Is this nationwide? Small sticker on the drive-thru at KFC alerting us to a 39 cent charge for debit card purchases?
Start getting used to it. It’s in several places around my town, although KFC is the first chain I’ve seen do it. Mostly it’s small places with really low profit margins and small average purchase prices.
It’s been going on for years and has been the subject of a lot of back and forth. I suspect it’s a franchise by franchise decision.
Do debit charges cost the retailer more than credit card charges?
I believe debit charges are a flat fee while credit charges are a percentage. So debit charges can be more painful if the overall total is very small.
It all depends on the merchant’s “merchant account” - their credit and noncash payment system.
A private franchise or a small franchise chain is likely to have a sucky agreement, with high fees across the board. The bigger a merchant, up to Target/Macy’s/WalMart, the better a deal they can strike for their processing.
Fees for debit cards used to be quite common but they’ve almost completely gone away, in my experience. Credit card fees tend to be higher in that there’s a fixed cost (anywhere from $0.05 to $1.00, depending) plus a percentage (anywhere from about 2.5% down to 0.5%, again depending, and Amex is typically 4-6% plus higher fees, especially for small merchants).
Compounding the problem is that many jurisdictions prohibit a surcharge for credit card purchases, either through a fee or a cash discount. Debit cards cost a flat fee that’s somewhat higher than credit but is not (usually) covered by such proscriptions.
So small merchants have the choice to (1) take no cards at all; (2) take credit cards and hope the users are of a tier to make the unrecoverable fees worthwhile; (3) take debit cards and eat the small fee; or (4) take debit cards and charge a fee for doing so. Debit cards are used for very small purchases much more often than credit cards, so a fast-food place that takes them is getting nibbled to death, 35-50 cents a transaction on a $4-10 purchase.
What surprises me are the number of merchants that insist on credit over debit when the purchase is higher dollar: the lower credit card fee plus the merchant discount greatly exceeds the higher debit card fee, but they’re too stupid or rooted in tradition to realize it. They just dimly know that “debit cards cost more” and never figure out the advantage.
All that said, KFC got so expensive so fast I stopped buying it, especially as most stores’ quality dropped at the same time.
A local liquor store chain near me gives you a 5% discount if you pay with a debit card (or cash, or check) rather than a credit card.
Party stores(liquor stores) I expect this from. Major chains like KFC? Lame. Lame. Lame.
Why? Those “major chains” are run by small franchisers who have very small profit margins and no big financial backing.
I haven’t seen it, but I’m not going to get upset about it. Arco service stations have been charging 35 cent debit fees for years. And they don’t take credit cards at all.
Would this be Spec’s? If so, being in their “club” gives you the same discount if you use a credit card.
When I was junior-high-school age I saw a check on the wall of the office of an insurance agent in Lawndale, CA. It was made out to the agent by name, by… Jack Benny. For “exactly thirty-nine cents.” 
Yep, Spec’s - I guess the other way to look at it is they charge a 5.26% surcharge for using a credit card, but that would probably run afoul of their credit card agreements, so they call it a cash/check/debit “discount”.
Anyway, because of policies like this I alway assumed using a debit card costs the merchant less than a credit card - but it sounds like some here are saying that is not necessarily the case?
When I was back visiting New York, a major supermarket chain (whose initials rhyme with Price Chopper*) was charging a $1 surcharge to get cash back from your debit card. The future has arrived, and it’s gonna nickel-and-dime-and-dollar you to death.
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- I mean all the initials, right in a row, also, words rhyme with themselves
Wouldn’t Yum! Brands (parent of KFC) be able to negotiate a discounted debit card rate that would apply to all of its franchisees? Or would it only be able to negotiate on behalf of the corporate-owned stores?
It’s probably illegal (for very small degrees of such), and it’s almost certainly against the store’s merchant account rules. If the provider finds out, he’ll lose the account, possibly after a warning.
(It’s not in card providers’ best interest to have consumers know where the money goes or think in terms of discounted purchases. Plus, consumer fairness laws often make the practice illegal.)
Franchisees are on their own in every respect that isn’t essential to the parent company’s profits and notions of image and consistency.
Almost none of this is true.
It’s certainly not illegal in Texas, and the major credit card companies no longer strongarm businesses into charging the same for using cash.
Also, it’s not one store but a chain of at least 40 stores that’s got the leading position on liquor sales in SE Texas (with stores in the Dallas/Fort Worth area now) and region wide advertising to match. If nobody’s found out by now, they’re not watching TV/listening to radio/reading newspapers/drinking liquor.
Whether it’s an independent store or a franchise, a 35 cent to $1.00 fee (using the figures provided above) for a credit card or debit purchase likely represents three to 10 percent of a typical fast food purchase. That is enough to negate most or all of the net profit the business realizes, and is actually similar to the franchise fee paid to KFC, McD’s, etc…
I try to have some respect and awareness for businesses, and I don’t use a credit card or debit card for purchases under $10 or $15. I am actually seeing more and more businesses post signs saying a CC or DC won’t be accepted for purchases under $10 or specifying a $0.50 fee or 3-4% fee for using cards. Yes, that most likely violates their agreement with card processors, but I understand the merchant’s side of it.
A state known for its consumer protection policies. 
I assure you it’s true in many jurisdictions, and was probably reinforced by the credit-card changes of a few years ago, which were entirely in the consumer’s favor. The right to use a credit card for a candy bar, even if the fees exceed the merchant’s profit, is guaranteed by law. Most small merchants (including indy franchisees of the biggest names) have the unhappy choice of not taking credit or debit cards, eating the costs on their already small profits and margins, or trying to assert limits or fees against both business regulation and their card processor’s rules.
Well, since last year, Visa and Mastercard both now formally allow credit card surcharges in their merchant agreements. Before, it was such that they did not allow them (technically), but cash discounts were allowed (see the many gas stations that had different cash & credit prices). However that change in the merchant agreement did not allow debit surcharges, so I wonder if something has changed yet again. Minimum purchases are also now okay in the US by the Visa merchant agreement, but cannot exceed $10, and cannot be applied to debit card purchases.
I am not aware of there being a law requiring merchants to take credit card for a candy bar, if they take credit cards in general. And it’s certainly not against at least the Visa card agreement any more. (It used to be, but good luck getting it policed. Nobody gave a shit.)