# How much do credit cards add to the cost of general merchandise? **URL:** \ **Category:** Factual Questions\ **Created:** [August 1, 2009, 12:03pm UTC](https://boards.straightdope.com/t/how-much-do-credit-cards-add-to-the-cost-of-general-merchandise/504969 "2009-08-01T12:03:31Z")\ **Posts on this page:** 6\ **Page:** 3
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [August 2, 2009, 8:59am UTC](https://boards.straightdope.com/t/how-much-do-credit-cards-add-to-the-cost-of-general-merchandise/504969/41 "2009-08-02T08:59:18Z")
Never mind. ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [August 2, 2009, 4:26pm UTC](https://boards.straightdope.com/t/how-much-do-credit-cards-add-to-the-cost-of-general-merchandise/504969/42 "2009-08-02T16:26:18Z")
> [@DanBlather](#): > > In what world does charging merchants higher fees not result in having enough “left over” to offer rewards to a customer? I was just clarifying that rewards cards are processed at a rate that includes an additional fee on top of the discount. Your post seems to imply that the discount rate is so onerous that the freebies are flying out to the customers, when in reality it’s the special card fee that is so onerous and allows those freebies to fly out to the customers. There is so little understanding of how credit card processing actually works that I figured it might do the board some good to learn about the finer nuances of plastic commerce. ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [August 2, 2009, 4:29pm UTC](https://boards.straightdope.com/t/how-much-do-credit-cards-add-to-the-cost-of-general-merchandise/504969/43 "2009-08-02T16:29:14Z")
> [@DanBlather](#): > > Two stores I have worked at decided to not accept at least one brand of cards because the fees were higher (Discover in one case, Amex in the other). It would be suicide, however, to not accept Visa or MC. This raises an interesting point. Arco has not accepted credit cards for over 20 years, and it’s actually a critical part of their business model. Costco does not accept anything except AmEx at their brick and mortar stores, although I do believe you can use Visa and Mastercard at their online store. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [August 2, 2009, 4:45pm UTC](https://boards.straightdope.com/t/how-much-do-credit-cards-add-to-the-cost-of-general-merchandise/504969/44 "2009-08-02T16:45:14Z")
> [@DanBlather](#): > > Those numbers are based on recent experience negotiating a lease in OR and on real life sales of two small retail businesses. Neither of those busoness pay rent based on percent of gross sales. I think that is more common in a mall, no? It is more common in a mall, true. But, in order to get a good comparison between what a realistic rent figure would be compared to a realistic gross receipts, the 5% figure is a commonly accepted number. Dog80- do you have hold-up insurance? Has an employee ever stolen from you? ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [August 2, 2009, 5:06pm UTC](https://boards.straightdope.com/t/how-much-do-credit-cards-add-to-the-cost-of-general-merchandise/504969/45 "2009-08-02T17:06:42Z")
> [@Dog80](#): > > 1. If accepting CCs costs me an extra 2-3% then I will have to jack up the prices by 2-3%. Simple as that. And I am not going to lose business due to my increased prices because every shop owner has already adjusted their prices to offset the CC fee. So yes, CC add a cost to the merchandise and it is paid by the customer. Well, unless you’re selling a commodity, where the price of the item is the most important consideration for the customer and quality or brand name of the product is a secondary consideration. As a gas station owner, you’re probably well aware that a 3 cent difference in per-gallon pricing compared to the station across the street can result in a significant portion of business going to the station with the lower price. You can refer to Arco as a perfect example. Here in the US, they do not accept credit cards (only certain fleet cards, and at some locations only an Arco fleet card), it’s well-known that they don’t because that’s been their business modal for decades. Their prices are 10-15 cents per gallon cheaper than their competitors. I don’t see how it can’t be argued that every gallon of gasoline sold by Arco is a gallon of lost business to the other retailers. And as a gas station owner you’re probably aware that there isn’t much money to be made selling gasoline, the real money is in the convenience store selling sodas and chips at a 150% markup or having the customer’s car worked on in your on-site repair shop. Everything a business does will add to the price borne by customers. If a business does not