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."
I'm curious to see how many retailers actually use (Score:5, Interesting)
I wouldn't think twice about having the clerk go, "there's a surcharge for credit", to which I'd respond, "OK, thanks anyway." and leave.
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:4, Interesting)
Well, realistically, I'd probably not have gone in the store in the first place if they implemented it, because I'd have hopefully done my homework.
That said, I think it would be important that store owners have a chance to hear their employees go, "yea, I had to put 3x as much stuff back on the shelf today because people keep saying no thanks when they try and charge items to their credit cards".
Other than groceries, I do very little shopping in-store now anyway -- I do most of my shopping online.
Re:I'm curious to see how many retailers actually (Score:5, Informative)
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)
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: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.
Re:I'm curious to see how many retailers actually (Score:4, Interesting)
That depends... to the typical person who is poor, they're going to use cash and checks (and maybe debit) anyway. Why? Because most will have cashed their paychecks at the grocery store, Wal-Mart, and suchlike. The advertised discount is a bonus to 'em.
We have something similar here in Oregon; the "am/pm" (Arco) gas stations. You pay a surcharge if you use plastic (debit or credit) to buy your gas. The stations are usually packed to the rafters - they're often sited in the less prosperous areas of town. The average price per tankful (say, 15 gallons) works out to around 10 cents less per gallon if you pay cash.
Not defending it or suchlike, but take it as you will.
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If they ever threaten to eliminate cash it will represent a huge increase in governmental control. Poor people like cash because they can buy "on the sly" avoiding taxation altogether.
A cash free economy essentially means perfect tax collection for the .gov as well as perfect control over the economy. This sounds even worse when you consider that power in the hands of an oppressive regime. Economic freedom is one of the most basic freedoms of all.
Comment removed (Score:5, Insightful)
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Right now, I use Debit most, along with occasional Credit and Cash purchases. If any of the three options offered me a cheaper solution somewhere(even 1%), I'd use that one almost exclusively. I'm not too worried about my card being stolen - I take responsibility for my money. If it gets lost or stolen and someone empties my bank account, I will dispute it, but consider it a lesson learned. With cash, if it's gone, it's gone.
What I'd be most interested in is how merchants who run Debit transactions as a Cre
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.
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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 rea
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Except some banks are also charging you to use a debit card (trying to push you to push credit at the register). http://www.dailyfinance.com/2011/08/16/wells-fargo-3-debit-card-charge-a-sign-of-more-bank-fees-to-co/ [dailyfinance.com]
So, now, you're screwed no matter what.
Comment removed (Score:5, Informative)
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.
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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:4, Interesting)
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It actually happens quite a lot. There are several stores in this area which have a higher 'normal price' and then offer a 'cash discount' at checkout.
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Re:I'm curious to see how many retailers actually (Score:5, Insightful)
Re:I'm curious to see how many retailers actually (Score:5, Interesting)
The logic is (almost) sound. I see a few points of failure here...
* A typical register will have something like $50 in change sitting in there, with maybe $50 as backup for every two registers or so. A typical large local grocery store with 20 registers would barely need $1500 in change money sitting around, with maybe $500 more for the customer service desk. Way short of your $10k figure, and the excess gets deposited nightly at the nearest bank anyway as income, where it gets put to use for the business. Even on a macro scale (say, Wal-Mart), $10k would easily cover change for 3 or 4 supercenters, or what you'd find in a typical city. Compared to the hundreds of thousands of bucks that those 3-4 supercenters suck in each day, $10k is chump change.
* If you have a bank branch for your business' bank close by and it's during most of the business' open hours, you just go get more change - takes a few minutes, tops (you notice it's running low, you go get more...)
* CC transactions often take just as long, if not longer than cash. The transaction has to be authorized before you're done, grocery purchases can be half-and-half (say, half debit, half EBT), etc.
* What if the buyer doesn't have enough to pay for the complete purchase? Any time the cashier turns and says "I'm sorry, your card was declined", everyone in line waits while a guessing game is played: how much does the declined shopper have in his/her account, as transactions are re-run multiple times to find out? With cash, both parties know on the spot how much the buyer is short, and can adjust accordingly.
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In Vegas they don't even have to post both prices. So inevitably they post the cash price and you get a surprise at the pump (or if you aren't paying close attention, at the end of the month when you get your credit card bill).
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: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.
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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.
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.
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I wholeheartedly agree. Putting the cost on the card users is the right way.
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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: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:5, Insightful)
Signatures? How quaint. I remember that from the last century,
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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: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.
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I'm curious. Where do you have to be that you can't spend 3-5 seconds while a clerk gives you change? What is so important that an extra couple of seconds would make a big difference? Even if you had 10 cash transactions per day, which is very unlikely, we're talking about half a minute over the course of 24 hours.
