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Credit Card Swipe Fees Begin Sunday In USA 732

Posted by timothy
from the nickled-and-dimed dept.
An anonymous reader writes "A speedbump on the road to a cash-free economy will go into effect Sunday in the U.S., as retailers in 40 states will have the option of passing along a surcharge to customers who pay with credit cards. The so-called swipe fees arose from the settlement of a seven-year lawsuit filed by retailers against Visa, Mastercard, and big banks, who collect an electronic processing fee averaging 1.5 to 3 percent on transactions involving credit cards. The banks naturally have opposed the consumer surcharges, preferring that the extra costs to be passed along in the form of higher prices. Consumers in ten states (California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, Texas) won't be affected, since laws in those states forbid the practice (it seems that gasoline station owners here in Massachusetts got a different memo, though). Also, the surcharges won't be collected for debit or prepaid cards."
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Credit Card Swipe Fees Begin Sunday In USA

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  • Oh dear! Oh dear! (Score:4, Insightful)

    by Let's All Be Chinese (2654985) on Saturday January 26, 2013 @12:28PM (#42701143)

    Credit card companies want to have their fees hidden, rather they'd have everyone else too pay for the fees they charge retailers of their lucky convenience-furnished customers. And that they no longer can? Honesty in retail, surely a big speedbump, yes.

    A speedbump on the road to a cash-free economy [...]

    And that's an issue, because everyone wants cash-free, Shirley. Because, uhm, cash doesn't carry your name and isn't subject to chargebacks, hallmarks of, er, what exactly?

  • by satuon (1822492) on Saturday January 26, 2013 @12:28PM (#42701149)

    What if their prices are lower than other retailers' with just the amount of the surcharge?

  • by p0p0 (1841106) on Saturday January 26, 2013 @12:31PM (#42701167)
    Doesn't matter. Working in retail I learned that individual customers are very much unimportant. Just because you come in every week and buy a couple things doesn't make you a valued customer and your business will not be missed. The majority of people will not care and will continue doing what they have been doing for years. Don't kid yourself in thinking your storming off will teach anyone a lesson. The clerk does not care (and they never do), the store does not miss your purchase, and the next customer moves ahead in line that much faster. Most often the clerk will joke about you with their colleagues about that guy who couldn't afford the fee and he got mad and left. Made us put his items away too. What a prick.

    Carry cash or use a debit card. Might as well make it easier for yourself than anyone else.
  • by Vitriol+Angst (458300) on Saturday January 26, 2013 @12:42PM (#42701267)

    AS soon as consumers get the option to "Pay less in cash" -- because "pay more with credit" is more emotionally troubling, then the real cost of Credit Cards can be visible.

    They don't really pay anything, just the difference between accounts from other banks - -but they charge a hefty fee on retailers and charge interest (compounded) on consumers.

    There are new options that charge less, and they will get more prevalent if REAL COSTS are factored in. Not allowing retailers the option to pass on costs was only a benefit to the credit card companies -- it doesn't really save you money over time.

  • by Anonymous Coward on Saturday January 26, 2013 @12:49PM (#42701325)

    I get thousands of dollars a year in rewards.

    Interesting... you get free money, and wonder why there may be fees now?

  • by sjames (1099) on Saturday January 26, 2013 @12:57PM (#42701403) Homepage

    You do know you've been paying that fee all along don't you? It is the transaction fee the credit card charges the merchant. All this is is that they won a lawsuit invalidating the contract term that forced them to hide the fee in the form of higher prices for everyone (including cash customers).

    If you don't like the fee,, tell the credit card company "no, thank you", they're the ones charging it.

  • by nimbius (983462) on Saturday January 26, 2013 @01:04PM (#42701453) Homepage

    to any sort of cash-free economy. this is a roadblock to multinational financial institutions continuing to exercise carte-blance restraint in the way they charge fees for their services. A cash free economy and a privately controlled electronic banking system are two different things.

    can we bite the bullet and conclude that electronic transfers and card based transactions are so ubiquitous as to become a right of the people? Grow some balls, amend a few laws, and lets make a national payment card system that works with our existing currency and doesnt require some per-swipe "fee" to pay for a server to connect to a database and decrement an integer over SSL.

