Now we can be charged Credit Card Fees

[ERD50]

DW had a very small retail store (way under $1mil) in sales. She was able to run her credit charges through an "association" of like retailers for something like 2.1%. ...

For CERTAIN, she came out ahead using CCs at 2.1% charges vs house accounts. AND 2.1% allowed her to rarely have more than a couple of hundred dollars in cash on hand - which was her limit for making a cash deposit to the bank at close of business (one employee taking 1/2 an hour to do so on average plus vehicle costs). Also, discriminating robbers only hold up cash businesses. In short, her math showed that her total costs of handling "money" were best served by USING CC. She would prefer them to cash. ....

Thanks Koolau; good to hear input from someone who has actually 'been there'.

-ERD50

 

[SecretlyFI]

According to what I read, Amex and Discover do not allow merchant fees to be charged to their customers. Also, Visa & MC do not allow their merchants to have varying credit card policies. Since 10 states will not allow these fees this means that any company doing business in those states (meaning all large chains) won't be able to charge these fees. Also the fees are not allowed on debit cards. Having said that, I predict seeing alot of new discounts for cash offered (since that's always allowed) and some smaller retailers trying to charge the fee even when they're not supposed to.

 

[bondi688]

When I went for grocery shopping today, I was at 2 different stores, I was not charged an extra amount, and I was not in one of those 10 states. But how long would that last before they have to change the policy because of lawsuits from cash customers? That change likely will be cash customers get a cash discount.

 

[Texas Proud]

Here in MA I deal with this at a local gas station. The MA law reads

“No seller…may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means.”
Statute:*Mass. Gen. Laws Ann. ch. 140D, § 28A(a)(2) (West)

Discounts for Cash Payments are allowed in Massachusetts
Discount offered to induce payment by cash, check or other means not involving a credit card not considered a finance charge if offered to all prospective buyers and disclosed clearly and conspicuously.
Statute:*Mass. Gen. Laws Ann. ch. 140D, § 28A(b) (West)

It is disclosed on the pump, but the tall sign of the gas station shows the "cash" price, which would suggest that it's a surcharge, not a discount, but it's a common practice, not (yet) prosecuted.

To me, this is the worst that a gas station can do... I will not buy gas from a station that does this.... I have left a few when I find out that they are not being honest....

 

[Texas Proud]

According to what I read, Amex and Discover do not allow merchant fees to be charged to their customers. Also, Visa & MC do not allow their merchants to have varying credit card policies. Since 10 states will not allow these fees this means that any company doing business in those states (meaning all large chains) won't be able to charge these fees. Also the fees are not allowed on debit cards. Having said that, I predict seeing alot of new discounts for cash offered (since that's always allowed) and some smaller retailers trying to charge the fee even when they're not supposed to.

Just my thinking... and only a guess.... but I bet that since the CC companies agreed to the fee they will not be able to use that clause about varying credit card policies...

 

[Tyro]

It is disclosed on the pump, but the tall sign of the gas station shows the "cash" price, which would suggest that it's a surcharge, not a discount, but it's a common practice, not (yet) prosecuted.

We have a local station that posts (on the large sign) the price you pay/gallon IF you get your car washed, which is lower than the pump price. We got fooled a couple times, but haven't ever gone back since.

 

[Tyro]

For those who make a lot of out-of-state internet/mail order purchases, my questions are, if the consumer lives in one of the 10 excluded states, but the vendor is in one of the 40 states that can add a surcharge, which state's law applies?

Can the consumer be charged the surcharge, and must they pay it?

Does it make a difference if it's electronic (internet/web) vs. snail mail-order?

Tyro

 

[Texas Proud]

For those who make a lot of out-of-state internet/mail order purchases, my questions are, if the consumer lives in one of the 10 excluded states, but the vendor is in one of the 40 states that can add a surcharge, which state's law applies?

Can the consumer be charged the surcharge, and must they pay it?

Does it make a difference if it's electronic (internet/web) vs. snail mail-order?

Tyro

This is just a WAG, but I think the merchant can go by his local law... can't force him to follow every state law...

 

[ronocnikral]

I believe this will likely only hurt small business. I love the convenience of using a CC (not to mention the travel rewards that go with it). The big boys won't make any changes. Small business probably will. But, one thing they need to be careful about is it is much harder to part people with cash than it is to swipe their CC and let them deal with it later. In essence, if everyone is saving 2-3% by paying in cash, is there an unintended consequence of flipping a bulk of your customers from paying with a credit card to paying in cash? I think it will be people being more cautious with their greenbacks, which in turn hurts the business as well. Especially those merchants which offer "wants" or luxury items.

 

[Texas Proud]

I believe this will likely only hurt small business. I love the convenience of using a CC (not to mention the travel rewards that go with it). The big boys won't make any changes. Small business probably will. But, one thing they need to be careful about is it is much harder to part people with cash than it is to swipe their CC and let them deal with it later. In essence, if everyone is saving 2-3% by paying in cash, is there an unintended consequence of flipping a bulk of your customers from paying with a credit card to paying in cash? I think it will be people being more cautious with their greenbacks, which in turn hurts the business as well. Especially those merchants which offer "wants" or luxury items.

I was just thinking about the time saving for the merchant when I went to lunch... was at Chipolte and the line was moving at a good clip with everybody paying with a card... then someone pulled out cash... and it took at least 2X and probably closer to 4X the time to check him out... that would back up the line big time for a place that needs quick volume like a fast food place...

Not so much for a small mom and pop who might only get a few customers every hour...

 

[bUU]

This is just a WAG, but I think the merchant can go by his local law... can't force him to follow every state law...

If it is anything like sales tax, then they have to follow your local state law if they have a presence in your state, otherwise they only have to follow their own local state law. (I wonder if they'll start pursuing reciprocal agreements.)

