Credit Card Swipe Fees Begin Sunday In USA 732
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."
This is good news. Actually. (Score:5, Informative)
With this change, the retailers are going to give a 1 or 2% discount for people who use pin instead of signatures. Or even if they retain the savings themselves I would like the profit to go to my local retailer, not the too-big-to-jail banksters.
gas stations (Score:4, Informative)
(it seems that gasoline station owners here in Massachusetts got a different memo, though)
Despite the fact that the outcome is similar, there's a legal difference between "surcharge for credit" and "discount for cash". The former is/was illegal, the latter is legal. Presumably gas stations in MA and elsewhere are doing the latter.
Re:I'm curious to see how many retailers actually (Score:5, Informative)
If someone swipes/steals [my credit card] information, they're stealing VISA's money, not mine. If I use a debit card and they steal my info, they drain my bank account, my mortgage bounces. That's bad.
It isn't true that Visa eats the cost of fraud in most cases. When you want to reverse a charge, your bank and Visa/Mastercard happily oblige because they usually yank the money straight out of the merchant's account.
You are right that the cardholder has much more leverage to reverse bad charges on a credit card versus debit. After I had left GoDaddy, they made the mistake of hitting my debit account for one more charge. Reasoning with GoDaddy didn't work, so I filed a chargeback through Sovereign Bank. Long story short, Sovereign proved to be completely unable to handle it, and I didn't have the leverage of saying I wasn't going to pay the disputed amount.
Now, nothing has direct withdrawal rights to my money. No entity should have my debit card on file, nor any prior approval for ACH withdrawals. If they want to charge me every month, they do it on the credit card, or I can pay them via bill pay or (occasionally) check. I am aware that a sufficiently determined company can still get access to my checking account, but at least in that circumstance I can expect to be made whole in the end.
Re:I'm curious to see how many retailers actually (Score:3, Informative)
The whole thing is just a scare story anyway, only a few retailers are ever likely to exercise this ability anyway (just like few gas stations charge different prices anymore for cash vs. credit, not even Arco). From NBC news [nbcnews.com]:
The big question is: Will any stores do this? Should you worry about paying a credit card surcharge?
"We have discussed the settlement with many, many merchants, and not a single merchant we have spoken to plans to surcharge," Craig Sherman, spokesman for the National Retail Federation (NRF), said in a statement. The NRF was not involved in the class action lawsuit.
NBC News contacted some of the country's largest retailers. Wal-Mart, Target, Sears and Home Depot said they have no plans to add a credit card surcharge.
Re:I'm curious to see how many retailers actually (Score:3, Informative)
I use a credit card for two reasons. /everything/ on my credit card. Only thing I don't is my mortgage and that's just because I can't. I pay it off every month. Companies that are going to make this less advantageous for me are going to get less of my business.
A) If someone swipes/steals that information, they're stealing VISA's money, not mine. If I use a debit card and they steal my info, they drain my bank account, my mortgage bounces. That's bad.
B) Rewards programs. I get thousands of dollars a year in rewards. I put
If you think these benefits are worth it, why should others who don't benefit share the cost?
Nobody held a gun to the heads of retailers and forced them to accept credit cards. They entered into these agreements with the CC companies in the first place because they knew they'd do more sales if they could transact more easily. If the customer is about to make an impulse buy but don't have the cash and must first find an ATM or bank, they might rethink the purchase and not come back. If a customer is using cash they generally have a much better idea of how much and how fast they are spending money and spend less of it. Sure there are the small minority of card users who keep receipts, track everything carefully, and pay it off each month; but that's few.
Big retail LOVES credit cards. I used to data warehouse work for a certain large home store chain. One of the first things you notice is that when the tender type is CC, customers not only spend more but they also had far more average items per ticket. Trust me it might not be core business but lots of revenue was driven by those ridiculously marked up Gator bottles, strange screw driver contraptions imported by the truck load from Asia for pennies, and other junk nobody really needs for anything.
The reason those others should share they cost is they are getting benefits as well. Maybe not as many and maybe not as direct but they are there. Stores can carry a wider variety of merch, they guy in line ahead of you checks out faster just to name two. My question to you non CC user is why aren't you using one? Can't manage your money? I agree with the grandparent as well those rewards programs can be VERY VERY good if your careful. Make sure you understand the fee structure on them, make sure you buy the right things on the right cards. Don't hate us players.
California: Surcharge vs. Discount (Score:4, Informative)
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
California law prohibits adding a surcharge for credit cards, but allows a discount for cash: California Civil Code Section 1748.1 [onecle.com]. So while consumers in California may not be affected by the change in national law, they're already subject to the possibility of a higher price when using a credit card - and unlike states that will now allow surcharging, California receipts do not break out the difference in price as a separate charge.
Re:I'm curious to see how many retailers actually (Score:2, Informative)
The US treasury mints what, exactly? Nothing that I'm aware of. All the currency in circulation today belongs to private banks, not to the government.
The US treasury mints coins, not private banks.
The Federal Reserve is misnamed, intentionally, to hide the fact that they are neither "federal", nor are they a "reserve".
Well, they're neither fish nor fowl (like the Postal Service). They're not exactly federal, but they're not exactly private. The members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by the Senate, but they have long and staggered terms, to prevent any closer control by the government. This seems to be the result of a compromise between those who wanted public control, and the banksters of 1913, though both sides agreed on the need for a central bank to prevent panics.
Re:Retailers pay your visa rewards (Score:5, Informative)
I am a small merchant, I do take credit cards.
Prior to change, of my 1.3 million in sales, about 900k was in plastic each year.
3 years ago, I started offering a 3% cash discount (cash discounts were allowable all along)
now my plastic sales come in under 400k, and my net sales are comparable....
My guests decide to pay or not..
some do it for the miles... some do it 'cause it's a work issued card... it works for me and my clientel
Re:This is good news. Actually. (Score:5, Informative)
I work for a credit union as a programmer. I am fairly involved in card stuff. The 2-4% gets split up between Visa/MC, the bank that is lending the money to the customer, and any other processors / stand-ins along the way. The majority of the amount the lending bank gets goes to reward programs and fraud. For debit cards, most of the fraud gets eaten by the bank / credit union that issued the card because most debit card fraud does not involve using a PIN; in debit card fraud situations, the bank's customer usually gets a refund after filing a dispute. This is why debit card interchange fees are almost as high as credit card fees.
For credit cards, the interchange income the bank receives sometimes does not even cover the cost of fraud and rewards; the rest of the cost is paid for from the CC loan interest. Yes, that means financial institutions sometimes lose money on CC customers even when they don't default. Overall, banks generally do make a profit on CCs even when the card holder pays it off every month, but that profit is no where near 3% of the charges on the card.
Re:I'm curious to see how many retailers actually (Score:5, Informative)
Re:I'm curious to see how many retailers actually (Score:3, Informative)
If you think companies such as Apple pay per-transaction for things like the iTunes Music Store, you don't understand how commerce works for giant corporations.
If they don't work out an annual contract price for their card processing, or somehow do it themselves, they are a lot stupider than I thought.
Comment removed (Score:5, Informative)