Merchants and card surcharges - are they allowed? Has it changed how you spend?

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MtnTravel
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Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by MtnTravel »

I'm noticing more and more places instituting credit card surcharges of 3%+ for any type of card, credit or debit.

I thought this was against the Visa/MC/Amex merchant terms, or did that change? It seems like these surcharges didn't start popping up until about a year ago, and now they are becoming ubiquitous at stores of all sizes except for the big chains.

I know using a cash back credit card helps a bit, but even with a 2% card, you're still paying at least 1% extra on all of these purchases. Is anyone finding that they are carrying more cash? I hate using cash, but I also hate throwing away 1-2% just for the convenience of using a card.
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JDCarpenter
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by JDCarpenter »

Haven't noticed it much at merchants in the US (NZ earlier this year was seemingly every transaction.)

It affects my analysis if it is more than 2.625% or 3%, or 5%, depending upon which card I'd be using. After thinking about it, I just chose to pay more than my rewards percentage for 50% of a new roof on our house so as to smooth cash flow (45 days later on the payment).

Not an absolute bar, but can make me switch my payment in some cases.

OTOH, currently planning a trip for later this month and into the fall. One of the ferry boat services in Glacier National Park only takes credit cards--no cash. And, of course, no surcharge....
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bd7
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by bd7 »

MtnTravel wrote: Sat Jul 06, 2024 8:20 pm I thought this was against the Visa/MC/Amex merchant terms, or did that change?
A lawsuit and settlement about a decade ago eliminated the ability of the CC companies to prohibit surcharges. Before that you might have seen a discount for cash, but never a surcharge from stated prices for CC. Now it is regulated by state laws, with most states allowing surcharges.

There are three reasons that businesses will typically institute blanket surcharges for credit cards (as opposed to minimums and fees for small transactions which is a different issue). The first is that they have an emotional reaction to getting their merchant account statement each month and seeing the fees. The second is that they are dodging taxes and want cash. The third is that they have taken out a fixed discount factor loan against their future credit card receipts and their cash flow is severely crimped when you pay with a CC.

It hasn't changed HOW I spend very much, but it may change WHERE I spend since I don't typically carry any cash. I make a few specific exceptions, typically involving very small transactions. Today I went to a local laundromat to wash something oversized and I took a roll of quarters. I noticed that since I was there last year, they've installed credit card readers on a lot of their machines.
Last edited by bd7 on Sat Jul 06, 2024 10:21 pm, edited 2 times in total.
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Doom&Gloom
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by Doom&Gloom »

It doesn't change how I spend, but it might change how I pay.

Last week I wrote a rare (for me) check to pay for a moderate purchase. It still hasn't cleared, so I am making a riproaring 0.002% apr or whatever my checking account pays on the amount of the check.

Most of my card charges are at restaurants, so I'll probably continue to use CCs for convenience. I probably break at least even on all those anyway.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by bobn60014 »

MtnTravel wrote: Sat Jul 06, 2024 8:20 pm I'm noticing more and more places instituting credit card surcharges of 3%+ for any type of card, credit or debit.

I thought this was against the Visa/MC/Amex merchant terms, or did that change? It seems like these surcharges didn't start popping up until about a year ago, and now they are becoming ubiquitous at stores of all sizes except for the big chains.

I know using a cash back credit card helps a bit, but even with a 2% card, you're still paying at least 1% extra on all of these purchases. Is anyone finding that they are carrying more cash? I hate using cash, but I also hate throwing away 1-2% just for the convenience of using a card.
In all my experience and travels I've only seen this once at a high end restaurant in downtown Chicago, and that was during COVID. TBH, they offered a opt-out not to pay. Never seen it elsewhere.

Where exactly are you seeing this?
Last edited by bobn60014 on Sat Jul 06, 2024 9:01 pm, edited 3 times in total.
miket29
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by miket29 »

MtnTravel wrote: Sat Jul 06, 2024 8:20 pm I'm noticing more and more places instituting credit card surcharges of 3%+ for any type of card, credit or debit.
According to https://zenti.com/blog/surcharge-laws-by-state/ it is illegal to surcharge a debit card.