 

[ronocnikral]

I was just thinking about the time saving for the merchant when I went to lunch... was at Chipolte and the line was moving at a good clip with everybody paying with a card... then someone pulled out cash... and it took at least 2X and probably closer to 4X the time to check him out... that would back up the line big time for a place that needs quick volume like a fast food place...

Not so much for a small mom and pop who might only get a few customers every hour...

I think someone mentioned the gas stations upthread. Who wants to pay cash for gas? You have to go in, wait in line, slap a benjamin down on your pump, walk back outside, pump your gas, go back inside, wait in line, get your change and walk back out to your car. Either that or your gas gauge is so accurate you can actually calculate how much gas you will need or you are satisfied driving away with a partially filled tank. Any gas station that asks for cash, I just keeping on going to the next place, which probably has the same price and takes my credit card.

 

[Texas Proud]

If it is anything like sales tax, then they have to follow your local state law if they have a presence in your state, otherwise they only have to follow their own local state law. (I wonder if they'll start pursuing reciprocal agreements.)

I agree... but that was not how I read the question...

It was if the company was in the 40 states that do not prevent it doing business with someone in a state that does... if they have presence in the state that prevents it, then I would not place them in the 40 states...

 

[scrabbler1]

I think someone mentioned the gas stations upthread. Who wants to pay cash for gas? You have to go in, wait in line, slap a benjamin down on your pump, walk back outside, pump your gas, go back inside, wait in line, get your change and walk back out to your car. Either that or your gas gauge is so accurate you can actually calculate how much gas you will need or you are satisfied driving away with a partially filled tank. Any gas station that asks for cash, I just keeping on going to the next place, which probably has the same price and takes my credit card.

I have always paid cash for gas. At my local station, there is now a discount for cash. Also, because I am a regular customer, I can pump first then pay inside so I can fillerup or not as I so choose.

 

[obgyn65]

Does it mean we won't have to pay the annual fees for the privilege of using our cards? I guess the answer is no...

Heard on the news last night that merchants can now charge consumers up to 4% credit card fees.
.

 

[samclem]

Who wants to pay cash for gas? You have to go in, wait in line, slap a benjamin down on your pump, walk back outside, pump your gas, go back inside, wait in line, get your change and walk back out to your car.

I think this is a major reason a gas/convenience store owner would offer a discount for cash--to get people to go inside, see the gum, cigarettes, and magazines, smell the coffee brewing, etc. All those things are high markup items. I'll bet these stores lose a lot of impulse-purchase sales when folks pay at the pump. I haven't seen many pumps that accept currency, and I think that's why.

 

[Original Wally]

re gas - at least here in cantral California the price is same for cash or debit card. only c/card is higher.

cash = pump price.

Debit = pump price + flat 45 cent debit fee (I suppose to ME that is the price to not have to go into store, stand in line to give deposit, go pump, then go BACK to stand in line for change)

C/card = an extra 10-12 cents per gallon.

OR if I am in the nearby town (12-15 miles away) go to Costco, price is 2-5 cents less and no debit fee (which is another penny and a half for my truck when it is empty)

 

[meierlde]

I was just thinking about the time saving for the merchant when I went to lunch... was at Chipolte and the line was moving at a good clip with everybody paying with a card... then someone pulled out cash... and it took at least 2X and probably closer to 4X the time to check him out... that would back up the line big time for a place that needs quick volume like a fast food place...

Not so much for a small mom and pop who might only get a few customers every hour...

To give an example from the Navy on the cost of cash. It used to be that a medium sized ship had 5 or 6 positions involved in the handling of cash. They went to smart cards and those positions vanished (the tasks at least no necessarily the people as there were other jobs to do). If you think about it in the referenced article if your a cash mostly business security is a big issue, and you are a member of the candidates for armed robbery club. Consider that at the end of the day, the cashier has to count the till, then someone else has to count the till (likley in this case with a currency counting and coin counting machine). Then the totals have to be reconciled, the cash has to then be put into a bank or other safe location. All this costs time and money for the store. I have not found a study that compares the cost of cash to credit cards to a merchant. Note that the merchant also gets a nice accounting record every day of the amount of sales, as well as monthly. All these features provide some advantages, however since you need to take cash some still has to be handled.

A web based merchant would be cutting its throat by not taking credit cards, as with checks it would have to wait for the check to clear before shipping.

 

[veremchuka]

...... Who wants to pay cash for gas? You have to go in, wait in line, slap a benjamin down on your pump, walk back outside, pump your gas, go back inside, wait in line, get your change and walk back out to your car. Either that or your gas gauge is so accurate you can actually calculate how much gas you will need or you are satisfied driving away with a partially filled tank.....

I agree 100%. The problem here is that all gas stations now have cash vs cc prices, you can't buy gas in this state w/o dealing with this nonsense.

Say gas is $3.72 a gallon for cc and 6-7 cents less for cash. My cc gives me 2% back on gas purchases so I am still paying the cash price using the cc with that cash back program. No way am I going through the rigamarole ronocnikral accurately describes above except he forgot to add the part about the idiots smoking inside and how I have to eat their smoke. I'm pretty frugal but this is one case where cash is trash to me.

 

[Hamlet]

This varies a lot depending on the retailer. I shop mostly at Target and Cub by my house. Paying by credit card at Target is super fast, at Cub not so much.

Whether the retailer requires signatures for small purchases makes a difference as well.

I was just thinking about the time saving for the merchant when I went to lunch... was at Chipolte and the line was moving at a good clip with everybody paying with a card... then someone pulled out cash... and it took at least 2X and probably closer to 4X the time to check him out... that would back up the line big time for a place that needs quick volume like a fast food place...

Not so much for a small mom and pop who might only get a few customers every hour...