but cash is just faster. Hand money, get handed change back. No waiting for authorizations to go through.

          • trentblase says:

            At most places where I shop, credit is much faster than cash. I do tend to shop at places with very good integrated point-of-sale systems, where my card seems to be authorized even before they finish ringing me up. My card is back in my wallet (if it ever left to begin with) long before then they hand me the receipt. If I see one of those separate little machines where they have to swipe, plug in a merchant number, plug in an amount, wait for dial-up, wait for credit slip to print, then hit paid on the register and print me another receipt, I will tend to use cash (unless it is a large purchase)

            • Kitamura says:

              Depends on the cashier IMO, seasoned cashiers can process cash (assuming you aren’t trying to pay with exact change) can take a bill and have the change out of the drawer faster the time it takes to swipe the card, process the authorization, have the customer sign the receipt, and verify the signatures.

              Newer cashiers though, EFT is probably way faster.

          • sleze69 says:

            /disagree

            I swipe my card, 10 seconds later I get receipt.

            or

            I hand cash over…clerk counts it…gets change…I recount it > 10 seconds.

            • Loias supports harsher punishments against corporations says:

              I love how the cash vs. credit debate always has the “time at the register” argument. I don’t think the 5-10 seconds of time saved in line should ever be used as argument for cash vs. credit. It’s probably the least important factor of the whole thing.

          • jesirose says:

            Yet we hear all the time about how the cashiers can’t count without the register telling them the amount, so we must assume they also have trouble counting the amount of pennies, nickles, dimes, quarters, $1 bills, $5 bills and $10 bills you should get back, when paying with a $20 bill for a bottle of soda. Must take a while.

          • pecan 3.14159265 says:

            My experience indicates the opposite. Authorizations take a few seconds at the most and counting on people to actually count out change is a hassle. Plus, all of them insist on handing you a pile of change on top of bills and that makes it really hard to store money in your wallet, plus you have to make sure that they gave you the right amount of change (assuming you weren’t watching like a hawk as the cashier counted it).

      • coffeeculture says:

        Hassle: finding an ATM, withdrawing cash, getting change back…change piles up, gotta a) roll it yourself or b) head to a bank that counts it or c) Coinstar.

        I only use cash if the place is cash-only and its food is that good. Any so-so places that don’t take CC don’t get my business. I hate cash as much as I hate checks.

        Slide card, punch in pin/sign sales receipt, exact amount, consumer protections, airline miles & rewards, no interest loan for a month when i pay the balance off, not my money if someone steals it….what’s not to like?

        • Alvis says:

          You know you can just -spend- that change, right?

          • Illusio26 says:

            Which you have to carry around with you to do. I don’t really like walking around with a pocket full of change.

            • Alvis says:

              All you need is three quarters, two dimes, and four pennies. That’s like the space three take up on your keyring. How small are your pockets that it’s anything approaching an inconvenience?

              I feel like I’m talking to a wall here. When did people become so retarded about using cash? Did no one else have lessons using play money in second-grade math?

              • coffeeculture says:

                Not retarded, just preference…I don’t like carrying/paying with coins. If I’m not rolling it up and depositing it into a bank, I’m counting it and shoving it in my pocket.

                Hell, I’m mad that BofA doesn’t have contactless payment on its debit cards yet.

                Plus, I don’t get airline miles plunking coins down on the counter.

      • buzz86us says:

        It is when you are walking through the seedy area of town.

    • frank64 says:

      That is why this is good. The banks are going to want to keep the advantage, the merchants are going to want to give the customers what they want. Many merchants will keep it the way it is now, they will just have some negotiating power with the banks. In the long run it should reduce our costs, but it will be a bit messy in the beginning. Right now the banks get about 3% off the top of these transactions, and it has little to do with the cost of actually performing the service.