The prohibition is also mentioned in https://www.mastercard.us/en-us/busines ... rules.html and https://usa.visa.com/dam/VCOM/global/su ... or-web.pdf

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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by PNWpilot »

1) yes, card surcharges have been on the rise IME since 2021.

2) Businesses that implement these surcharges don’t care about their individual customer. These businesses are typically: touristy restaurants and gift shops that don’t have repeat customers.

3) If I encounter a card surcharge, I will avoid doing business if possible. Then, I never return.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by HIinvestor »

It may give me pause to consider what method of payment I prefer. When surcharge is 1%, since my card gives me 2%, I charge it anyway. S gets 4% so he is happy when I charge on his card and give him a check.

If I really like the merchant (eg our mechanics, small restaurants), I may pay cash anyway to save them the processing fee, whether there’s a fee to me or not.

I have seen more places tacking on the fee for CCs but haven’t noticed if they also charge for debit cards. (I very rarely ever use a debit or atm card.)
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by bbqguru »

It's allowed to offer a "cash discount" per most of the merchant agreements that retailers sign. If you head down that path as a merchant, there's about a 300ish page document from VISA that outlines their specific rules and requirements. Then there's one for Mastercard, etc... It's a total pain in the rear and ripe for chargeback issues. Then you get into the different state specific laws regarding the issues.


Convenience fee/cash discount is different. It all comes down to what specific terminology the retailer uses when explaining the fee. The majority of rules and regulations require that you can't charge the customer more than the average processing fee paid if going the surcharge route.


That said, as a business we have noticed that since COVID a a significant majority of our business is switching to credit/debit card payments. Pre COVID it was around 15-20% of our yearly revenue. In a low margin business it's a conversation we've got to start having as a business-- do we offer some type of cash/ACH discount, pass along the merchant fee to our customer, or raise our price to cover it? Either way it's a no-win situation with much more paperwork and hassle than it's worth.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by muffins14 »

In effect, a cash discount is the same thing as a card surcharge.

Would you rather have
1) all prices are 3% higher and zero extra fee for card, no discount for cash
2) all prices flat, but have a 3% fee for using a card
3) all prices 3% higher but you get a 3% discount for cash
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by muffins14 »

PNWpilot wrote: Sat Jul 06, 2024 8:56 pm 1) yes, card surcharges have been on the rise IME since 2021.

2) Businesses that implement these surcharges don’t care about their individual customer. These businesses are typically: touristy restaurants and gift shops that don’t have repeat customers.

3) If I encounter a card surcharge, I will avoid doing business if possible. Then, I never return.
For 3) would you rather they raise all prices by 3% and not tell you why, rather than adding a credit card fee and allowing you to pay cash? life is expensive and many businesses have small margins. I can see why they want to both keep prices flat and reduce fees paid on revenue
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MtnTravel
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by MtnTravel »

bobn60014 wrote: Sat Jul 06, 2024 8:51 pm Where exactly are you seeing this?
I’ve seen it for home repair companies, restaurants, breweries, and most recently at a tire store. It’s usually not the big chains, but rather the smaller chains or one off mom and pop places.
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heartwood
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by heartwood »

We see it many places, including our local (non-chain) pharmacy, many local restaurants, local trades people (HVAC, plumbers, electricians). Most take debit cards at no fee, or checks at no fee. No one in our area mentions or will accept Venmo or similar.

I consider it a convenience fee so I don't have to go to the ATM/bank for cash. Or, important to me, not have to accept coins as change back. I don't remember the last time I used a coin; years ago for sure.