  • by Anonymous Coward on Saturday January 26, 2013 @01:04PM (#42701457)

    Thats why you work in retail and don't OWN a retail store. The owner knows that every individual customer is very important, and everyone that stops shopping at their store is money out of their pocket.

  • by sunderland56 (621843) on Saturday January 26, 2013 @01:05PM (#42701465)

    2% for a few days? 2% for a week's float works out to a 180% interest rate. At what point do they stop being a credit card, and start being a loan shark?

  • by flaming error (1041742) on Saturday January 26, 2013 @01:06PM (#42701471) Journal

    The other retailer is not discouraging the use of the card, he's just no longer subsidizing your costs by adding it to everyone's price.

    If I, a cash customer, can stop paying your fees, I'll happily shop at the retailer you boycott.

  • by kelemvor4 (1980226) on Saturday January 26, 2013 @01:16PM (#42701559)

    The other retailer is not discouraging the use of the card, he's just no longer subsidizing your costs by adding it to everyone's price.

    If I, a cash customer, can stop paying your fees, I'll happily shop at the retailer you boycott.

    Except it won't work out that way. You will still be paying the same price you've always paid (including the baked in fee) and the retailers that implement it will be getting an extra influx from the fees they charge to CC users.

  • by ZorroXXX (610877) <{moc.liamg} {ta} {ladvolh}> on Saturday January 26, 2013 @01:16PM (#42701569)

    If I, a cash customer, can stop paying your fees, I'll happily shop at the retailer you boycott.

    I wholeheartedly agree. Putting the cost on the card users is the right way.

  • by spikenerd (642677) on Saturday January 26, 2013 @01:20PM (#42701605)

    If you don't like the fee, tell the credit card company "no, thank you", they're the ones charging it.

    Mod parent up. Visa has a near monopoly in taking a cut of all transactions, and you want us to get upset at all the retailers who don't want to submit cheerfully? Think about what you're trying to do for a second. As long as the Visa tax is hidden, no one can ever try to do it for less. Customers will always choose the bigger more-convenient card that works everywhere.

  • by caseih (160668) on Saturday January 26, 2013 @01:29PM (#42701699)

    Guess who pays for the rewards programs? That's right. It's the retailers. Credit card companies charge retailers more for the rewards program credit cards. You don't think Visa is actually giving you money do you?

    I use a business credit card with some huge multinational companies charging up hundreds of thousands of dollars in business each year. I don't feel too bad about taking airmiles from them. But I do feel bad about taking rewards from little mom and pop retailers. Visa had them over a barrel. If they wanted business they have to accept credit cards. But if they want to accept credit cards they have to do it on Visa's terms (until now), which were higher fees for rewards cards, and Visa would not allow them to pass any of those charges on. It's quite a racket, actually.

  • by future assassin (639396) on Saturday January 26, 2013 @01:32PM (#42701719) Homepage

    Not sure where you got this individual consumers don't matter but for small retailers "every" customer matters. I'm not talking about "the customer is always right" because I will tell someone to fuck off if they are unreasonable, oh a I do own a successful retail store. If the clerk does not care you haven`t taught your employees properly of they don`t respect their job/you/you business to care enough.

    Personally if I can make profit I will go out of my way to satisfy even the smallest customer. For example on Monday I have a special order for a customer that came in yesterday. Normally if I ordered this item on Fri I wont get it till Tues/Wed so I'm gonna go out of my way on the way and drive to the distributor to pick this item up on Mon. Yes it'll cost me $5 extra in gas and 45min of extra driving but instead of making $35 on the item I'll make $30 and the word of mouth of how she was treated by the store will bring me in more business. 90% of my return customer is word of mouth because I've gone out of the way for them even if it meant I had to make less profit on a sale of two.