      • ianmac47 says:

        Yes, but I get some of that 3% that the banks collect as rewards, and also part of that 3% as services in the form of better consumer protection and limited liabilities on theft. That 3% also covers the grace period between bills so credit cards users don’t pay interest on the loaned money between a transaction and a billing cycle — otherwise you would end up having to pay off a credit card every night to avoid interest charges. And that 3% is being absorbed by all the merchant’s customers, not just people paying with credit cards. Cash has none of these advantages; if its stolen, you are SOL. If the merchant goes out of business and your product stops working, you are SOL. Cash is also coverage in bacteria and filth.

        • frank64 says:

          There are very real advantages for using credit to both the merchant and the customer. The real issue is that both of us have not had any pricing power, anything that gives us that will lower the price.

          The way rewards work really highlights the problem, the merchant has no choice but to pay the higher fees, and if you don’t use reward cards you pay too! That we are getting a piece of the action makes us accomplices, we are getting subsidized by the other customers. I get a few hundred dollars a year from rewards, but I also pay a little more for my goods because of it, and for those who carry a balance on their reward cards, they pay a higher interest rate. The only ones who don’t pay for our rewards is the banks!

    • Guppy06 says:

      If not carrying cash is such an advantage, then it’s something you should feel comfortable in paying more for.

  4. mbd says:

    And of course, there is no regulation prohibiting the merchant giving a discount for paying in cash, which makes the prohibition a joke.

    • Dover says:

      It’s not a joke because it’s unfair for business to advertise a price to get customers in the door and then add fees for certain types of customers. Gas stations which offer different prices for cash and credit are the biggest violators of this rule and it is very frustrating for credit customers.

      • ndonahue says:

        Every gas station I’ve seen that differentiates prices between cash and credit advertises the something to the effect of ‘cash price’ on their signage. Maybe it’s more tightly monitored where I am (in MA), bit I disagree that gas stations are the worst offenders. Small, independent clothing stores and convenience stores are (in my experience), the establishments least likely to adhere to their master services agreement.

    • fs2k2isfun says:

      It is 100% permitted to offer a cash discount. CC companies forbid a credit card surcharge. My local liquor store offers a 5% cash discount and on price tags cash and credit prices are clearly listed.

      • LACubsFan says:

        No it’s not. It states in the merchant agreement that offering cash discounts is not allowed in face to face transactions.

  5. ShruggingGalt says:

    Why would merchants raise their prices again? The credit card fee is already included in the current pricing; and heck, thanks to the Financial Reform bill my company is offering cash discounts now.

    The only reason to be worried about price increases is the assumption that credit card fees will be going up soon, and that’s going to be interesting, as the majors have already been smacked with one anti-trust lawsuit over those fees. They’ll be hit with another if they raise the fees again. The current fee structure already makes them a lot of money – and they can’t include the risk of loosing chargeback funds – because they have higher rates to those merchants who have lots of chargebacks!

  6. Loias supports harsher punishments against corporations says:

    You can still haggle with cash. “I’ll give you $35 for that $40 item and I’ll pay in cash.”

    Still works in some places.

    • Tim says:

      Yeah, and if merchants are allowed to charge fees for credit card use, haggling with cash might become a lot harder.

      - “I’ll give you $35 for that $40 item and pay in cash.”
      – “No, $40 is already the cash price. $45 is the credit price.”

  7. Sian says:

    I’ve seen a few restaurants around here offer discounts for customers who pay with cash.

    Why can’t other retailers do this?

    • Fumanchu says:

      +1

      Yes other retailers can do this. The merchant agreements say that you can not charge extra on top of the regular price for someone paying with a credit card over someone paying in cash. However, they do allow the retailer to give a discount on the retail price for people paying with cash. You see this at a lot of gass stations, where the price for credit card bought gass is $2.60 while the price for cash bought gass is $2.45. The credit card price is the offical retail price and the cash price is on sale for that much.

    • Rose says:

      Why would they? Every time someone uses cash, they add to the cost of doing business, just like with credit cards.

    • dotkat says:

      I’ve seen 20% discounts for cash, too. However, there were so many stipulations to get the discount (not valid on carry-out, not valid on weekends, etc.) that it honestly wasn’t worth the hassle.