Yes, it's irksome at first and perhaps in principle, but for me better to pay for the convenience than using the equivalent of the "penny tray".
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by Normchad »

MtnTravel wrote: Sat Jul 06, 2024 9:31 pm
bobn60014 wrote: Sat Jul 06, 2024 8:51 pm Where exactly are you seeing this?
I’ve seen it for home repair companies, restaurants, breweries, and most recently at a tire store. It’s usually not the big chains, but rather the smaller chains or one off mom and pop places.
I’ve seen it at several restaurants and at my dentist. It can be easy to miss this at restaurants if you don’t look at the receipt when you’re done. (Also seeing more service fees and auto-matic gratuities at restaurants).

For me, it does change what I do. If I like the place, I pay cash. If I don’t have cash, I go someplace else.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by talzara »

miket29 wrote: Sat Jul 06, 2024 8:52 pm According to https://zenti.com/blog/surcharge-laws-by-state/ it is illegal to surcharge a debit card.
No, that page says that debit card surcharges are legal in 10 states.

The OP lives in one of the 10 states, so the surcharge is legal.
Debit card surcharge laws by state are similar to credit card surcharge laws in that they vary depending on your location. Currently, ten states allow businesses to charge debit card surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.

https://zenti.com/blog/surcharge-laws-by-state/
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by cubs1999 »

The one I always think of when I see this topic is Las Vegas Taxis have a credit card surcharge.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by toddthebod »

If they didn't add the surcharge, they would raise their prices. It doesn't affect my spending or decision-making. I don't care how the merchant does their accounting. I haven't carried cash in more than 10 years, I'm not going to start now.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by TimDex »

People seem quite upset that they get hit with a surcharge for using a credit card. They consider it their privilege not to have to pay cash. Guess what? How do you think that merchant feels when he takes a big hit on every transaction?

I pay cash when I can, and I particularly do it for local merchants who I want to help. You consider it your right to use a credit card? Then go ahead and pay for that privilege.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by bd7 »

muffins14 wrote: Sat Jul 06, 2024 9:16 pm For 3) would you rather they raise all prices by 3% and not tell you why, rather than adding a credit card fee and allowing you to pay cash? life is expensive and many businesses have small margins. I can see why they want to both keep prices flat and reduce fees paid on revenue
A long time ago an AMEX sales rep told me that AMEX customers would have higher ticket averages and that is why I should just suck it up and pay their higher rate. They had data arranged by business sector to back that up. It turned out he was right and it was my observation for my business as well. The reasons for that may not be as clear today (this was decades ago) but any reasonable business needs to consider this before they alienate their CC or AMEX customers. Credit cards provide money (that some customers may not have at the moment) to be spent at businesses that accept them. CC customers typically spend more than cash customers. IDK if they tip better, but I suspect I do.

Let's say your regular CC exchange rate is 2.5%, your rewards card rate is 3% and your AMEX exchange rate is 4%. If your ticket average is 40% higher for AMEX, should you a) refuse AMEX b) take AMEX but impose a surcharge or c) put up AMEX signs and take it without complaint? I suppose it depends on the business and its margins, but I doubt most small operators have really thought it through this way and arrived at the conclusion that they should discourage credit card use. It's more likely to be taxes or factor loans as I mentioned earlier.

So lets consider this from the business perspective, not the customer. What would a reasonable business owner want a customer with a credit card to do when presented with a surcharge? How about a) walk out and go to an ATM to get cash (and maybe come back), b) just purchase the minimum, intending to do more shopping elsewhere (or perhaps skip dessert/drinks if this is a restaurant) or c) spend what they originally intended to but grumble about it to anyone who will listen?
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Post by bd7 »

TimDex wrote: Sat Jul 06, 2024 10:39 pm You consider it your right to use a credit card?
No, I consider it the merchant's privilege to accept my credit card. :happy
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Post by Gaston »

Post-Covid, a number of businesses (coffee shops, small restaurants) where I live no longer accept cash. I guess they decided that paying the 3% credit card fee is better than paying the costs of handling cash (collecting it, counting it, depositing it, risk of being robbed).
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by LotsaGray »

PNWpilot wrote: Sat Jul 06, 2024 8:56 pm 1) yes, card surcharges have been on the rise IME since 2021.