Are you on your way to diffuse a bomb attached
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That's what passing on the cost would do: bake the cost of processing a credit card into the price for the people WHO CREATE THE COST.
Re:I'm curious to see how many retailers actually (Score:5, Interesting)
Yes, yes, how very cynical of you. As an actual business owner that deals the vast majority of the time in cash and checks, and cringes when someone yanks out a credit card, I can tell you that we do NOT bake credit card processing fees into every purchase, because the margins required to compete are thin. This is an excellent change, because customers can actually see one of the costs.
And the next time it comes time to raise prices on that dozen eggs, perhaps it's 2% instead of 4%, because the CC processing fee won't be baked in, and it will be business as usual.
Bottom line, the fact that it's ILLEGAL for businesses to even inform customers of this, but to keep everyone IGNORANT of the true cost baked in is UTTERLY STUPID AND WRONG. Who the hell paid for the original legislation? The only ones it benefits are the credit card companies.
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Hello,
I've shopped at retailers who post signs asking people not to use credit cards so they can keep prices low.
At those retailers I respect that and use cash. Try it, it might help you a bit. I also try to make it a habit to tip in cash.
Best,
--PM
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.
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:5, Insightful)
Carry cash or use a debit card. Might as well make it easier for yourself than anyone else.
Re:I'm curious to see how many retailers actually (Score:5, Interesting)
Actually, when the store owner has to start paying his employees more money to put shit back on the shelf, he may start rethinking if that money on the credit card fees is more worthwhile.
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
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:4, Funny)
I get thousands of dollars a year in rewards.
Interesting... you get free money, and wonder why there may be fees now?
It's not free money, it's a kickback. "As long as you are going to buy that HDTV anyway, why not use our credit card? We'll get the merchant for 4% and give you 1%..."
And you payed 4% higher price because of it, so here, we will make that easier and make it so you only lost 3%....
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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?
I prefer to pay by credit card as well. It allows me to differ the payment and to get reward points. The problem is that it's not free. People that don't pay by credit card shouldn't be forced to pay as well - unless that's the store's policy. In that case people who insist on paying with a credit card will be free to find a better deal elsewhere.
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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
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.
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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.
In that case, you shouldn't hate those of us who will play the game and avoid the paying credit card fees by paying cash.
Re:I'm curious to see how many retailers actually (Score:5, Interesting)
Is it really a cost, though? According to Mastercard's income statement [yahoo.com], they earned $6.71B on revenue of $7.22B. That is, Mastercard is making plenty of money. Visa has similar margins. It sounds like their expenses aren't all that high, even with users like the grandparent post (and me) turning a profit on them by never paying any interest.
With that much cash on the line, in a simple scenario, retailers should be able to push back and play them off one another for a better deal. They could keep the profits themselves, or pass it on to their customers.
The retailers have good reason to want to encourage their customers to use credit cards. Handling cash is time-consuming and error-prone. The credit card companies are doing work for their share of the money (maintaining computers, accepting payments, sending bills, collecting, taking risks on default and fraud) but it sounds as if there's still a lot of room for retailers to push on them to get a service they want at a lower price than the one they're already getting, rather than having to pass a higher price on to the consumer.
It smells like a monopoly power: cheaper competitors should arise, but aren't, due to ... what? High barriers to entry? Collusion?
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.
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You've never worked in retail, or you'd know that employees have to put stuff back on the shelves /all the time/. I worked in a grocery store many years ago and we had to put a full cart's worth of stuff back at least once a day - they were either dropped off at checkout ("I don't want this") or haphazardly shoved onto the wrong shelf when someone changed their mind & was too lazy to put it back themselves.
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.
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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: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
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There's no reason it can't come from the people who don't pay it off at the end of every month.
There's no reason it can't come from the generosity of the Grey aliens, sharing the bounty of their far-reaching interstellar empire with us. This is classic free lunch thinking here.
Your contract with the credit card companies didn't include specifying where your "reward money" comes from. Hence, it comes from the greatly expanded fees the credit card company charges on your transactions which from the credit card company's point of view is the logical choice. They'll just drop the rewards system gimmi
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.
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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
I think I know where you work. (Score:5, Funny)
Lets see here....
Complete disregard for providing quality customers service. Check
Arrogant attitude. Check
Believe that providing a crappy shopping experience will not result in any financial repercussions for the company you work for. Check.
I can only conclude that you are an employee of Best Buy.
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""The clerk does not care (and they never do),"
This is why the porno industry has lasted as long as it has in the face of the internet. While *YOU* as a retailer might not give a fuck, we *WANT* our customers to be happy, since that's, you know, part of the fucking business.
Porn, doing what you lazy fucks can't do as a matter of courtesy, since FOREVER.
"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
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> I've had fraudulent transactions reversed quite a few times over the years with my debit card.