  • by 0111 1110 (518466) on Saturday January 26, 2013 @01:34PM (#42701747)

    Except it won't work out that way. You will still be paying the same price you've always paid (including the baked in fee) and the retailers that implement it will be getting an extra influx from the fees they charge to CC users.

    Is there a difference? Prices fluctuate all the time. Either you charge a lower cash price or you don't. Since the merchants themselves have up to a 4% penalty for CC purchases it would seem reasonable to give up to a 4% discount for cash purchases.

    If customers actually had to pay the 4% for using their card the cc companies might start having to compete with each other for processing fees. Cards with lower fees might start to be preferred by the customers themselves costing the greedier cc companies a lot of business. I'm not sure preventing retailers from passing on the charge is actually a good thing for consumers. If I can save money by not using a credit card I'd prefer to have that option. I don't see anything wrong with having different cash and credit prices.

  • by 0111 1110 (518466) on Saturday January 26, 2013 @01:39PM (#42701795)

    99% of the time cash is faster than cc. Most people don't use exact change. And armed robberies are not my problem. I'll let the insurance companies worry about it. I like the anonymity of cash.

  • by DarkOx (621550) on Saturday January 26, 2013 @01:42PM (#42701819) Journal

    I think the point is he and I do like like the processing fee and we like the current system where is rolled into the retailers general expenses. Some of it gets kicked back to me in the form of rewards and other CC company giveaways. I am collecting an economic rent for all the idiots out there who can't get a credit card because they destroyed their credit; or don't use one because they can't manage money they don't hold in their hand physically. I like that fine.

  • by 0111 1110 (518466) on Saturday January 26, 2013 @01:44PM (#42701851)

    I still don't see how offering a discount for cash or debit customers actually hurts you hardcore cc users. Cash/debit customers cost the merchant less. It's that simple. Their costs are up to 4% higher for cc customers. I don't see why cash customers should be forced to pay it just to give cc customers the illusion that using a cc is free when it isn't.

  • by MadShark (50912) on Saturday January 26, 2013 @01:52PM (#42701939)

    Cash is faster? You must be joking. For the vast majority of my credit card transactions these days, I swipe the card while they are ringing up my purchases and walk away as soon as they finish. Most of my charges are under $50, so most of the places I shop don't even require a signature. Even when they do, my signature takes far less time than handing them cash, them fiddling around getting me change out of the drawer and handing it back.

  • by nabsltd (1313397) on Saturday January 26, 2013 @01:55PM (#42701989)

    99% of the time cash is faster than cc.

    I've already swiped my credit card while the clerk is still scanning the first item. When they finish scanning everything, I might not even have to sign the screen (for a small enough transaction). For cash, you can't do anything until you get the total.

    Most people don't use exact change.

    Everywhere I shop, one end or the other of every cash transaction uses exact change. Either the buyer gives exact change, or receives it in return.

  • by sabri (584428) * on Saturday January 26, 2013 @01:56PM (#42701999)

    99% of the time cash is faster than cc. Most people don't use exact change.

    Well, my personal experience is different but I was unable to find hard statistical data on that.

    And armed robberies are not my problem. I'll let the insurance companies worry about it.

    Exactly my point. Who pays the premiums?

    I like the anonymity of cash.

    Prepaid credit/debit cards. Available (for cash, even), everywhere. I use them for my online purchases.

  • by Nimey (114278) on Saturday January 26, 2013 @01:58PM (#42702009) Homepage Journal

    I, probably like most people, had assumed that money for rewards came from interest (lots of people don't pay off their cards every month) and advertising.

  • by TheRaven64 (641858) on Saturday January 26, 2013 @02:02PM (#42702063) Journal

    99% of the time cash is faster than cc.