  8. DeeJayQueue says:

    Honestly, who even carries cash anymore? With the exceptions of paying for things that I know don’t take credit cards, like parking garages, I don’t even bother with cash. It’s quicker to use a credit card, they’re easier to keep track of, and they have better protections for consumers.

    • SunnyLea says:

      These days, even most of the parking garages around here take cards.

      • DeeJayQueue says:

        Here in DC, a lot of them do but some of them don’t. Since I’m schlepping gear from my car to my worksite, parking close is the name of the game, not preferred currency method. I don’t have the luxury of choosing to park at a place that might be further away but takes plastic when I have to lug hundreds of pounds of gear with me to wherever I’m going.

        • Gramin says:

          Really? I have yet to find a parking garage in Chicago that doesn’t take credit card. In fact, many of them DON’T take cash anymore. Furthermore, even our parking meters take credit cards :)

    • JulesNoctambule says:

      Almost everyone I know carries cash, but I also know a lot of people who deal in antiques and vintage. Cash-in-hand is the name of that game when you’re looking for stock.

    • AllanG54 says:

      I don’t worry about protections when I’m dining out and besides if we’re splitting the check with another couple it’s easier to do it in cash than to give the server two credit cards.

  9. brianisthegreatest says:

    Is there any data available on how many people pay with credit compared to those who pay in cash? I’d like to see where consumers are going with this, and the decision made to reflect what consumers need, and how they are paying. Surely it is a shame to see all prices rise for everyone, but that is the choice of the store. I’m pretty sure you can list credit/cash prices separately and keep the cost associated to who is using the service. I have only seen that in one merchant agreement however.

  10. FatLynn says:

    Sigh. Merchants really need to accept that CC fees are a cost of business, and that people spend much more if they accept CC’s.

    • SPOON - now with Forkin attitude says:

      thats why merchants accept cc’s and fees at all. this isn’t about making those fees go away, it’s about making business sense out of non-sense. CC’s cost up to 9% plus 25 cents per transaction. basically this is a database call. This isn’t a huge amount, but it does add up.everyone wants to minimize costs both to keep more profit and to keep customers happy. If costs are lower than prices stay lower slightly longer.

      • BStu78 says:

        The problem is that this cost is just going to be passed onto consumers which isn’t fair or reasonable. Retailers will make customers eat the entire processing costs just because it can be easily quantified. There is an expense for dealing with cash, too, but retailers like to pretend that doesn’t exist.

        The fact is, they ARE paying the fees now because clearly the service provides a benefit they are interested in. That’s a cost of doing business. It will hardly protect consumers if retailers are allowed to void their merchant agreements with credit card companies just to penalize customers paying with plastic. The result will just make credit card payers subsidize cash payers. Its wrong either way, but the present situation at least reflects a negotiated contract not a unilateral reversal.

        • frank64 says:

          It isn’t really a NEGOTIATED contract, it is mostly a take it or leave it thing, where Visa and Mastercard have the monopoly. If it wasn’t for the monopoly issue I would agree with you. All the law will be doing is changing what the banks are allowed to put in the contract, the merchants will still be abiding by it.

          This is where someone will come in and say the merchants have a choice not to accept cards if they don’t like the terms. The think is merchants must accept cards because cards are a strong part of the financial infrastructure, many consumers will not do business with merchants that don’t accept cards. It would be financial suicide for the majority of mainstream business to not accept them.

          • BStu78 says:

            It IS a choice. The fact that it is an obvious choice doesn’t change things. No one is even talking about making the Credit Card companies pay. Its about taking money from consumers. There is a service that retailers believe is essential to their business but they somehow think they shouldn’t pay? Give me a break. Do they think I need to cut a check to their landlord, too?

            I’m sympathetic to the notion that the fees are unwarrentedly high. I’m not at all sympathetic to the notion that consumers need to be punished as a result. Even if they are too high relative to the actual service provided, the VALUE of that service is clearly very high to retailers because hardly anyone has actually stopped taking credit cards. They can moan about it all they like, but the fact is they still signed up for it. They clearly believe the service is indispensable to their business. Well, that means they need to suck it up and pay. Not attack their customers for wanting to buy their goods.

