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We should have a standardized government approved and facilitated electronic banking system for all payments in the US.
There should be no private company gaining access to payment information or taking their cut for the majority of transactions.
The fact that there is in my opinion is predatory. These are the worst kind of companies, milking old technology without innovating or adding any real value.
Are you new to capitalism? These fees have been passed down since forever, they were just not disclosed. Do you think retailers swallow the cost of the surcharge?
Buisness I work for will never take credit. The cheapest processing fees we've found are severeal percentage points more than our profit margin.
I work in fintech, serving the US market. Fees are varying but not specific to AMEX/Discover/MC/Visa. There's card fees and then there's gateway and payments processor fees. Often this is cumulatively just a flat fee, like $3-4, which is why some places will have signs saying "$3 extra charge for CC purchases below $20".
Good question. I believe the card companies used to have language in their agreements stating that vendors were not allowed to specifically charge fees for card usage. So you used to occasionally see places offering a discount for cash like you said.
But I have been seeing more and more places outright stating a card fee, so I wonder if those agreements have changed in the last several years.
Not sure where you are located, but A quick search says that there are some US states with laws banning card surcharges, but most allow them.
Unfortunately, you know those fees were baked into pricing structures long ago, so any place charging an extra fee for card usage is definitely double-dipping.
This is really the best answer, I think. Except the agreement you have to sign to take Visa cards used to stipulate that you could not offer a discount for cash.
Visa’s rules have changed in favor of the merchants at last….. Visa has updated their Visa Core Rules and Visa Product and Service Rules, and the rules changed benefit all business owners in all 50 states ! …Now, you can offer a discount when your customer pays with cash in efforts to incentivize your customers and avoid having to pay credit card processing fees. (Therefore if you sell a product or service for $100, you get to finally keep all $100 of the sale….Not $96.00 )
Its been baked into the item price for a long time, they're just being blatant and adding fees.
It used to be against the terms that the businesses signed with the credit card companies. This allowed CC companies to build up their market share while offloading the blame. Then in 2013 a lawsuit ended with them not being able to enforce that.
When everybody started using the "easy" POS systems like Stripe, Square, Clover etc which typically charge 1-2% more for credit card fees rather than the more competitive but poorly integrated processors like authorize.net or the random guy coming into your business.
The credit card companies have always tried to prevent merchants from doing this by inserting language prohibiting either credit card surcharges or cash discounts into the contract agreements with the merchants. Obviously, credit card companies want to make it easy and convenient for consumers to use their credit cards.
I can't immediately find it, but at some point I think 10-15 years ago, some merchants sued the credit card companies over this, and they won a court ruling that said that the clauses forbidding cash discounts and surcharging are unenforceable. As a result, merchants are now free to do it, but there are various rules. And some state legislatures have started to get involved with regulating things.
A big part of it was the rise of credit card perks like cash back, supported by higher credit card fees. I gotta admit, why should the vendor be paying for our cash back?
Almost as if the cash back scheme is just that, a scam.
But you can’t opt out. It scams the vendors but also the people who don’t take part.
Opt out by not using that credit card. I refuse to have a CC with points or cash back.
Looks like no one here has run a cash business or has experience with the overhead that comes with dealing with cash. It's not zero.
With credit cards, there is no need for cash drops, safes, drawer balancing, armor cars or employee theft. Banks actually charge businesses fees just for depositing cash.
Yeah.
It’s less trouble for, like, a two-person food truck. Perhaps that‘s what OP is seeing. But cash quickly becomes plenty of trouble.
Credit cards have hazards too though, like chargebacks/fraud. I read some horror story about that sinking a healthy business.
It's always been the case. Now it's just transparent, vs. being baked into the price of the goods. When the economy sucks, vendors do stuff like this to try and soften the blow (for themselves).
Just posted the same thing. Its always been passed to the customer, just now it's blatant and they're adding more "fees".
Shareholders gotta eat too! /s
Was it really baked into the price of the goods when the price of the goods hasn't changed?