There's a big, HUGE difference. The difference isn't that the charges won't EVENTUALLY get reversed... the difference is that one immediately empties your checking account, while the other is mostly an abstract paper loss.
If someone steals your credit card and makes fraudulent purchases, you submit the paperwork for the fraud claim, and that's pretty much the end of it until they finish their investigation.
If
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.
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.
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.
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Every single current US coin is minted by treasury, you moron.
What's the cost for Cash? (Score:5, Interesting)
Re:What's the cost for Cash? (Score:5, Interesting)
Believe it or not, in addition to the internal handling costs for a retailer to count cash there are bank fees. Most commercial banks actually charge businesses a fee to accept cash deposits. Yes, when I make a deposit of cash to the bank they charge my business a fee to count that cash and put it into their vault. In addition I must pay for change (rolled coin, singles, fives, and tens) and keep a stock of change in my business safe. We really love it when a customer pays by debit and gets cash back at the same time...less cash for us to handle at the end of the day.
Cash also attracts thieves, hence the traditional targets for holdups are convenience stores and smaller businesses that don't do much (if any) credit card business. Years ago liquor stores didn't accept credit cards (might have been a law prohibiting it in NY, not sure) and they were always targets for late night armed robberies.
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Let's see. With cash, it's in your hand. In the digital world, you could have a certain company beginning with P (who think they are a bank but aren't) who decides that it doesn't like your haircut, then suspends your account without notice so the money you need for your business is now frozen. You might get it back some day, who knows when.
If you don't want to take cash in store, don't cry when a card company stops payments and your cash flow freezes up. Litigate for the money? After your business has coll
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If you don't want to take cash in store, don't cry when a card company stops payments and your cash flow freezes up. Litigate for the money? After your business has collapsed? Cashless will never happen, although it's many governments wet dream as it will be able to track everything you spend your money on, and that's what they want.
Here in Norway I'd say that if you won't accept cards you're dead as a business because so many use it for everything and simply won't have cash. Between electronic transfers, debit and credit cards they estimate 94% of all money transactions now go cashless. Personally I know the only time I tend to use cash is when I'm out drinking as you get rather sloppy with both card and PIN when you get drunk and even that's less of a hard rule these days if I'm just having a few beers.
The main reason it's not 100% h
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We use a loyalty program to track customers, not their bankcards, so cash or credit card makes no difference from that aspect. I'd say most retailers do very little tracking via the bankcard numbers since they would be exposed to PCI issues if they stored the data and it was hacked. However, at the Mastercard/Visa level they definitely are tracking consumer buying patterns and even selling that aggregate data back to retailers.
John
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Hmm, that's not been my experience. For instance at my local grocery store they have two policies in place for credit cards. For bills under $25 you swipe your card through the automatic card reader, choose credit and then it is authorized. The bill then prints out and you go on your way. For bills that are $25 and up the bill is printed out and you sign it and then go on your way. Neither process takes as long as cash, especially if there is change involved as often the cashier has to open up another chang
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Faster depends how much change has to be counted out (either by the customer or the clerk, sometimes both), how fast the card processing terminal and the network it uses is and of course the individual customer. Cash transactions can be painfully slow.
Then there is the risk of the cash being lost or stolen, the hassle of getting it to the bank, the additional risk of errors (miscounting, over changing customers, or under changing and being caught out), the risk of fake currency, the cost of getting change (
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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?
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.
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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?
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And worse, with PIN transactions, the account holder assumes the risk of fraud, which is large, and the fault of banks creating a ridiculous transaction system based on a set of "secret" numbers (printed on the card).
Yup, this is why I never use debit cards. Credit cards are completely insecure. The only protection I have from fraud is legal, and to use a debit card is to give up that legal protection.
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The only protection I have from fraud is legal, and to use a debit card is to give up that legal protection.
Citation needed. Every fraudulent transaction I've had on my debit card has been reversed without complaint. Sounds like you might want to switch banks. Now, maybe a pin transaction is different. I'll have to check on that. IIRC, my bank even protects me from fraudulent ATM withdrawals (gun-to-head ATM withdrawals, kidnappings, ATM cameras, over-the-shoulder-pin-surfing etc), but I could be wrong.
I'm not sure how the laws apply to debit cards when using a signature, but it is entirely possible that your bank is treating you better than the law requires them to. That's wonderful, but one shouldn't count on it.
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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.
Looks like a cash cow for ten states (Score:2)
Re:Looks like a cash cow for ten states (Score:5, Interesting)
Very true.
Many, many people in Kansas City, which sits on the border of Kansas and Missouri, buy their gasoline in Missouri and the busiest stations are the ones just on the Missouri side of State Line Road, because the difference in gasoline taxes amounts to about seven cents per gallon.
At current prices in the area, that's about 2%. So it is a fair comparison and a good predictor that people would likely do the same thing for credit card purchases.