            • frank64 says:

              It is about allowing merchants to negotiate. They want to accept cards, they do realize a benefit. If you look at it very simply you can make a case the consumer loses when merchants get to charge, but if you take a closer less superficial look, you will see that we will benefit. This is what Consumer Reports thinks too.

      • Hoss says:

        What transaction costs 9%, or for that matter what costs 5%? Selling gold bullion maybe?

    • pecan 3.14159265 says:

      Once in a while, I’ll treat myself to lunch out during work and I always avoid places that are cash only because I never have cash on hand. I think businesses need to accept that credit cards are part of doing business and they will attract more business this way.

    • Dover says:

      I’d also like to see how much cash costs businesses. Between counterfeits, employee theft, robberies, bank runs, safe/security costs, till auditing, etc., some companies might even do better by only accepting credit cards. It may not be a line item on the budget sheet, but cash has costs.

      • jesirose says:

        Wasn’t there an article on here a while back about a store that stopped accepting cash?

        • pecan 3.14159265 says:

          Yes, but in that case, the store stopped accepting cash because it kept getting robbed. The owner figured that if he stopped accepting cash, his store wouldn’t get robbed anymore.

      • vx15i says:

        Back when I worked in retail the company I worked for gave us a sheet with the ‘cost’ of each type of payment. Amex was the highest, followed by Visa/MC, then checks then cash. Cash was not free, it had a cost, but it was lower than the others.

        Cash is very time consuming so I imagine those costs can vary greatly depending on the establishment.

        • AlphaLackey says:

          Our local greasy spoon chain here in Winnipeg (Salisbury House) is open 24 hours but doesn’t accept cash during late night and early AM hours, presumably all the cash is carted out and deposited in the late afternoon. Though, they do thoughtfully sell branded gift cards…

    • ShadowFalls says:

      Remember in some states it is illegal for merchants to charge fees for use of a credit card. They are allowed to give cash discounts, but they must be advertised as such. For example, if you pay cash that soda is $1, but it is $1.25 if you use credit. They just aren’t allowed to tack on a transaction fee, and the discounts must be clearly marked as such.

  11. Dover says:

    They can’t discriminate against the “more expensive” credit card customers, but they can sure give discounts to cash customers to encourage people to use paper and I don’t see why this is a problem.

    • Venality says:

      Actually, coming up they will be able to choose ‘a la carte’ cards. Merchants will be able to choose to accept a debit card, but not your more fee intense business card.

  12. odarkshineo says:

    Seems like an issue on promoting mugging in a sad economy…Plastic please.

    • Why is this on Consumerist? says:

      See, you’re gonna get mugged regardless. The criminal can’t tell whether you’re carrying cash or just a credit card. The difference is a happy criminal (cash) vs an angry one (no cash). If you have no cash, maybe they’re pissed off and shoot you.

  13. Kconafly says:

    Or…the merchants can offer a discount for paying with cash! Sounds like a solution to me.

    • diasdiem says:

      I know of a few places that do this. It sounds a lot better to offer a “discount” for paying in cash than charging a “fee” for paying with a credit card.

  14. Rose says:

    People need to remember that cash is expensive as well. My company, and every business establishment that I have ever worked for, spent at least two hours a day counting money. Usually once at the open of business, and once at close. The more registers, the more man hours.

    When there was a problem (weekly), it could run to several hours. Credit card processing was a matter of two minutes – one to run the totals, and one to make sure that they matched the receipt totals. They did.

    Then, there are banking costs, which can be HUGE, along with paying an employee to take money to the bank every day, or every other day.

    Cash costs money, as well. The only difference is that the costs of using plastic can be quantified.

    • SonicPhoenix says:

      I would guess that it depends on the type of store and the amount of business that gets done that will determine whether cash is cheaper. Spending two hours to count cash really isn’t that expensive in the grand scheme of things. Consider a big box store that does ~$100k worth of business a day. At 2% they would pay $2k in processing fees. If that were cash instead and an employee to count and process it cost $20/hour it would take 100 man hours before the cash cost more to process than the credit cards.

