Slashdot Mirror
Credit Card Swipe Fees Begin Sunday In USA
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 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.
I wonder what it costs retailers to deal with cash? You have to count it, keep it secure, deposit it, etc. etc. More or less than the percentage for electronic transactions?
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?
What if their prices are lower than other retailers' with just the amount of the surcharge?
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.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
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 doesn't make you a valued customer and your business will not be missed. The majority of people will not care and will continue doing what they have been doing for years. Don't kid yourself in thinking your storming off will teach anyone a lesson. The clerk does not care (and they never do), the store does not miss your purchase, and the next customer moves ahead in line that much faster. Most often the clerk will joke about you with their colleagues about that guy who couldn't afford the fee and he got mad and left. Made us put his items away too. What a prick.
Carry cash or use a debit card. Might as well make it easier for yourself than anyone else.
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.
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
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.
"Flame away, I wear asbestos underwear"
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.
>>"ad space available -- low rates!!!"
(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.
I get thousands of dollars a year in rewards.
Interesting... you get free money, and wonder why there may be fees now?
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.
I want to delete my account but Slashdot doesn't allow it.
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.
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.
to any sort of cash-free economy. this is a roadblock to multinational financial institutions continuing to exercise carte-blance restraint in the way they charge fees for their services. A cash free economy and a privately controlled electronic banking system are two different things.
can we bite the bullet and conclude that electronic transfers and card based transactions are so ubiquitous as to become a right of the people? Grow some balls, amend a few laws, and lets make a national payment card system that works with our existing currency and doesnt require some per-swipe "fee" to pay for a server to connect to a database and decrement an integer over SSL.
Good people go to bed earlier.
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.
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.
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.
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.
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.
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.
Quite an experience to live in fear, isn't it? That's what it is to be a slave.
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.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
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.
Quite an experience to live in fear, isn't it? That's what it is to be a slave.
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. 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.
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.
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.
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.
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.
I'm not a complete idiot... Some parts are missing.
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.
I am TheRaven on Soylent News
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:
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:
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.
'The tyrant will always find pretext for his tyranny.' - Aesop's Fables
Is it really a cost, though? According to Mastercard's income statement, 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?
Having been to places where they can charge surcharges, large chains with ties to the US, grocery stores and gas stations will not surcharge, but small restaurants and owner run shops will charge the surcharge.
Learn to love Alaska
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.
Although illegal in NY, it seems that gas stations have been doing this since gas rose above 2 bucks. Not all of them but some of them
have you seen my sig? there are many others like it but none that are the same
Then you should be mad at the CC companies and banks who have been sticking it to ALL OF US whether we used cash or credit than to the store who is trying NOT to assrape you if you pay with cash.
The whole point of the suit was the banks and CC companies said "Fuck 'em, just raise prices across the board 3% and we'll BOTH make out" to hide the fees. Me personally I'd be MORE likely to shop there as I could always use my debit or hit one of the bazillion ATMs in town and not get stuck with the fees that we were ALREADY BEING SADDLED WITH thanks to these asswipe companies.
ACs don't waste your time replying, your posts are never seen by me.
... 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.
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.
You were critically hit for no damage. The bruise will look nice, and maybe the scars will make good party talk.
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.
Why is there an "insightful" mod and why isn't it "-1"? If I wanted insight, I wouldn't be reading
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.
Qualitas edurus commercium, nullus penitus net rimor, nullus deus beneficium
"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.
Yeah, this is true. For example Target pays $1 million each day to credit card companies due to fees. That's why they always try and get you to sign up for a store card, saving 5% on each of your transaction actually still saves them money overall.
No it doesn't. There's no way they pay anywhere near 5% in fees. I ran a part-time small business, and my sales were miniscule...a few $K per year. I didn't have a card swipe machine (used a knucklebuster instead) which meant I payed a higher rate (over 3%). Plus since I called in my transactions over the phone (touch tone), they charged me an additional 99 cents per transaction (on top of the regular 40 cents). Even with all that, my average overhead for a credit transaction was something like 4.9%.
The real reason they offer the 5% discount can be found on their annual report. Here are their revenues from 2011
Credit card revenues: $1.4B
Credit card expenses: $446M
Yes, that's right...their credit cards actually EARN them money. That's from all those suckers carrying a balance paying 22.90% interest, and forgetting to make their payments thus paying $35 fees. That's the reason you see the most ridiculously branded credit cards. Everyone wants in on that money maker.
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.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
Paying by cash is not free for the merchants. Merchants would save money if they could eliminate cash. First there is the cost of stocking each register with change money. $10,000 in change money is $10,000 that can not be used to pay bills. Than there is the cost of ensuring the employee does not steal any of that money. Than there is the cost of an employee to wait for the customer to count their money and the cost of counting their change. Than there is the cost of an employee to count all the money and to document and balance the cash. Than there is the cost of an employee to deposit the money in a bank and a safe to keep the next days change money. There will always be mistakes in counting either the money given or change given back. If a register is manned by more than one person than there is no way to know for certain who is at fault if there is a shortage of money. Today it is much faster to do a transaction with a card than with cash so the person behind the till will do a lot more transactions so their cost will be lower. If anything should be done there should be a fee for using cash. I know that I would feel safer if I knew there was no cash in the till for anyone to steal and that goes for when I am a customer and when I work behind the till.
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.
Quo usque tandem abutere, Nimbus, patientia nostra?
The moral of that story is don't use the large banks which I've found generally have shittier service and higher fees anyway. In just about every town in America you have smaller banks and co-ops and they not only have lower fees (my bank charges a whole $1 a month for my debit card flat fee) but they tend to have better service.
So just do your homework and I bet you'll find there are plenty of banks in your area that will be happy to take your business without screwing you on fees.
ACs don't waste your time replying, your posts are never seen by me.
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.
Quo usque tandem abutere, Nimbus, patientia nostra?
Signatures? How quaint. I remember that from the last century,
Sig out of date
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%....
When you cant win, ad hominem.
I'll shop where it's cheapest, or the service justifies the premium, rather than irrationally ignore the best deal because of how the price is structured.
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.