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."
Oh dear! Oh dear! (Score:4, Insightful)
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.
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?
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
What if their prices are lower than other retailers' with just the amount of the surcharge?
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
Carry cash or use a debit card. Might as well make it easier for yourself than anyone else.
This is actually good news! (Score:5, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
I get thousands of dollars a year in rewards.
Interesting... you get free money, and wonder why there may be fees now?
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
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.
Comment removed (Score:5, Insightful)
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
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.
Re:This is good news. Actually. (Score:3, Insightful)
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?
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:3, Insightful)
I wholeheartedly agree. Putting the cost on the card users is the right way.
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
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.
Retailers pay your visa rewards (Score:5, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:3, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:3, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.
Re:Retailers pay your visa rewards (Score:3, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.
Comment removed (Score:5, Insightful)
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
... 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.
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
"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.
Re:I'm curious to see how many retailers actually (Score:2, Insightful)
"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.
Re:I'm curious to see how many retailers actually (Score:3, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
Re:I'm curious to see how many retailers actually (Score:2, Insightful)
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)
Re:I'm curious to see how many retailers actually (Score:5, Insightful)
Signatures? How quaint. I remember that from the last century,
Re:I'm curious to see how many retailers actually (Score:4, Insightful)
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.