If their costs went up by 3%, they could hold prices level by taking the credit card fee out and making it an explicit surcharge.
It sounds like a way of raising the price while incentivizing cash payment (because maybe just maybe they aren't claiming all their cash sales)
As soon as it became clear we were willing to pay it.
thank conservatives for pushing the cost of raw goods up, lowering margins.
if your margin is 5% you sure as fuck dont want to be pushin 3% to visa
They always have.
In the past it was just by increasing the prices of things to cover it.
Now they’re talking about why they’re doing it in the hopes we won’t be pissed at them and pissed at the credit card people.
I have not yet seen it normalized but I have seen the opposite. 5% discount for cash. I mean effectively its the same thing. EDITED - thought I would mention there was a well known burger place in my area run by some brothers who would only take cash. They had a sign with the location of the nearest cash machine. I think they decided the credit card machines were not worth the hassel and its the kind of place that had a line out the door the whole time they are open.
I'm my experience, most places like that set up their own ATM with absolutely extortionate fees as a way to get extra money.
I've seen shops that only take cash, with an ATM in the store.
I kind of get it for small shops. Even just reconciling the register every day is way easier with just cash.
Even just reconciling the register every day is way easier with just cash.
No, it's the opposite. Humans make mistakes with cash, and the overall drag on the store's operations (from needing a safe for large amounts of cash, physically transporting cash to be deposited at the bank, dealing with theft/loss) tends to be higher than credit cards.
That's why a lot of places have switched to entirely cashless operations, because cash is slow and expensive for them.
You're not wrong, cash does have more mistakes, but it evens out at the end, since you usually make mistakes both ways. Cash is riskier, yeah. But it's also a lot cheaper depending on what the services and machines cost.
I remember a time when people were hesitant to use cards for small payments, and some places wouldn't take them for small purchases.
Then cards became more popular and in recent years cash has been going away at least here, when it used to be that you had to be able to take cash.
But yeah mistakes happen with cards as well. They're just way harder to fix from the client end. (Client as in the company/person using a card machine to charge someone something.)
But yeah it's marginally easier to just take card payments but you have to keep the receipts from those as well just like you need to keep cash so there's not that much of a difference in very small scales. (Like driving a taxi.) The bigger the scale the more it matters.
Cash is riskier, yeah. But it's also a lot cheaper depending on what the services and machines cost.
No, I don't think this is true, and most merchants are coming around to this view. Adding an extra 15 minutes to the cashier's shift counting cash, adding an hour to the manager's shift driving the cash to the bank, doing all sorts of analog counting processes, maintaining a secure chain of custody so that the cash doesn't get lost or stolen, the risk of actual violent robbery, it's all going to cost more than the 3% fee that the processor charges.
but you have to keep the receipts from those as well just like you need to keep cash
No, everyone's POS systems are totally digitized. There's a database with all the transactions, not a pile of paper receipts. And the database actually links each transaction to an actual distinct card payment, rather than a digital note that the cashier took that much cash and put it into the register.
Plus, no chargebacks.
If a customer gets cash from the ATM and then gives you the cash, they can't later try to claw that cash back by denying the charge.
That's been a thing since the beginning of the cards being implemented. In the US they've tried to make it illegal, but like, economics doesn't work that way. The store owner needs to make a profit, so the fee is going to the customer.
A consumer incentive to use cash seems like a good thing. It's not like there's ever a scenario where credit card companies aren't taking a fee to use their cards.
Smaller local convenience stores in Canada, often had a CC charge added probably 20 or more years ago.
There are some decent laws here to stop this getting out of hand and make sure it's reasonable.
My guess is that when they noticed suburban teens paying $200 for blue jeans in the early 90's. After that it was anything goes. /s
In the early days of CC you were charged per transaction.
Then you weren't.
Now they're doing it again.
I've seen it vary by card and vendor many times.
Edit: by Early Days I mean when electronic clearing became ubiquitous in the early 90's, as the clearing houses charged per cleared transaction. Before that you literally mailed the card that was imprinted via the credit card machine.