I would guess most people, though, could switch from credit purchases to debit card purchases for routine shopping.
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Many, many people in Kansas City, which sits on the border of Kansas and Missouri, buy their gasoline in Missouri and the busiest stations are the ones just on the Missouri side of State Line Road, because the difference in gasoline taxes amounts to about seven cents per gallon.
A whole 7 cents per gallon? So, on a fill-up of a 12-gallon tank you're going to save 84 cents. If you figure $3.00 per gallon, a decent 30 mpg vehicle, and a two way trip, you're basically costing yourself money if you have to drive more than an extra 4.2 miles to to the "cheaper" gas.
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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.
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.
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The latter was actually banned under these merchant agreements also: they forbid credit-card users being charged a different price from the cash price, regardless of whether it was structured as a surcharge for one or a discount for the other. However, some states overrode that with state law that allowed different cash/credit prices in certain markets, the two most common being gas stations and liquor stores.
In Texas, for example, merchants aren't allowed to give a cash discount in general, except that liq
Opposite effect - see Iran (Score:5, Interesting)
So we kicked Iran out of the SWIFT international monetary system, and what did they do? Trade everything in gold to Turkey and China. We've lost the ability to track what they're buying.
The government wants to track everything you buy - hell, Target wants to track everything you buy - and what this will do is make everyone use good old cash. After a while that 3% surcharge will feel like chump change to people who've lost their entire demographic database of purchasers.
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They'll still be tracked because their store card gives them a discount whether they pay by cash or not.
Only on some items and not all stores even have discount cards. When I don't have any items that are on sale I don't use the discount card.
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All that you can obtain simply by counting your sales. You're not targetting your sales efforts at particular people.
Comment removed (Score:5, Insightful)
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Wonder what the market forces will do? (Score:3)
All this does now is slightly increase the cost to the credit card holders as it is just charging them rather than spreading it across the customer base. It also makes it very transparent to the consumer and becomes another factor in choosing to purchase at a certain retailer.
Some retailers will choose to not pass on the cost to those generating it. Others will pass on the cost similar to a tax. Yet others will pass on the cost via discounts for cash and maybe debit. It will be interesting to see which of the prior wins. 2-3% isn't much, but today it does affect where people shop for gas. So I think it will have an impact on sales and retail is a low margin business.
The whole point of credit is to increase volume. I think the retailers who do NOT pass on the cost will eventually win. Also the cost of manually handling cash is not small, just better covered up and has more unknown risk. So for small to some parts of middle level retail this may make sense as they already have the infrastructure for handling cash and it is underutilized. But for semi-large to large operations, any increase in cash transactions probably mean additional costs.
For the former, they will choose the discounts for cash. The later will continue business as usual. I don't see my normal shopping retails like Walmart, Amazon, Kroger, and Target changing anything. But maybe Walgreens and CVS will go the Aldi way. I am a credit card guy so I will probably adjust by lowering the volume I do in the smaller group.
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.
Two Reasons Larger Chains Can't Surcharge (Score:4, Interesting)
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).
Visa/MC contracts still state that merchants have to have the same policy across their business. For larger chains that have a retail presence in these ten states, the prohibition on surcharging there means no surcharging anywhere else either.
From NBCNews [nbcnews.com]:
Visa and MasterCard have rules that require retailers to handle credit cards the same way in all of their stores across the country. That means a chain with stores in any of the 10 states where a surcharge is banned would not be able to have a surcharge at any of its stores.
The settlement also states that merchants have to apply the same policy equally to their other cards that they accept, such as AMEX or Discover. Since AMEX still prohibits surcharging, if a merchant accepts AMEX they cannot surcharge for credit cards.
From NBCNews [nbcnews.com]:
The National Retail Federation points out that under terms of the settlement, a merchant who adds a surcharge to purchases on a Visa or MasterCard would have to do the same with American Express cards. But AMEX prohibits surcharge fees. So a merchant who accepts American Express as well as Visa/MasterCard would not be able to surcharge any of those cards.
Already done here with many small merchants (Score:3)
On the other hand, merchants will probably eat the fee for very large purchases still. You can't expect someone to pay for a $1000 car repair in cash. Also, store-brand credit cards better not charge this fee. I have a Macy's card because I got 20% off my Christmas shopping last fall, but I'd happily cancel it and cut it up if they want to add on an extra fee for using it, instead.
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No oppressive state income tax. Robust economy. Wide open choice in education. Lower housing prices. None of these credit card fees. The governor should run for President. (that last part was supposed to be funny, so before you flame me, just go ahead and piss off already, alright flametards?)
There's also Texans there, so, you know...
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"No oppressive state income tax"
No, just higher property taxes, which you must pay regardless of your income.
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And that's exactly why the whole thing was a scam that needed to stop. Why should cash paying customers help foot the bill for your cash back?