Seriously, you are missing the point. People are mad that the merchant agreement is being violated. cosmosdan and I have merely asked if the changed scenario to a cash paying rebate, which IS within the merchant agreement, would settle the issue in those angry peoples minds.
If you really think your question needs an answer: if they put a surcharge on everything, that’s called “higher prices” and obviously no, nobody would like that. Sheesh.
I agree **DrDeth ** has a valid point. The costs associated with cash are not as tangible as the costs associated with credit/debit cards, but they are real costs. There are also costs associated with accepting checks, such as a verification service or losses due to bad checks. If folks are going to argue that taking credit cards hurts the merchant, that damage needs to be compared with the reality of the alternatives.
I for one do think slightly higher prices overall is the answer. That’s how the costs for taking checks and cash are treated now–as costs of doing business.
No, you are missing the point. The defenders of the merchants point out that the merchants have costs associated with taking CC, and thus they should be able to recover those costs. But there are costs associated with taking any form of payment, and overall CC are actually not significantly higher. Sure, the costs of CC are right there on the statement, but the costs for cash are very real also, even if it is scattered around.
What the merchant defenders have to prove, first, is that the costs of accepting CC are significantly higher than cash or checks. Next they have to show that the higher sales generated by accepting credit cards do not overcome those costs.
Since nearly every big retailer in the USA has already carefully studied the math on these down to the mill, and have made the decision they make more by accepting Credit Cards, then I think the defenders of the merchants have got a long row to hoe.
In other words- they don’t have a valid complaint. They lose nothing- and in fact likely make more- by accepting Credit cards.
No, that’s wrong. When you use it as a debit card, the transaction is immediately deducted from your account, end of story. However, when you use it as a credit card, the transaction places a hold on your account for the authorized amount. This hold is generally released in a few days. Once that happens, if the merchant has not yet submitted the transaction for payment, your available balance will not reflect this amount. The transaction amount will not actually be deducted from your account until it has been submitted by the merchant.
I work for a typical busy convenience store / gas station in California. We sell about 5000-6000 gallons of gas per day, and have merchandise sales of about $2800 per day. We profit about 7 cents per gallon of gas at this time. In the last 2 years, we have paid an average of about $8000 per month in credit card fees… If we (against our contract) charged a quarter per transaction, I estimate that we would get back about 75% of those fees, possibly more. Possibly close to 100%.
YMMV, this is one store out of HUNDREDS of THOUSANDS in the US alone.
Joe
Unless the system works differently in the US, here in Australia it happens instantly when you use your credit card with an electronic EFTPOS terminal. Swipe your card, merchant enters amount, receipt prints out, merchant compares signatures, presses “OK” to confirm the signatures match, and the money comes off your credit card and goes to the merchant.
The only time I’ve noted a delay is when purchasing stuff over the phone, ie without the signature. Then there’s usually a delay of around 3 days (so you’ve got the chance to reverse the charges if you didn’t authorise them, for example).
As for the “Cash has costs associated with it too”- those costs are already built into the price of goods and allowances made for them. Not necessarily so with Credit Cards.
Incidentally, in Australia it is legal for business to charge credit card fees to customers, provided they tell people up front. As a general rule, most places don’t, but it’s not at all uncommon to see smaller businesses advertising that purchases made using Amex or Diner’s cards will be subject to a 2% surcharge because of the increased fees involved.
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Not really, I think. The costs of cash banking are long established and likely built into the prices already. DrDeth can insist that there is no additional cost to accepting credit on small purchases, but I just don’t really buy it. BTW, most little shops I know will not accept personal checks.
And again, despite it being ignored, my question is whether people are just upset about a Merchant agreement violation or if they just expect there to be no cost to charge convenience. DrDeth has made his position clear: the merchant agreement has nothing to do with his disdain for these minimum-charge businesses. But I was asking more generally, as he had pretty much made it clear before I asked.
Ah, I hadn’t noted your location. Apparently it DOES work differently, then, since here it is as I described. I do wish it worked the way it does for you–it makes accounting much simpler.
It seems to me that at that restaurant, the de facto base price was 90% of what was printed on the menu, and they charged credit card users a 11% surcharge. I mean, yes, they were fulfilling the letter of their contract, and I applaud them for sticking it to the CC companies, but isn’t this really a surcharge for CC users?
Visa says that you can’t ask for ID with a debit/credit card purchase? Do they take full responsiblity for fraudulent charges?
And so are CC costs- cc have been around longer than most small businesses.
