There is a slightly more cool-headed OP on this same subject currently in IMHO. Though Fear Itself did make that same suggestion over there.
So customers who do pay cash should subsidize those who want the convienience of paying for ice cream with a CC by paying higher prices? Once they find out do you think they’ll be pissed and then ask for a cash discount?
The problem with your theory is that there really are more and more people using credit cards for small purchases. Thinking it’s not true doesn’t change that.
I think it’s more reasonable to expect the people who want the convenience of using their CC for smaller purchases for whatever reasons to pay for it.
Customers who order a super-sized with many toppings (and for the whole family too) subsidize the lone dude that orders a single, plain, with no toppings. Customers who never complain subsidize those who complain about every little thing. The lunch rush subsidizes the off hour customer. So what? Every customer is different and some are hwaaaay more profitable than the others. That is just part of being in retail.
There are costs associated with cash too (banking charges, hold-up insurance, cash shortages and employee pilfering). Likely smaller than CC, but they are still there. Nothing is free.
The cash customer is paying less than a nickel on his order for the CC customer, if that. Big fucking deal.
Any business that wants to can simply stop taking CC. It is as simple as that. But very very few do as they know they make greater sales and thus greater profits overall if they do take them. Sinc emany retail establishments would go out of business if it weren’t for their CC sales, it can equally be said thatthe CC customer subsidize the cash customers.
No, each customer gets what he wants and what he pays for. The merchant decides what he wants to offer for sale and how that affects his business. But the suggestion being made is that the folks who want extra, the convienience of using their CC, shouldn’t have to pay extra for it, the cash customer should pay extra.
I don’t care much either way but I don’t see it as a much better solution than raising prices and then offering a discount to cash customers. Let customers choose if they are willing to pay more for their convienience.
No they don’t. Look up subsidize.
And irrelevant to the point.
Likely smaller? That’s not what you argued in the other thread is it?Doing a little backtracking? I think it’s fairly obvious that CC percentages and transaction fees are more costly than cash especially for small purchases.
I think the merchant should be free to decide how to operate his business what is too expensive and what isn’t and how to pass on those expenses to the customer. Within the law. We as consumers balance the product, our desire or need for it with cost, customer service and other policies to decide if we want to do business there. That’s as it should be. My point is these threads is to point out that it’s unrealistic and a bit selfish to insist on a convienience for yourself that cost the merchant money and then bitch about it when the expense comes back around to you. Like you said nothing is free. The person wanting the extra service should be the one paying for it.
That’s funny. I thought all the folks whining about the surcharge and the minimum were claiming it’s the principle not the money. If the cash customer has to pay more on every small purchase they make to subsidize the convienience of CCs for someone else that eventually adds up.
So a cash customer mentions to the the ice cream vendor, “Hey I notice all your prices went up”
“Yeah, I’m sorry I had to do that but more and more people are paying for ice cream with CCs and the fees were eating all my profit”
Cash customer is now aware that he pays more to subsidize CC purchases and thinks “Dam this is just one small store that sells ice cream” He thinks about all the stores he stops in and realizes he’s paying more in lots of places to subsidize people who don’t want to carry cash.
Is he justified in being a little pissed now?
Should he expect the merchant to give him a cash discount?
Stop being silly. No it cannot be equally said. Once again, please look up subsidize.
These arguments just don’t hold up. Yes they could decide to not accept CCs but that’s an unrealistic choice for most in today’s market place. Instead they are looking for alternatives and the same people who want the extra service are the ones whining that it shouldn’t cost extra.
Yes CCs do help move sales and on larger items the helps the merchant. The specific thing we’re talking about is smaller purchases. Do you think the ice cream vendor sells a lot more ice cream now because people have CCs? Do you think the convenience store sells a lot more soda chips and slim jims now because of credit cards? Hardly. What has happened is that more consumers are paying for smaller purchases with CCs and it’s really cutting into the small merchants budget. They respond and the folks who want that convenience that cost extra cry…no fair.
I believe it’s very common for merchants to refuse to split payment among multiple cards. My guess is that the credit card-merchant agreement allows such refusal.
Damn, I can’t believe this thread is still alive.
Well, at least it gives me a chance for an update.
Though following up with Visa seemed mostly useless, I did submit an anonymous letter to the editor (sort of - it’s called “Sound Off” - you can either phone your “letter” in or email it; I chose the latter) of my town’s weekly paper, which has a very high circulation considering the population, and they printed it.
Hopefully some businesses will take heed.
What was the place? Name names!
Hopefully your letter included a plea to Visa & Mastercard: If the total amount of the purchase is $2 or less, they shouldn’t charge their per-transaction fee of $0.35. Because this is the crux of the problem. In fact, perhaps a good solution would to eliminate the per-transaction fee for small totals, but double the discount rate from 3% to 6%. Still gives the credit card companies their chance to make a profit, but eliminates the motivation of small businesses to restrict low-dollar credit card purchases.
