Restaurant adding fee for use of credit card

[Go-NoGo]

My Chase Freedom (no fee) card rebates 3% for restaurant charges.

Citi Custom cash gives 5% back on your top spending category, but limited to $500/month spend.

https://www.citi.com/credit-cards/citi-custom-cash-credit-card

 

[Car-Guy]

Next thing you know they’ll start charging for the heat and electricity.

Heat is free in Texas most of the year. It was 85 today. 100+ temps are coming soon.

 

[aja8888]

Next thing you know they’ll start charging for the heat and electricity.

Or your table!

 

[RetiredAndLovingIt]

It will be interesting to see if these credit card fees are allowed in California now that the AG has confirmed that the new junk fee ban applies to other types of restaurant surcharges. No more hidden fees. Junk fee law bans restaurant surcharges

I was charged an additional 3.75% fee over Christmas when I purchase a gift card at a local steak house. I questioned it and they pointed to the sign on the register counter informing customers of the fee details. I decided to pay in cash and let my friend who eats there often know about the charge. I suppose I don't care if I know in advance, I'll just pay in cash. I rarely eat out so it shouldn't impact me to much.

 

[threeonesix]

What state has this law?

Kansas. But also a lot of states have rules/laws against charging credit card fees. Here in Kansas they actually prosecute businesses who get caught doing this. Everybody says the workaround is to offer "cash discounts" but I have yet to receive a receipt from any business that shows I received a discount for paying in cash, I just wasn't charged their "convenience fee" that they add when paying with plastic.

16a-2-403

 

[GenXguy]

My Chase Freedom (no fee) card rebates 3% for restaurant charges.

I have the same card, but it only does cashback rewards for restaurants THIS quarter, and it's for 5%, not 3%. Starting next quarter, it's back to 1%.

 

[Jerry1]

. . . my main point is that the credit card cost is no different than the cost of a packet of french fries. If you want the convenience of using a card or you are hungry for french fries it is the same. You should pay the cost of what you want, not expect others who do not want the card or the fries to subsidize your consumption.

What about the convenience to the establishment of not having to handle cash? The cc fees don't seem as simple as the fries. This is also an issue for DW who says "what are we going to do when we get to a cashless society?" - something that seems to be more and more encouraged these days.

Personally, I think that the issue is all the rewards programs that the cc's have. I understand there is a transaction fee and I'm guessing that the restaurant has that baked in. But if the cc companies are increasing the transaction fees in order to recoup the rewards programs, that's not fair. The restaurant owner didn't sign up for that and cash payers should not be subsidizing it either.

As for - why don't they just change/increase the price, I'm sure it's a lot cheaper to put in a fee than it is to redo the menus. The code to do so is probably already in there.

In the end, I do agree that it's a choice. I don't have to use the credit card. As long as I'm made aware of it in advance, I have no problem with it. I can decide based on the situation at the time and that's fair enough.

 

[Texas Proud]

Well, at least, that's what I remember Clark Howard explaining on his TV show about 20 years ago. Since then, I only use a debit card at my bank's ATM machine.

And I do not even have a debit card... I made the bank give me an ATM only card. You can ask for one if you want.

 

[GenXguy]

And I do not even have a debit card... I made the bank give me an ATM only card. You can ask for one if you want.

I just use the debit card as an ATM card, so it doesn't really matter to me. I make purchases with credit cards.

 

[Chuckanut]

The first time I am charged a fee is the last time I will go to that place...

They KNOW that the vast majority will use CC and they are just not raising their price...

This suggests a strategy to save some money. Outsmart them by paying cash and keeping the old lower price.

 

[Midpack]

Credit card fees are just a way to increase revenue without raising the price. Most businesses don’t really care for cash because it requires extra handling and on occasion gets lost or comes up short.

This is one of those ideas that spreads like sparks from a fire. When one business sees another doing this, they do it too.

I wish they would just raise the price, but many businesses, especially small ones, are afraid to do so.

+1. Customers pay the CC fees regardless, but raising prices is better than another fee IMO.

 

[Alan]

In the UK it is against the law for merchants to charge extra for credit or debit card fees. (Even though the charges are only about 1/10th of those in the USA at around 0.3%). This also promotes the move to a cashless society.

https://assets.publishing.service.gov.uk/media/5b2d09bae5274a55bb5790cb/payment-surcharges-guidance-update.pdf

 

[Chuckanut]

I’ve heard that variable CC fees are on the way. If you use a premium, high cost to the store owner CC, you might pay a higher fee. Supposedly Australia already does this.

The idea that merchants could charge more to the holders of premium, perks-rich cards, which are expensive, might also deter consumers from using them. Some experts question the viability of the practice given the potential for consumer backlash.

 

[Spock]

I really don't understand why everybody is commenting "CC fees have been already baked into prices, why charge fees now?". Read the news. Businesses, especially restaurants, have been ransacked by higher costs. Labor either with min wage increases or people just refusing to work (restaurants here routinely close early due to no staff... 2 long time cafes closed permanently in the last year because the couldn't hire). Do you really need a reminder of higher food costs?

Small business are scrambling to find ways to increase revenue to keep up without driving away customers. It costs them more when customers pay with CC so they charge CC users more.

Locally there is a huge push for cash. The county and municipal utilities charges massive extra fees to process any form of electronic payment... I calculated it was close to 10% extra if used to pay property taxes last month. Our vet tacks on a CC fee, most restaurants, all gas stations, and a lot of the locally owned stopped accepting CCs entirely.