2) Businesses that implement these surcharges don’t care about their individual customer. These businesses are typically: touristy restaurants and gift shops that don’t have repeat customers.

3) If I encounter a card surcharge, I will avoid doing business if possible. Then, I never return.
I am the opposite. I will seek them out and gladly pay with cash. It beats having them raise my price to cover your fees.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by Doctor Rhythm »

Only place that I encounter this is a local taqueria where I've probably spent 75% of my cash in the last 3 years.

I'd rather pay with credit card. But I'd rather pay with cash than pay for an inferior or more expensive product with a card. Also, the advantages of credit card (cash back and consumer protection) are pretty meaningless in a lot of cash businesses.
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Post by bd7 »

LotsaGray wrote: Sat Jul 06, 2024 10:54 pm It beats having them raise my price to cover your fees.
That's the theory--a cash only business could charge less. But do they? You'd have to convince me of that.
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Post by LotsaGray »

bd7 wrote: Sat Jul 06, 2024 11:21 pm
LotsaGray wrote: Sat Jul 06, 2024 10:54 pm It beats having them raise my price to cover your fees.
That's the theory--a cash only business could charge less. But do they? You'd have to convince me of that.
Since my DW does run a cash only biz and we have discussed it and looked into accepting CC. We did this years ago before it was easy for a small new biz. DW decided to remain cash only which back then meant mostly taking personal checks. The only way she would take CC is if she could recoup that fee. That was not possible or at least quite difficult then.

So I do know that at least some small biz do charge less when the do not have to pay CC processing fees. I do have to be convinced of something I know. Is it always true? Probably not but often enough imo.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by andypanda »

The Ourisman group out of D.C. recently bought McGeorge Toyota in Richmond VA. They charge 3% if you use a credit card, so I use a check.

They also charge a 17% fee for shop supplies with a $75 max iirc. I think I'll go elsewhere as soon as I use up my two free oil changes on my '23 4Runner.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by muffins14 »

bd7 wrote: Sat Jul 06, 2024 10:42 pm
muffins14 wrote: Sat Jul 06, 2024 9:16 pm For 3) would you rather they raise all prices by 3% and not tell you why, rather than adding a credit card fee and allowing you to pay cash? life is expensive and many businesses have small margins. I can see why they want to both keep prices flat and reduce fees paid on revenue
A long time ago an AMEX sales rep told me that AMEX customers would have higher ticket averages and that is why I should just suck it up and pay their higher rate. They had data arranged by business sector to back that up. It turned out he was right and it was my observation for my business as well. The reasons for that may not be as clear today (this was decades ago) but any reasonable business needs to consider this before they alienate their CC or AMEX customers. Credit cards provide money (that some customers may not have at the moment) to be spent at businesses that accept them. CC customers typically spend more than cash customers. IDK if they tip better, but I suspect I do.

Let's say your regular CC exchange rate is 2.5%, your rewards card rate is 3% and your AMEX exchange rate is 4%. If your ticket average is 40% higher for AMEX, should you a) refuse AMEX b) take AMEX but impose a surcharge or c) put up AMEX signs and take it without complaint? I suppose it depends on the business and its margins, but I doubt most small operators have really thought it through this way and arrived at the conclusion that they should discourage credit card use. It's more likely to be taxes or factor loans as I mentioned earlier.

So lets consider this from the business perspective, not the customer. What would a reasonable business owner want a customer with a credit card to do when presented with a surcharge? How about a) walk out and go to an ATM to get cash (and maybe come back), b) just purchase the minimum, intending to do more shopping elsewhere (or perhaps skip dessert/drinks if this is a restaurant) or c) spend what they originally intended to but grumble about it to anyone who will listen?
But if you don’t surcharge and don’t do a cash discount and simply raise prices on all customers instead (because you need to grow your margin), some customers will also be lost due to rising prices, right? I do suspect no one wii be as mad about a silent 3% price increase as they are about a clearly-stated credit card fee though.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by muffins14 »