I would hope that business are allowed to refuse that. Because a $5 purchase spread across 500 separate credit card transactions would cost the business at least $175 in transaction fees.
There’s a thread IN My Humble Opinion on this same subject.
We had a expert there who works for a major CC company answer some questions.
Although he didn’t know that the merchant agreement asked cashiers to examine and compare signatures he did offer some very good info. When asked if the CC companies ever pulled a merchant agreement for the minimum purchase or surcharge he answered
I take that to mean they won’t pull the agreement and are satisfied to have some merchants change their policies because they believe they might. that MHO.
His post 148 was interesting to, explaining how some companies offer rewards like airline miles, or other perks but chanrge the merchant nore when the consumer uses those cards. Nice huh?
In summary, for those of you who want to report the merchant for having a minimum purchase or having a surcharge for low dollar CC transactions be realistic about what you are actually choosing.
The convenience of CC use costs the merchant extra and that expense will be passed on to you somehow because it is you the consumer who wants it. It is totally unrealistic to think you can have that convenience and airline miles or whatever without paying for it somewhere. Most people said they wouldn’t mind if the merchant marked their prices up to cover the cost but just accepted CCs without any hassle. So what you’re really saying is that you don’t mind paying a nickel, dime, dime or quarter more for everything you buy on CCs, as long as the merchant hides the fact that you are paying extra for that convenience. You just don’t want to think about it or be reminded of it.
Maybe charging you for that convenience at the register is the better way of making us aware of how our desire for convenience is costing us a shitload of money.
Check this out.
So get real people. Maybe your CC doesn’t have an annual fee and they offer cute little perks to encourage you to use them to pay for everything, but you are paying extra and they are playing you and the merchant big time to get rich. That convenience isn’t free for you and understand that every time you pay for something with your CC it is costing you extra. If you don’t think so you’re only fooling yourself. The merchant who has a minimum amount or a surcharge is only reminding you of that economic fact and his reward is getting reported and bitched at.
How exactly does that eliminate the motivation for small business? Okay, an extra 2% charge on $5.00 ticket is 10 cents rather than 25, so it does help a little but I don’t think it eliminates.
It’s interesting to note that CC fees in Europe are much much lower than the US. That’s in part due to massive deregulation here thanks to out cute little lobbyists and a government that is far to bought and paid for.
Check out the link in my other post.
I wonder if there is a cultural thing at issue here. In the United States, we are accustomed to paying for items in non-round amounts. If the newspaper is marked at 35 cents, when you take it to the register, the 6.5 percent county or city sales tax (varies by jurisdiction) makes it 37 cents.
Almost all goods are priced at $X.99 or $X.49. That 20-ounce Coke? It’s $1.99 or $2.49. With tax (again, varying by jurisdiction), the register comes out to $2.12 or $2.66. Except at vending machines, we never expect that a sale will come out at an amount evenly divisible by 5 or 10.
You’re right, I shouldn’t have said eliminate, but it will reduce the motivation significantly.
If someone makes a $0.50 purchase, the current card card discount rate and transaction fee that I am charged by the credit card companies would be $0.36, giving me only $0.14 for an item that may have well cost me $0.25 to purchase in the first place. A 6% discount rate with no transaction fee would only cost me $0.03, letting me keep $0.47. A very significant difference indeed for a shop owner who stocks mostly small-ticket or low margin items.
Fortunately, for my own business the lowest priced item you can buy is $4.95 (for one month of web hosting) so the transaction fees don’t have as big of an impact on me. But, I can definitely see that it’s a problem.
I think Congress should act to make credit card merchant contracts more small-business friendly, as they are clearly and unfairly in favor of the credit card companies now for small-ticket items. I think a letter to my congressman is in order.
Oh, lord, please don’t. One sure-fire way to make a bad situation worse is to call upon central planners to solve it. If you think things are bad now, just wait until the unintended consequences of Congressional meddling surface. Instead of adding restrictions that force people to write contracts they don’t want to write, do the opposite. Lift restrictions on people who would like to write friendlier contracts and compete fairly with the big boys. Suppress initial force or deception, but beyond that, I would appeal to you to let people make decisions for themselves.
I see your point, but how can we get credit card companies to remove the transaction fee for small amounts except through regulation? There is no competition here. The companies can basically add whatever terms they want, and there is nothing a business can do about it. I should clarify that I would prefer a market / competition based solution, but I just don’t see it happening.
Just to reiterate my implied question in Post No. 292 –
Is there a difference between British and American culture regarding an expectation that till amounts will come out evenly divisible by fives or tens?
Not all states have sales tax. I can buy a $4.99 sandwich for $5, and always vote against efforts to change that.
I agree with you here. Under free enterprise the too greedy banks would create the market place for someone else. It isn’t happening. They are all developing that same MOs. There’s a reason.
When you get a few minutes watch this
A PBS special “The Secret History of the Credit Card”
Transcript also available on this site.
This is besides the point. The fact is the sandwich is priced at $4.99. So you, as an American, are accustomed to paying non-round amounts. Am I wrong?