      Now if the business only did $1000/day they’d pay $20 in credit card processing fees and it would only take one hour at $20/hour for it to break even on processing costs.

      • frank64 says:

        A very good point, people are exaggerating the cost of cash to make the point, and not having exact numbers makes it easy to do.

    • cvstrat says:

      I wanted to agree with you. Even with less people using cash it still takes 4 or 5 people almost an hour to close every register and count/prepare the deposit. On a night where you have 2500 in cash and 12,000 in credit card purchases you’re really glad people don’t use cash that often. Imagine a busy night 6 or 7 people counting cash drawers, totaling 15-20 grand. Even if nothing criminal takes place, you’re still spending a ton of cash to keep hourly workers there counting money.

      Guess ultimately it depends on the type of business, number of employees, and the amount of actual cash they’d take in.

  15. sufreak says:

    So…to get the best price, we’ll have to carry around potentially hundreds of dollars in cash. Watch the crime rate jump.

    Gas and grocery shopping in one day can have you hauling $100-$200. And you have to run to a bank/atm (fee)…

    This can’t lead to anywhere good.

    • pecan 3.14159265 says:

      I try not to go to an ATM that isn’t inside the bank, and with banks opening and closing within a four-hour window on weekends, and being open precisely during the hours in which I am working (and thus unable to go to the bank), I don’t go to the ATM often.

      Swiping my card, on the other hand, ensures that it never actually leaves my hand.

    • evnmorlo says:

      Could go back to checks…though the government is also trying to make sure that banks charge a fee for checking accounts

  16. cspirou says:

    These contract terms definitely shouldn’t be allowed. Having people that pay cash subsidize people that pay with credit isn’t fair. If you consider that the poor is more likely to use only cash then it ends up being a regressive tax.

    I applaud the few places that offer a discount to cash paying customers but it’s apparent that most places are fine not giving the customer the best price and are perfectly fine charging cash payers more.

    • Rose says:

      Cash customers are not ‘subsidizing’ credit customers. Cash has it’s own inherent costs that may very well be more than credit. Credit is just easier to quantify.

      • cspirou says:

        How are they not subsidizing credit cards? Credit card customers effectively pay less for the product then people that pay cash. All this does is make everything more transparent and honest instead of a secret tax on everyone.

  17. jdmba says:

    I pay for everything by credit card; its a great way to keep track of expenses and also earns miles. I hope the ban stays in place.

  18. laughingisfree says:

    i love my credit card! decide to keep it the same! i don’t want to go back to using beans to buy stuff

  19. Tim in Wyoming says:

    I pay anywhere from 1.7% to 3.5% total for each card I process, on average it is 2%. The fee varies by if I swipe my customer’s card or if they pay online through my billing system along with the type of card and the rewards program tied to that card. I have no complaints with that fee.

    If I have a customer paying by cash or check I will offer them a 2% discount. Isn’t much, but I will at least pass my savings on to them.

    Personally I do NOT carry any cash. I strictly use my debit card or my Amex card. If an establishment doesn’t accept cards or charges me extra, I walk.

    • jshier says:

      Thanks for the info. I don’t know why the CC companies are allowed to charge a fixed percentage in the first place. It sure doesn’t cost them more to process a $1 charge than a $1000 one. I’d say the fee should be capped at 1 – 2% up to $1 in total. It would still be obscenely profitable for the CC companies and merchants wouldn’t be totally ripped off. Also, they shouldn’t be able to charge different rates for different methods (scanning vs. keying vs. internet).

      • nbs2 says:

        The differing rates is due to the ability of the merchant to verify the transaction. It is easier to enter in a string of 16 digits and expiration date than it is to manufacture a counterfeit credit card.

  20. sparc says:

    They should either do discounts for cash or surcharges for credit cards. One or the other.

    A system for both is just a disaster. Causes more consumer confusion because you have to check the stores policy with a fine tooth comb.