Gaston wrote: Sat Jul 06, 2024 10:51 pm Post-Covid, a number of businesses (coffee shops, small restaurants) where I live no longer accept cash. I guess they decided that paying the 3% credit card fee is better than paying the costs of handling cash (collecting it, counting it, depositing it, risk of being robbed).
Isn’t that illegal? At least in New York, I believe all businesses have to accept cash
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Post by happyisland »

This thread reminds me a bit of a very wealthy person I know who drives out of his way to pay a few cents less per gallon of gas for his Mercedes luxury car. How much are people spending that 3% is worth thinking about?
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Post by Grogs »

Gaston wrote: Sat Jul 06, 2024 10:51 pm Post-Covid, a number of businesses (coffee shops, small restaurants) where I live no longer accept cash. I guess they decided that paying the 3% credit card fee is better than paying the costs of handling cash (collecting it, counting it, depositing it, risk of being robbed).
I think there were so many businesses in Washington, DC that wouldn't accept cash that the city decided to impose an ordinance requiring them to take it. I remember in 2022 my friend came up and tried to pay cash at a coffee shop. The cashier recoiled as if she was a vampire and the cash was garlic. :D
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by jebmke »

Grogs wrote: Sun Jul 07, 2024 6:12 am
Gaston wrote: Sat Jul 06, 2024 10:51 pm Post-Covid, a number of businesses (coffee shops, small restaurants) where I live no longer accept cash. I guess they decided that paying the 3% credit card fee is better than paying the costs of handling cash (collecting it, counting it, depositing it, risk of being robbed).
I think there were so many businesses in Washington, DC that wouldn't accept cash that the city decided to impose an ordinance requiring them to take it. I remember in 2022 my friend came up and tried to pay cash at a coffee shop. The cashier recoiled as if she was a vampire and the cash was garlic. :D
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by NYCaviator »

happyisland wrote: Sun Jul 07, 2024 6:00 am This thread reminds me a bit of a very wealthy person I know who drives out of his way to pay a few cents less per gallon of gas for his Mercedes luxury car. How much are people spending that 3% is worth thinking about?
That's a good point, and it's probably only a few hundred a year, but it's the idea of businesses passing on their overhead as a separate fee that bothers me. It's like restaurants charging "back of the house gratuity" fees and other nuisance fees.

Credit card fees are an overhead expense that a business needs to factor into its prices, just like any other overhead expense. If a business doesn't like it, don't take cards and see what happens to their bottom line.

I could be wrong, but I don't think card interchange fees suddenly skyrocketed in the last year, yet the prevalence of these surcharges certainly has. It seems to be to be a sneaky way of businesses trying to increase revenue without actually increasing prices.

But if consumers allow these fees, where does it stop? Can businesses start charging a 5% "our rent went up this month" fee? Or, a 3% "the cost of insurance went up" fee?

I know that in most states it's illegal to surcharge debit cards, but the signs I see just say "3% fee for cards." They don't distinguish between credit or debit. The big problem are ridiculous interchange fees to begin with, which are higher than anywhere else in the world. Until those get under control, this system of consumers and businesses fighting each other over credit card rewards vs. interchange fees will continue. At the end of the day, the rewards are coming from somewhere. There's no free lunch.

It's somewhat changed the way that I pay for things. I've started (begrudgingly) carrying a little more cash and avoiding businesses I know that charge a fee unless it's somewhere I really need to shop/really want to eat.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by toddthebod »

Ironically it actually costs many businesses more to handle cash than to take credit cards.
For example, data compiled by Brink’s shows that on average, businesses that take in low volumes of cash ($10,000 a month or lower) and don’t use a cash pickup service spends nearly 6% of their monthly cash intake on costs of managing and handling cash. For businesses with medium volumes of cash ($20,000 a month), that number is 3.09%, and for businesses with high cash volumes of cash, ($30,000 a month) it’s 3.26%
https://us.brinks.com/-/the-true-costs- ... management
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by bobn60014 »

andypanda wrote: Sun Jul 07, 2024 5:33 am ....They also charge a 17% fee for shop supplies with a $75 max iirc.,
Now that's a rip-off!
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Post by Nicolas »