While I miss the convenience and the cashback, I much prefer the swing back to cash vs. the counter-trend of cashless only. CBDCs are going to make us wish for the days when you could still pay with cash.

 

[REWahoo]

I’ve heard that variable CC fees are on the way. If you use a premium, high cost to the store owner CC, you might pay a higher fee. Supposedly Australia already does this.

Clark Howard has an interesting article on how we could soon see variable charges for using a CC:

Major Changes To Credit Card Rewards Are Coming Soon​

It appears things could get interesting in the next few month when deciding which, if any, CC to use when making a purchase.

 

[OldShooter]

What about the convenience to the establishment of not having to handle cash? The cc fees don't seem as simple as the fries. This is also an issue for DW who says "what are we going to do when we get to a cashless society?" - something that seems to be more and more encouraged these days.

Handling "cash" is not a big deal and in most cases is not optional. I say "cash" because handling checks is the same as cash.

Re fries, they have to be ordered, received, counted, refrigerated, inventoried, and monitored for "use by" dates. All this before they go into the fryer. Then holding times must be monitored. CC fees are a walk in the park compared to any tangible product.

Regarding cashless, the CC companies and the IRS would love this, but in that tax collectors' nirvana CC fees will be driven down by law to the point of being negligible to the consumer. Probably below the level of swipe charges in Europe.

 

[MichaelB]

Clark Howard has an interesting article on how we could soon see variable charges for using a CC:

Major Changes To Credit Card Rewards Are Coming Soon​

It appears things could get interesting in the next few month when deciding which, if any, CC to use when making a purchase.

Interesting article and food for thought, thanks.

 

[euro]

If they were baked into the price then the people who paid with cash or debit have been getting ripped off for years.

Yes, this is true - cash payers have been financing the kickbacks that the CC customers received. This is what ultimately convince me to switch to cc payments as far back as the nineties.

 

[Surewhitey]

I'd rather not need to read my menu like a contract with the fine print showing me a fee. I go to places to relax and enjoy.

And at the end of an enjoyable meal they poopoo on me with the convenience fee & leave a little ticked. This recently happened & I didn't say anything since we were with friends and didn't want to make a scene over $10 extra.

 

[Turbo29]

Handling "cash" is not a big deal and in most cases is not optional. I say "cash" because handling checks is the same as cash.

As someone who once managed a retail store for a large well-know chain, handling cash is a big deal. It requires two people to count it, when the person with a gun comes in they go for the cash (not the credit card payments), and it tends to disappear (credit cards don't, they are "captured" by the credit card terminal). As for checks, they have bad check losses (which are greater as a percentage than disputed credit card sales). So I will have to disagree with you.

As for small businesses, I won't paint them all with the same brush, but I am sure that some like the way that cash can be left off of their taxable sales.

 

[Jimmie]

Where we live, most places charge the max cap of 4%, even for debit cards, which is thievery as banks only charge a small amount for debit card transactions. Still lots of places that don't accept cash too. What's the world coming to?

 

[sengsational]

If they start hitting me up for more than 2% at the register, I'll open a second account with orders to reject overdraft transactions. Then get a debit card for that account. I'll transfer money over on my phone, real time as needed to eliminate risk of fraud. I could keep the balance zero, and transfer over exactly the amount on the receipt. As a bonus, that would prevent servers from awarding themselves a larger tip, which has happened to me on (a very few) credit card transactions in the past.

 

[GenXguy]

Locally there is a huge push for cash. The county and municipal utilities charges massive extra fees to process any form of electronic payment... I calculated it was close to 10% extra if used to pay property taxes last month. Our vet tacks on a CC fee, most restaurants, all gas stations, and a lot of the locally owned stopped accepting CCs entirely.

I pay some bills electronically that don't add any fee for electronic transactions directly from checking account, such as water bill, natural gas bill, and electric bill. Comcast actually gives me a $10 deduction to autopay from checking account. At one point, natural gas billed to the credit card, but they took away that option years ago.

My cell phone and health insurance premiums are auto charged to my credit card, and there's no extra fee there, either. The local hospital and my home/car insurance company don't charge an extra fee for paying manually by credit card online or in person. None of the restaurants I've been to locally have charged an extra fee for credit card nor any other bogus add-on charges. None of the gas stations have, either.

I have run into some extra charges for manually made "online" electronic payments - my COBRA Payments charged $2 for each ACH transfer, and $3.56 processing charge from the state for car registration renewal, that I paid with credit card.

 

[Music Lover]

I really don't understand why everybody is commenting "CC fees have been already baked into prices, why charge fees now?". Read the news. Businesses, especially restaurants, have been ransacked by higher costs. Labor either with min wage increases or people just refusing to work (restaurants here routinely close early due to no staff... 2 long time cafes closed permanently in the last year because the couldn't hire). Do you really need a reminder of higher food costs?

I guess some people automatically assume credit card charges are baked in and never change, even if those charges may have been erased long ago by several other cost increases that weren't reflected on the bill..

Unless people look at their books over several years they have absolutely no idea.

 

[Closet_Gamer]

Press 1 to accept your 3% credit card fee.

Press 2 to approve the 25% tip we calculated. Or press 3 different keys to get rid of it.

This is all getting a bit out of hand in terms of not exposing the price when they give you the price. Same thing for resort fees, etc.

At a certain point it becomes fraudulent to say something is the price when there are a litany of “optional” after purchase decision fees and hurdles laid out.

Yes, you can pull out cash, press no, etc but when it becomes systemic that declines as a practical option.