Certainly there are add’l costs for accepting credit on small purchases, but so what? There are add’l costs for a change order, for depostiting large amounts of cash, for withdrawing large amounts of cash, for having cash in the store at all (hold-up insurance), for employee pilfering, and what not. What is so damn fucking special about just the puny costs for small CC charges that make them so special so that they can be directly passed on to the customer, rather than added into the price, like every other cost?
There should be no cost to charge just like there should be no cost to pay by cash. Or a charge *just to walk in the door, *as the business has to pay rent, utilities and payroll to keep that store open, you know. :rolleyes:
There are some businesses- such as nightclubs- which do charge you just to walk through the door.
Very true. Got me there. So do concerts and music halls and the like But they sell an intangible- entertainment. Plus, the price is listed up front; and when it isn’t- dudes get upset and call it a rip-off.
(Example being strip clubs where there is no admission fee, but a “two drink minimum” and it turns out “drinks” are $20US each.)
That’s possible. Still if your daily transaction record is on computer then there is still a record. I don’t think you can prevent cheating and it certainly isn’t reasonable to suggest stores must pay CC companies fees in order to create a more traceable record.
I don’t think you’re suggesting that, btw. I’m just saying.
Sure it’s possible and also irrelevant to this discussion.
No they most certainly do not. That is truly ridiculous.
Merchants have overhead , that is operating costs. CC transaction fees are one aspect of that overhead. There are also cost to handling cash, such as book keeping or the increased risk of employee theft etc. but most merchants would say it is much much cheaper to deal in cash as far as overhead is concerned.
So based on principle, if reporting it doesn’t change anything. The merchant doesn’t change their policy because they know the CC company won’t do anything about it, what does the consumer do next?
Would the principle involved change if the merchant raised all their prices a wee bit and then offered a cash discount? Would CC users still feel penalized for using their CC or would they see it as the merchants right to set their own polices?
It’s a point we’re not discussing at the moment. CC transaction fees cost the merchant much more than handling cash. So, the merchant could raise prices and then offer a discount for customers paying with cash. That is not in violation of their contract with the CC company. The question at hand is how would CC users feel about that. since their outrage seemed to be that the agreement was being violated?
Cite? You’ve said this at least twice and it’s dead wrong. Can you back this up? Do you have even anecdotal evidence to offer or did you just pull this out of the air just to muck up the discussion?
We don’t have to prove any such thing. Almost anybody who has any inside experience in retail will tell you that CC transaction fees are a significant factor.They cut into profit much more than the cost of processing cash transactions. You are the one making an outrageous claim. Back it up or stop repeating it.
The amount of increased sales and profits related to accepting credit card sales varies greatly from business to business and has a lot of variables. Companies that sell more high dollar items can more easily absorb the cost and see increased sales. Some stores sell smaller low cost less profit margin items so paying even a small percentage on each CC sale takes a more serious bite out of profits. Some stores sell both but fees are calculated in part on average transaction amount. That means increased low dollar sales increases CC fees on everything they sell.
The problem has only come up because of CC gimmicks and marketing and the changing spending habits of the consumer. CCs were used primarily for larger purchases but as we have moved to paying for small items with a card as well the cost of doing so has had a serious impact on merchants. They have responded.
Who gets to decide how much profit is enough to justify CC transactions without a surcharge? I’d say the merchant has every right to try and increase their profit margin and consumers shouldn’t expect any added service that increases overhead for the merchant to not be reflected in added cost to them. The question we are discussing is what’s an acceptable way to pass that cost on to consumer.
This is just one more ridiculous statement from you. Isn’t it glaringly obvious that major retail chains can defer the cost simply by volume while the small business owner has a much harder time doing that?
Here’s an example.
A small business such as a convenience store has been in the same location for many years and generated X amount of volume which makes it a reasonably profitable business. What has happened in the past 5 years is that while their volume remains constant, and their other overhead remains acceptable, more and more customers are buying the very same items they bought several years ago with a CC instead of cash. Their volume hasn’t increased because of accepting CCs just their overhead and now what was once a reasonably profitable small business is now on the edge and the owners are trying to respond.
I think it’s a shame and mistake to cooperate in squeezing out the small local business owner by selfishly pursuing our own convienience without expecting it to cost us any extra. It’s a bit like saying FUCK YOU, WHO CARE’S to our neighbor.
Thnks. can I ask a couple of more questions?
Take a look at the example I gave Dr Deth. down thread. It uses a convienience store like yours.
Would you save that same amount you mentioned if suddenly customers started carrying and paying with cash rather than CC?
Do you have any idea what the difference in CC vs cash transactions were 5 years ago? Have you seen any increase in volume directly related to accepting CCs or is it that more and more customers are buying the same things they bought a few years ago but paying with CC which reduces profit without increasing volume?