If the surcharge is over my rewards limit I pay cash or check, so it affects how I pay but not how I spend. I find I’m carrying a bit more cash around now than I used to.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by Bogle-Yardie »

I am seeing this in literally all the mom and pop take out restaurants I visit. They asked which payment method I will be using and once I say credit card they tack on the additional fee. One in particular charges 3.9 % for paying with credit cards and then have the nerve to ask for a tip for take out. Like some of the previous posters I use credit card for convenience.
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by Eager for FIRE »

The business owner’s issue should be with VISA & MC gouging them higher & higher processing fees (because they’ve cornered the market) to get paid their $ much quicker than the days when many customers paid by check. The vast majority of customers don’t have Venmo, etc that may charge less (for now) because those services don’t have the leverage VISA has over the merchant.

More importantly I’m irritated by some small businesses that refuse credit cards or surcharge us but miss the whole concept that customers typically spend far more $ buying more products than if we paid with our limited cash in our pocket. Profit is profit. Would you rather make 2-3% less but sell far more product? It’s akin to giving a discount for buying 2 or 3 of that item. Lower profit margin, but more sales profit overall.

It’s 2024, not 1970. Credit companies created the situation with aggressive marketing. Now it’s here. It’s part of doing business anywhere. Even tiny flea market businesses and food trucks can easily process cards with their phone apps. I find it hard to believe they’re not making more $ overall vs smaller sales with cash only. They’re just deluding themselves that they’re losing money.

To me it’s akin to providing “free” to-go containers, napkins & plastic flatware, ketchup, shopping bags, marketing stickers/magnets/swag, etc.. It’s no different than asking us to paying their electric bill, delivery charges, making repairs, upgrading/remodeling, etc. - it’s all overhead.

The final cost to me is the price. The rest is just relabeling as “processing/handling fees” which FEELS very different than offering a cash discount. Or discounting for bulk sales.

Whenever possible I try to remember those businesses and shop elsewhere.
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somber
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by somber »

PNWpilot wrote: Sat Jul 06, 2024 8:56 pm 2) Businesses that implement these surcharges don’t care about their individual customer. These businesses are typically: touristy restaurants and gift shops that don’t have repeat customers.
Not the case at all in my rural area. The majority of local businesses near me are now passing along credit card processing fees. I and other repeat customers are fine with it, because we want these businesses to continue.

You seem hostile towards businesses that do this. You are siding with the VISA/MC cartel. Here is a quote from Clark Howard:
“In the United States, the Visa and Mastercard cartel has been able to price-fix [high] fees for taking credit cards,” Clark says. “So our merchant fees in the United States are way higher than they are anywhere else that I know of in the world.

“This is one of the problems with modern capitalism in the United States. Lobbyists are able to spread money around Capital Hill and have laws that are to their liking to the harm of the free market and the harm of the American people. The Visa and Mastercard cartel are an enormous problem.”
jebmke
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by jebmke »

somber wrote: Sun Jul 07, 2024 8:35 am Not the case at all in my rural area. The majority of local businesses near me are now passing along credit card processing fees. I and other repeat customers are fine with it, because we want these businesses to continue.
I am also in rural area. Not seeing this a lot but some. Also, for as long as I've been here there are also places that just don't take cards period -- mainly restaurants. Some of the busiest ones have ATMs in the restaurant. A couple of smaller ones know their local customers and if you don't have cash, they slip your check in a dedicated slot in their register and you can pay next time you're in or in the area.
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NYCaviator
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by NYCaviator »

somber wrote: Sun Jul 07, 2024 8:35 am Not the case at all in my rural area. The majority of local businesses near me are now passing along credit card processing fees. I and other repeat customers are fine with it, because we want these businesses to continue.
I am in favor of supporting small businesses, but why are they suddenly adding these surcharges? What changed? Before surcharges became normalized in the past couple of years, interchange fees were just another part of a business' overhead. The same as the cost of handling cash.