successfully pass on all its costs, well that business won’t be a business for very long, will it? (airlines and investment banks aside) I think the issue that most folks have is that credit card transactions are subsidized by cash-paying transactions, but as has been shown in this thread credit card transactions also help to subsidize cash-paying transactions. > [@](#): > > 1. Accepting credit cards will not bring you new customers. The number of cutomers is the same but during the last years many have switched to credit card instead of cash. If you do not accept CCs then you are going to lose those existing customers. As a gas station owner you should be well aware that many people do not carry cash these days. You should also be aware that there are a great number of corporate and government customers that you will never be able to service unless you accept credit cards. I don’t know the specifics of your business, but I do know that here in the US, it would be ridiculously stupid for a gas station owner not to accept fleet cards, either. Not accepting credit cards will almost certainly guarantee lost potential business. At least here in the US, it **will** guarantee lost potential business. I don’t know the dynamics of your economy, but since you price things in euros you’re clearly not here in the US. Just to drive this point home more clearly, one of the few cards that Arco will accept **is** a fleet card. Finally, in my line of work, if I did not accept credit cards, I would not be able to sell my products to the Federal government, except for orders over $3000, in which case they must get competitive bids and issue a purchase order. Looking at the number of \<$3000 orders I’ve fulfilled in the last 6 months, I cannot agree with your assertion that accepting cards will not bring in new customers. I would have missed out on over $40k in sales in Jan 1 if I did not accept credit cards. Nevermind that I’d lost out on 99% of my online business, but I can’t fault you on this one, selling gasoline over the internet is somewhat rare. 😃 > [@](#): > > 1. About cash discounts > > I am silently increasing the sticker prices of my products by 3% and then I offer a 3% discount for cash. In effect I am imposing a 3% fee on the credit card purchase while I am keeping the old price for cash purchases. Same thing, differently worded. But you are not charging a line-item fee to credit card customers only, so you are doing a good job complying with the voluminous contract you entered into when you decided you wanted to accept credit cards. It’s the psychology of the situation. Refer back to item 1. > [@](#): > > 1. About the cost of handling cash. > > Jeebus, where do you guys get this info from? I operate a gas station and thus get shitloads of cash, especially since gas here costs 1+euro per litre. > Paying an employee for the sole purpose of counting money? No, the gal that works at the front desk does that. Alternatively I do it myself. I also got a money counting machine for 300€ and I can count thousands of euros in seconds. > Also no need for armored car. I just put the money in my pockets and go to the bank. And it is the first time I hear about banks imposing fees for depositing cash. You are accepting a great deal of risk, what with the possibility of an employee skimming from you, or the day’s receipts being taken from you by threat (or action) of force or fear. With that comes the reward of not having to pay for services that will eliminate your exposure to the aforementioned risks. I am not sure what the exact definition of a shitload of cash is. I have to infer that if you are putting it in your pocket and going to the bank that your definition of a shitload is not the same as my definition of a shitload. ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [August 2, 2009, 5:12pm UTC](https://boards.straightdope.com/t/how-much-do-credit-cards-add-to-the-cost-of-general-merchandise/504969/46 "2009-08-02T17:12:20Z")
> [@Martini\_Enfield](#): > > I can’t say I’ve heard of the practice, but seeing all the other fees and charges banks impose it doesn’t surprise me either. It will depend largely on the bank. Doing business with a consumer bank at a consumer branch is not likely to incur cash deposit fees. Instead you get to wait in line with the rest of us peons (maybe you’ll get access to a merchant window) and you certainly won’t get access to the products available at commercial banks, such as sweep accounts, treasury management, personal bankers with the authority to cut through red tape on a moment’s notice, etc. [Previous page](https://boards.straightdope.com/t/how-much-do-credit-cards-add-to-the-cost-of-general-merchandise/504969.md?page=2)