I've been in the POS business for 25 years, and deal with the credit card side a lot.
A very large part of this is POS companies often have a relationship with the credit card processor (or are owned by a processor), and make a lot of money from the processing fees. The higher the fee on the processing account, the more they make.
So they convince the merchant (restaurant or store) that they can have a free system by passing the cost to the customer. Often times they are just waiving the monthly subscription fee, but some will also give the merchant free hardware as well (with a multi year contract).
Then they jack up the fees on the processing side: Since the merchant no longer has to pay the 2.5% - 3% fee that they were paying before, they allow the credit card / POS company to charge them 3% - 4%, and then pass it to the customer.
Only chiming in for statistics. Where I live NC, USA; Almost nowhere charges a fee for credit/debit card use unless it's a third-party ATM. But even then those typically are only there to account for cash-only payments like lottery or coin changers.
Not saying that it doesn't suck, but I acknowledge that if your entire business is providing ATM services, a one-time sale is money lost, which is money that would go to support/maintenance.
I work at the dry-clean counter of a laundromat, and it's cheaper to use quarters (which everyone has and can be exchanged anywhere) than to manufacture proprietary payment options. We only have like 6 machines that take credit cards, and they put a $10 hold on the account.
Compared to a $3 ATM fee to change $20 into quarters, it's a million times more efficient, economically and ecologically.
When people generally carried cash they would've been reluctant to pay with a card if it was 2% more expensive.
When banks provide a business with a card reader, they want that business and it's customers to use it - if customers continue to use cash then the bank isn't getting 2% on those sales. So they did their best to avoid card charges being passed on to the customer. The business would pay the 2%, and just build it in to all their pricing.
Depending on jurisdiction maybe the clerk could add a card fee manually, but my point is the merchants weren't encouraging it.
Now that people generally don't carry cash, the banks / merchants are in competition with each other rather than competing with cash. About 5 years ago a new merchant / card facility operator emerged in Australia which gave businesses the option of automagically adding the charge to sales, so the customer would pay instead of the business owner.
For a restaurant or something that's a pretty great deal. For even a relatively small restaurant with a half dozen staff, it might be a third or half of one annual salary in savings.
The majority of restaurants in my area have changed over to merchant facilities offering this type of fee structure.
In the long run, customers aren't really paying more. Restaurants are always going to charge as much as they can. If every restaurant is doing the same thing then everyone is on equal footing, charging as much as they can, just like before when everyone absorbed these fees.
I'm guessing times are getting tough and if a business gets $100,000 in revenue (before expenses) per month but is paying $3,000+ in credit card fees, they see that large expenditure and start wanting to recoup those fees.
Personally as a business I find the "one and done" nature of credit cards much better than dealing with cash, checks, or trusting PayPal. So the fee isn't that big of a deal to me.
What I really hate is businesses that charge 4%+ surcharges, they probably pay more like 3.5% and are just gouging the customers. Or they are getting a terrible rate from their bank.
I've seen it a lot for over a decade. It is usually small businesses who did it since the cost to manage cash is almost zero. There was a reform bill which said that you couldn't charge more for credit, but there wasn't anything about giving a discount for cash.
I've been seeing it more for places with large transactions because the 3% is meaningful for those businesses.
Large companies don't do it because credit is preferable for them.
First time I personally experienced a credit/cash price discrepancy was around 2004, but I'm sure it was happening before that, I was just new to that level of economic participation.
From the comments I realised that you westerners don’t seem to have a concept of MRP (Maximum Retail Price) where you can’t sell the product for more than a specific price anywhere in the country set by the manufacturer per batch. It is inclusive of all sales taxes. Your prices seem to vary according to the demand lol. So if anyone charges above that it is usually added in the bill as Card processing fees and very few businesses do that because people get furious over here in India.
Even worse. We have what’s called MSRP (Manufacturer Suggested Retail Price) and the “Suggested” part does a lot of heavy lifting. Two crazy examples
Basically it’s a free for all where the consumer is saddled with trying to find the best deal, if there is one.