In my opinion, the problem is that more and more businesses started realizing that they could add nuisance fees to the final price and consumers would grumble, but still pay them. So it was a way to make it look like they were keeping their prices low, but they really weren't since they were increasing prices through fees.

As I mentioned upthread, are these businesses going to start adding on fees for other overhead items that have inevitably become more expensive like rent, utilities, or insurance?

If you want to accept cards, you need to bake the cost into your prices. Every single form of payment comes at a cost to the business whether it's cards, checks, or cash. The thing about cash is that a dishonest business doesn't have to declare it.

Almost every business benefits immensely from cards because most people don't carry cash these days. And studies show people paying with plastic tend to spend more. So it's a bit disingenuous for these businesses to act like they are getting the short end of the stick and that we should somehow feel bad for them.

I agree that interchange fees are too high, but until Americans are willing to give up their credit card rewards, that's not going to change. I'd be happy to pay with a debit card if that saved me the 3%, but most businesses I've seen do not differentiate between debit or credit for the surcharge. But my debit card doesn't give me cash back so I'd still be paying an extra 3%.

The whole interchange fee and credit card reward scheme is a lose-lose proposition. The money to pay for those rewards is coming from somewhere, and it's often these add-on fees or higher prices.

I guess it's time to start making a weekly trip to the ATM again. :D
PNWpilot
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by PNWpilot »

TimDex wrote: Sat Jul 06, 2024 10:39 pm People seem quite upset that they get hit with a surcharge for using a credit card. They consider it their privilege not to have to pay cash. Guess what? How do you think that merchant feels when he takes a big hit on every transaction?

I pay cash when I can, and I particularly do it for local merchants who I want to help. You consider it your right to use a credit card? Then go ahead and pay for that privilege.
I believe it is reasonable for consumers to be aware of all charges prior to receiving goods and services.

Card surcharges are rarely as transparent as the price of goods/services. They’re usually in ultra fine print on the bottom of a menu, or on a torn up piece of paper taped to the cash register.

So yes, I’d prefer the business incorporate the fee into their prices. You know, how businesses have done things for decades.
PNWpilot
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by PNWpilot »

somber wrote: Sun Jul 07, 2024 8:35 am
PNWpilot wrote: Sat Jul 06, 2024 8:56 pm 2) Businesses that implement these surcharges don’t care about their individual customer. These businesses are typically: touristy restaurants and gift shops that don’t have repeat customers.
Not the case at all in my rural area. The majority of local businesses near me are now passing along credit card processing fees. I and other repeat customers are fine with it, because we want these businesses to continue.

You seem hostile towards businesses that do this. You are siding with the VISA/MC cartel. Here is a quote from Clark Howard:
“In the United States, the Visa and Mastercard cartel has been able to price-fix [high] fees for taking credit cards,” Clark says. “So our merchant fees in the United States are way higher than they are anywhere else that I know of in the world.

“This is one of the problems with modern capitalism in the United States. Lobbyists are able to spread money around Capital Hill and have laws that are to their liking to the harm of the free market and the harm of the American people. The Visa and Mastercard cartel are an enormous problem.”

Two things can be true at once:

1)Visa/MC are working in tandem to fix prices.

2) Businesses who pass on those fees to their customer in a surreptitious manner are demonstrating poor customer service.

Card surcharges are rarely, if ever, as transparent as regular prices.
PNWpilot
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by PNWpilot »

LotsaGray wrote: Sat Jul 06, 2024 10:54 pm
PNWpilot wrote: Sat Jul 06, 2024 8:56 pm 1) yes, card surcharges have been on the rise IME since 2021.

2) Businesses that implement these surcharges don’t care about their individual customer. These businesses are typically: touristy restaurants and gift shops that don’t have repeat customers.