    I don't think I've ever seen that. The purchaser has to count the cash, then the merchant has to, then they (or their till) has to calculate change, then they have to get the change. Meanwhile, someone paying with a card just pops it in, enters their PIN, and waits for the receipt to be printed. Or, for low-value transactions (under £15 in the UK, not sure about elsewhere), just waves the card over the machine and does the contactless payment thing.

    And armed robberies are not my problem. I'll let the insurance companies worry about it.

    They do. The amount of cash kept on the premises is factored into the cost of insurance. The cost of transporting it to the bank also increases when there is more cash, as does the cost of storing it, and banks often charge transaction fees when dealing with large amounts of cash. These costs are all passed on to the customers, including the ones who pay with credit cards, but apparently it's fine for card-payers to subsidise cash-payers, but not the other way around.

  • by murdocj (543661) on Saturday January 26, 2013 @02:19PM (#42702227)

    You don't get it. You are not being penalized. Or the other way to look at is that right now, you are ALWAYS being penalized. The difference is that in future, if you care to pay by cash, you can avoid the penalty.

  • Then you should be mad at the CC companies and banks who have been sticking it to ALL OF US whether we used cash or credit than to the store who is trying NOT to assrape you if you pay with cash.

    The whole point of the suit was the banks and CC companies said "Fuck 'em, just raise prices across the board 3% and we'll BOTH make out" to hide the fees. Me personally I'd be MORE likely to shop there as I could always use my debit or hit one of the bazillion ATMs in town and not get stuck with the fees that we were ALREADY BEING SADDLED WITH thanks to these asswipe companies.

  • by ShanghaiBill (739463) * on Saturday January 26, 2013 @02:55PM (#42702531)

    ... somehow do it themselves ...

    In the USA, it is illegal for corporations to do their own card processing. Walmart tried, and was smacked down by the federal government. Corporations are able to act as their own processor in Canada and Mexico, resulting in lower fees, but in America the incumbent credit card processors have too many politicians in their pockets.

  • Yeah, this is true. For example Target pays $1 million each day to credit card companies due to fees. That's why they always try and get you to sign up for a store card, saving 5% on each of your transaction actually still saves them money overall. I doubt they'll switch to implementing fees now that they have the opportunity, they like to set their company policy nationally so as long as some major states have it illegal, they won't implement.

    This law is more about the Mom & Pop corner stores that have always had to have a $10 minimum for credit card fees, now it might be more convenient for them to allow credit cards for a bottle of soda, provided they can up the charge and not lose money on the sale. It'll also encourage people to switch back to good old cash that way.

  • by uncqual (836337) on Saturday January 26, 2013 @03:39PM (#42702877)
    The large chains probably have better deals with the credit card providers so pay less per transaction/sales dollar than the smaller places. This makes it more practical for the chains to include the credit card transaction cost in the product price.
  • by Jane Q. Public (1010737) on Saturday January 26, 2013 @04:14PM (#42703175)

    "You have stores like Walmart that sell cheaper versions of similar products for less; but typically not the same products."

    Actually, most of the "cheaper" brands such as sold in Wal-Mart, and under house names like Western Family and Kroger, are in fact the same products. They've just been "rebranded" with a different label.

    There are exceptions, but that is the most common practice. Those "generic" products aren't entirely new companies competing with the established brands; they ARE the established brands.

  • by Jane Q. Public (1010737) on Saturday January 26, 2013 @04:20PM (#42703227)

    "Carrying around a lot of cash sucks. If a retailer wants to penalize me for that, then I'll go somewhere else."

    Technically, you aren't being penalized. They are just passing the charges that the credit card companies charge the store for each transaction on to you. Of course, they did that anyway via higher prices, so likely you will end up paying the slightly higher prices you already pay AND the card charge.

    But all this really begs the big question: who the hell wants a "cashless" economy anyway? The moment you give up the ability to use cash, you have cemented your loss of freedom. Believe it. Carrying that cash might be a pain in the ass, but it's one of the prices you pay for having a free society.