  21. balthisar says:

    Sam’s Club is part of Walmart, and the company as a whole is famous for trying to squeeze the cost out of everything and anything. For a long time, Sam’s wouldn’t accept any credit card except for Discover, with whom they had a special deal. But even Sam’s saw the light, did their cost-benefit analysis, and started accepting Mastercard. (For all I know, they also take Visa these days; they do accept Visa online.) It’s in retailers’ best interest to accept credit cards.

    Oh, Sam’s here in Mexico [i]does[/i] have a credit card surcharge, by the way, but it’s so tiny as not to matter. If US stores try to get greedy, then screw ‘em.

  22. SkokieGuy says:

    If this gets approved, then it is no longer a merchant fee, it becomes a credit card fee to the consumer (for the stores that charge it).

    I wonder, considered how specific disclosures must be on credit card statements, your APR, total cost of credit, etc. – will the CC companies have to factor in the transaction fee when figuring your APR?

    They have to disclose this when they charge a one-time balance transfer, so why wouldn’t similar regulations apply?

  23. Talisker says:

    Please add the transaction fee to the receipt.

    I’m convinced that some of the increase in consumer prices over the past 20 years is due to credit card fees tacked on to the price of every item. Put the fees on the receipt as a separate line item and let the consumers see what credit cards are costing us.

    So many people believe that as long as they pay off their balance every month they are getting ahead of the credit card company. They’d change their tune if they realized that every time they use their card they are putting money into Chase or Capital One’s pocket.

    • Rose says:

      Yes, let’s put the costs of cash onto the receipts as well. You know, the man hours spent counting it, checking it, losing some to embezzlement or mistakes, taking it to the bank, paying the bank when there’s a problem… Wow, I think I’ll use my CC instead.

  24. Scuba Steve says:

    Uh, I have merchants who charge fees (They ask of course) all the time for Credit Card Transactions.

    They’re the only store in the building. Am I going to argue with them? Not really.

  25. RevancheRM says:

    I’m for keeping it status quo. It costs ME money to get my cash, unless I do something out of the ordinary (such as spending money at a grocery store). Nowadays, I stick with the credit card and let the merchant deal with the costs of ATMs (often co-located in their very store at $3 a withdrawal or more).

    Sure, I could switch bansk…but that would be moving my business from USAA, which would not be a wise thing to do since USAA, well, rocks. I could push for legislation to forbid or reduce ATM fees…but not only would that require action on my part (for the benefit of the merchants) and we all know that such legistaltion wouldn’t pass the DC lobbyists. No, I’m fine with the consumer coming out a bit ahead on this one, for a change.

  26. thaJack says:

    The problem I run into everywhere is that they have a minimum amount you have to spend in order to use the card that it says on the door you can use. I’ve also been in one place that said they will charge a 6% fee to use a credit card to pay for something more than $X.

    Unfortunately I’ve never been able to get the credit card company to enforce their agreements.

  27. thaJack says:

    By the way, has nobody considered that the merchants ARE NOT REQUIRED to accept credit cards? They do so because the benefits of doing so outweigh the costs. What they want are all of the benefits and none of the cost.

    If you’re a merchant and you don’t like paying the fees, don’t accept the cards. You’ll probably have fewer customers, but it’s part of doing business. Nobody is forcing you to accept cards. But if you do so, you should do so in accordance with the agreement that YOU SIGNED!

    • frank64 says:

      The problem is that CC make up around 70% of all transactions, and many people will not do business with anyone who does not accept cards. If a merchant decided not to accept cards he would be looking at a severe drop in business. They are an integral part of our financial infrastructure. The banks know this and take advantage, this is what the justice department is ruling on. The fees they are charged have little to do with the actual costs, and have double over the past decade or so. Merchants had no power to avoid the increase in fees without jeopardizing their whole business.

      • thaJack says:

        Thing is, let’s say the fee is 3% (making this up). The merchant decides to do business with Visa and Visa says “you can accept Visa if you agree to pay us 3% of transaction amount and you will not require a minimum or maximum purchase amount.”