3) If I encounter a card surcharge, I will avoid doing business if possible. Then, I never return.
I am the opposite. I will seek them out and gladly pay with cash. It beats having them raise my price to cover your fees.
The business could offer a 3% discount for cash customers. But most don’t.

This isn’t about paying cash, it’s about passing on costs to consumers in a surreptitious manner.
mnnice
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by mnnice »

MtnTravel wrote: Sat Jul 06, 2024 9:31 pm
bobn60014 wrote: Sat Jul 06, 2024 8:51 pm Where exactly are you seeing this?
I’ve seen it for home repair companies, restaurants, breweries, and most recently at a tire store. It’s usually not the big chains, but rather the smaller chains or one off mom and pop places.
Yep exactly. We have been both carrying and using more cash.
njdealguy
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by njdealguy »

A local primary care doctor recently started adding a 4% surcharge on all credit card transactions (and debit too). Its annoying and believe against terms for HSA reimbursement purposes (surcharge not a valid medical expense) so complicates the calculation in separating out actual doctor bill from the 4% charge I would have to eat myself
njdealguy
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by njdealguy »

PNWpilot wrote: Sun Jul 07, 2024 9:00 am
LotsaGray wrote: Sat Jul 06, 2024 10:54 pm
PNWpilot wrote: Sat Jul 06, 2024 8:56 pm 1) yes, card surcharges have been on the rise IME since 2021.

2) Businesses that implement these surcharges don’t care about their individual customer. These businesses are typically: touristy restaurants and gift shops that don’t have repeat customers.

3) If I encounter a card surcharge, I will avoid doing business if possible. Then, I never return.
I am the opposite. I will seek them out and gladly pay with cash. It beats having them raise my price to cover your fees.
The business could offer a 3% discount for cash customers. But most don’t.

This isn’t about paying cash, it’s about passing on costs to consumers in a surreptitious manner.
Businesses giving a "cash discount" could be also doing so to try and evade taxes. I know for a fact from one local restaurant (owner is my friend and told me) that will wave NJ sales tax (6.625%) on any cash payments while with CC not only charging the tax but also adding 3% surcharge on top!
Gaston
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by Gaston »

Suppose I pay for a purchase with a card that gives me 2% cash back, and Visa charges the retailer 3% on the transaction.

Does this mean, in essence, that the retailer is funding my 2% cash back, and Visa is charging only a 1% transaction fee to the retailer?
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mortfree
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by mortfree »

Seeing this everywhere.

Pizza places

Dealership for car service.

Today I paid my electric bill and the interface changed so I looked at the options. I was surprised to see a fee if you paid in person.
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upwind
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Re: Merchants and card surcharges - are they allowed? Has it changed how you spend?

Post by upwind »

It’s has been crazy on both sides of the transaction. The last thing most merchants really want is all cash. There are real costs to cash handling not to mention potential lost sales and leakage. Charging more than even the cost of the card transaction is ridiculous. I’m certainly not going to routinely pay more than any direct cash back value to use a card.

The card company and issuer arrangements are also nuts. The idea they can cook up any sort of rewards arrangement they want to promote their card and then force merchants to foot the bill without giving them anyway to limit the transaction fee cost to what is reasonable for the service is equally absurd.

The security and convenience of being able to use a single credit card universally for purchases without additional fees is something I hope does not pass into obscurity and it can be a benefit to all. If that means a no reward (and no fee card) is all that will be accepted that’s fine. Merchants and issuers could potentially have opt in rewards programs for special promotions through merchants if they wanted and saw it mutually beneficial.

Now that merchants have more control over what they have to accept maybe everyone will get together and come to a reasonable arrangement. I think we will begin to see a clearer distinction between class of card where merchants won’t foot the higher costs for a card with higher transaction fees just because it has higher rewards. That is reasonable. However, the current developments concerning customer impact are disturbing. Hopefully credit cards maintain their universal appeal and continue to be generally accepted same as cash. We don’t need a dozen different payment systems for various merchants.
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