    I caution strongly against any concept of "cashless" utopia. It would be the opposite. It's a pretty nasty place, and finding our way back could be difficult.

  • by Anonymous Coward on Saturday January 26, 2013 @04:51PM (#42703447)

    Yeah, this is true. For example Target pays $1 million each day to credit card companies due to fees. That's why they always try and get you to sign up for a store card, saving 5% on each of your transaction actually still saves them money overall.

    No it doesn't. There's no way they pay anywhere near 5% in fees. I ran a part-time small business, and my sales were miniscule...a few $K per year. I didn't have a card swipe machine (used a knucklebuster instead) which meant I payed a higher rate (over 3%). Plus since I called in my transactions over the phone (touch tone), they charged me an additional 99 cents per transaction (on top of the regular 40 cents). Even with all that, my average overhead for a credit transaction was something like 4.9%.

    The real reason they offer the 5% discount can be found on their annual report. Here are their revenues from 2011
    Credit card revenues: $1.4B
    Credit card expenses: $446M

    Yes, that's right...their credit cards actually EARN them money. That's from all those suckers carrying a balance paying 22.90% interest, and forgetting to make their payments thus paying $35 fees. That's the reason you see the most ridiculously branded credit cards. Everyone wants in on that money maker.

  • by Ol Olsoc (1175323) on Saturday January 26, 2013 @05:54PM (#42703817)

    The large chains probably have better deals with the credit card providers so pay less per transaction/sales dollar than the smaller places. This makes it more practical for the chains to include the credit card transaction cost in the product price.

    It will be an even better deal when they can just advertise that they don't surcharge. I'll stop there first.

  • by RicktheBrick (588466) on Saturday January 26, 2013 @05:55PM (#42703825)
    Paying by cash is not free for the merchants. Merchants would save money if they could eliminate cash. First there is the cost of stocking each register with change money. $10,000 in change money is $10,000 that can not be used to pay bills. Than there is the cost of ensuring the employee does not steal any of that money. Than there is the cost of an employee to wait for the customer to count their money and the cost of counting their change. Than there is the cost of an employee to count all the money and to document and balance the cash. Than there is the cost of an employee to deposit the money in a bank and a safe to keep the next days change money. There will always be mistakes in counting either the money given or change given back. If a register is manned by more than one person than there is no way to know for certain who is at fault if there is a shortage of money. Today it is much faster to do a transaction with a card than with cash so the person behind the till will do a lot more transactions so their cost will be lower. If anything should be done there should be a fee for using cash. I know that I would feel safer if I knew there was no cash in the till for anyone to steal and that goes for when I am a customer and when I work behind the till.
  • by Anonymous Coward on Saturday January 26, 2013 @07:02PM (#42704293)

    Interesting... you get free money, and wonder why there may be fees now?

    Apparently you are not familiar with the term "interest". The money is not free.

    Apparently you are not familiar with the practice of paying your credit card bill in full each month. In that case, from your perspective, it is indeed free. (note that this is financed by the customers who do *not* pay their bills in full and also by the retailers paying fees for credit card transactions)

  • by welsh git (705097) on Saturday January 26, 2013 @10:14PM (#42705187) Homepage

    Signatures? How quaint. I remember that from the last century,

  • by N1AK (864906) on Monday January 28, 2013 @06:54AM (#42714085) Homepage
    I'll shop where it's cheapest, or the service justifies the premium, rather than irrationally ignore the best deal because of how the price is structured.

    A small sandwich shop for example could easily be losing 10% of the sale price to processing fees. If they think they can make more money and/or price more competitively by charging a surcharge then I'm happy to see them try.

    The UK has allowed and it doesn't really make much difference. Some smaller shops will only accept payment above a certain amount by card. Other, typically high cost but low margin, products will include a surcharge for using a credit card. Even if it doesn't become normal it at least gives shop keepers an alternative to refusing to take cards and that will hopefully stop the card providers gouging too much in their fees.

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