        Then, the merchant signs the agreement and says “screw them, I’m doing what I want.”

        I don’t see how they should be allowed to do that. The 3% fee is the cost of getting a ton of customers. Deal with it. If you don’t want the customers, don’t accept the card. If you do, do… but abide by the agreement you signed.

  28. DragonThermo says:

    I can guarantee you that, if given a choice, I will boycott merchants that charge extra for CC transactions. I already boycott gas stations that don’t tell you about an additional charge for credit until you are at the pump.

    I will only pay a fee for CC if I have no choice, i.e., no nearby alternatives, or if their prices are so low that the CC fee brings them up to the MSRP or median price.

    I know why merchants *really* want to discourage CC use: fraud protection and chargeback privileges. I have learned this lesson the hard way. Pay cash or check and the merchant screws up or cheats you and you have no recourse. Pay with a CC, you have some recourse if the merchant tries to cheat you.

    Maybe transaction fees are part of the issue, but they really want people’s cash so they can more easily cheat their customers.

    Have your cash stolen? You’re SOL. Have your CC stolen? Call the bank and cancel the account and have zero liability, or at worst $50.

  29. newyorkjerry says:

    While the card companies say that merchants can’t charge an acceptance fee, they won’t do anything about it when they do. A nearby restaurant does this. I complained to all of the companies who issued me credit cards and the outcome is….. the restaurant still charges up to 8% “convenience fee” for paying with plastic.

  30. Mcshonky says:

    Sorry Ben but you mislead.
    Plenty of stores in NYC -and I’m sure other places- offer a discount for cash.
    Implying that the cost of the CC transaction is calculated into the price.
    Crazy Eddie used to do it and so did -does?- J&R

    But only a sucker would buy anything of value for cash.
    Once they have your money, your recourse is limited.
    Consumerist should make that clear in the article too.

  31. Gizmosmonster says:

    You have to be kidding us.
    Making it harder to pay with credit cards means that I lose the consumer protections available to me. How often do you tell people to pay with a credit card to preserve their consumer rights? If my cash is stolen, I am outta luck. If my credit card is stolen, I can prevent the loss of my money by contacting the issuer and letting them know.

    Merchants get a pretty big benefit from taking credit cards. fewer closing time bank runs, fast transactions, happy customers…

    So let us talk about cash. It costs a fortune to get at my money. I can’t afford to take out enough to bring the percentages down, as a consumer I am now paying the banks more of my money.

    That leaves us with checks. Does anyone remember standing in line behind a little old lady writing a check? Or pulling out 6 I.D.’s to satisfy the store’s requirements? Of course they can use those verification systems, but those cost money to the store too.

    Perhaps merchants could start charging an across the board fee for anyone paying for anything by any method in their business. Then they could add a fee for using a shopping cart, for the parking spaces out front, an entrance fee at the front door…and on and on.

    It worked pretty well for the airline industry. So many fees for all of the extra costs for the airline to operate- the stuff that belongs under costs of doing business. Consumerist does not call the airline extra fees a consumer benefit- so what is going on here?

  32. ben_marko says:

    This is pretty much the norm in Thailand. Anytime I visit my wife’s family I can expect to get hit with their 4% fee.

  33. incident_man says:

    I have no sympathy for merchants bitching about the fees associated with cards. It’s a business decision: either take the cards and, therefore the business, or don’t. What’s more insulting is that they get to write off the merchant’s fees on their business taxes. So…….let’s allow them to pass a “cost” on to consumers that they get to take a tax deduction for as well?? Yeah….GREAT IDEA!

    /sarcasm.

  34. jwissick says:

    I am curious why the government is allowed to charge HUGE fees for accepting these same cards for payments.

  35. Jimmy37 says:

    I’m amazed at some comments. Merchants should be free to choose what to accept and under what conditions. Why should they pay for my convenience? It has been proven, though, that people spend more using credit cards, so it would be to a merchants advantage to accept the cards at some price point. I find it remarkable that people keep thinking about cash as the green stuff, and have forgotten about checks.