I want to report a store for violating credit card agreement -- worth the trouble?

In My Humble Opinion
81

[QUOTE=DrDeth]
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:
[/QUOTE]

Holy Smokes. You might just answer the question asked then rather than derailing the conversation.

I think the fact that more and more small businesses are setting minimum purchases or the ice cream shop is charging a fee to use CC on small purchases is pretty reasonable evidence that CC fees are significantly more expensive than the overhead costs of dealing in more cash. Do you have any evidence that the claim you’ve made about the costs being the roughly the same? Anything at all?

We are proposing that the cost be built into the price rather than a surcharge just as you’ve expressed here. Did you miss that? What we’re asking is how would the CC user feel if the merchant offered a small discount to customers who wanted to pay cash?

82

I’m curious too, wheresgeorge04. If all of those were suddenly cash transactions, how much would your costs go up for change run and large cash deposit fees? Seriously, there are large cash deposit fees? Damn, I’m poor.

There’s a little “Account Planning Calculator” link on this BMO page, but I don’t have the time to play around with it. If anyone’s interested I guess they could plug some numbers in to get an idea of cash/debit handling costs.

83

[QUOTE=cosmosdan]
It’s a point we’re not discussing at the moment.
[/QUOTE]

That’s a pretty condescending statement. You didn’t even start the thread. The OP is asking if he should protest something. Arguments on both sides about the value of that “something,” and its alternatives, are relevant to the discussion.

84

[QUOTE=cosmosdan]
It’s a point we’re not discussing at the moment. CC transaction fees cost the merchant much more than handling cash.
[/QUOTE]

Got a cite for that?

My Bro is an Enrolled Agent, who does the tax returns for a number of small businesses and although the cash fees from the bank are certainly smaller, hold-up insurance and employee cash shinkage add up to more than CC fees do.
And you are not the OP and you do not get to decide this thread is going to go off on your little hijack.

85

Merchants who want to charge a fee on credit card orders are naive. cosmosdan’s beliefs to the contrary, cash is just as costly to a merchant to handle as credit cards. Back in 1995, I worked on Mondex*, an international smart card-based micro-payment system, for RBC. The sole benefit to the banks involved (which included many of the fifty largest in the world) was reduced cash handling costs. They had thousands of business cases for the sales teams to illustrate to merchants how much they could save by replacing cash sales with Mondex.

One of the big attractions for advent of bank debit card usage for big merchants is the reduction in cash handling costs. In fact, many merchants realized that they could even get the consumers to help them out further: “cash back” on a debit purchase means that there’s even less cash to handle than the consumer’s product purchase. Win/win for the merchant.

  • Sadly, for a variety of reasons, Mondex failed. This despite MasterCard purchasing 51% and pouring even more money into development.
86

[QUOTE=CarnalK]
I’m curious too, wheresgeorge04. If all of those were suddenly cash transactions, how much would your costs go up for change run and large cash deposit fees? Seriously, there are large cash deposit fees? Damn, I’m poor.
[/quote]
There aren’t individual large cash deposit fees. Frequently, banks will charge a business a per transaction fee , and there are apparently sometimes limitations on the amount of cash which can be deposited per month without a charge. I checked the fees for Chase Business Checking . The regular monthly fee includes between 250 and 1000 transactions (defined as a deposits and all other customer-initiated debits and credits.) Excess transactions result in a .40 per transaction fee. The fee does not depend on the amount of the debit or credit. If a business deposits $2000 from 1000 sales or $2000 from 20 sales, the cost remains the same. Depending on the account, between $10,000 and $40,000 per month in cash deposits are free. But remember, all of the cash coming in doesn’t necessarily get deposited- suppliers may be paid in cash, and it’s not uncommon for a business to cash employees’ paychecks.

Credit cards however, charge a per transaction fee ( transaction defined as each communication between the merchant and the processing network)and a percentage fee based on the amount of sale as well as a monthly fee. According to this site http://www.yournew.com/ecommerce.cfm, transaction fees range between .25 and .50 while the percentage fees range between 2.5% to 5%. With credit card sales, there is a difference depending on the number of individual sales. Assuming a .25 transaction fee, 1000 $2 sales will result in per transaction fees of $250, while 20 $100 sales will result in transaction fees of $5. If the store with the smaller average sale gets the 2.5% percentage fee ( and it probably doesn’t), that’s another $50 in fees . That’s $300 in fees on $2000 in sales. Plus, there may be transaction fees on the bank account for the deposits. There might be some profit left, but not much.
I’m certain Cerowyn is correct regarding big merchants- but just because it’s cheaper for Target to take credit cards doesn’t mean the same goes for Dunkin Donuts.

87

[QUOTE=cosmosdan]
No doubt some merchants might be just plain greedy and yes they are technically violating a business agreement but in reality the CC companies probably don’t plan on enforcing that detail of the agreement even if you report it.
[/QUOTE]

So, if reporting it won’t do anything, why all this hullabaloo about whether he should report it?

88

[QUOTE=Harriet the Spry]
That’s a pretty condescending statement. You didn’t even start the thread. The OP is asking if he should protest something. Arguments on both sides about the value of that “something,” and its alternatives, are relevant to the discussion.
[/QUOTE]

I apologize. I didn’t mean that to sound condescending and you’re correct I have no right to tell anyone what to post. :o CarnalK and then myself had asked the posters who objected to the surcharge a specific question. Would they object to the merchant raising the prices slightly and then offering a small discount for cash purchases? That means they would be passing on the cost of the transaction fees and still honoring the terms of their agreement with the CC company.
**
Dr Deth**s first response was to Carnalk but completely sidetracked the conversation from the question we were trying to ask. You commented on his post and I was trying to bring the focus back to the question we were trying ask before it got lost on a tangent. I phrased it badly.

89

[QUOTE=DrDeth]
Got a cite for that?

My Bro is an Enrolled Agent, who does the tax returns for a number of small businesses and although the cash fees from the bank are certainly smaller, hold-up insurance and employee cash shrinkage add up to more than CC fees do.
[/QUOTE]

If you’re going to add shrinkage to handling cash expenses then we also need to add the cost of charge backs, fraudulent charges, and employees who assist their non employee partners in CC fraud. There’s plenty of loss associated with CCs other than the fees …right?

My own evidence is also anecdotal. 25 years of working retail and working in and for small businesses. Most of them, including the independently owned store I work for now request cash or debit to save on CC fees. That doesn’t mean I think I have all the answers but I see no proof for your assertion.

You first responded to Carnalk but have ignored the question we were trying to ask. Offer whatever opinion and info you like but you might have the courtesy to answer the questions of the people you respond to.

90

[QUOTE=Cerowyn]
Merchants who want to charge a fee on credit card orders are naive. cosmosdan’s beliefs to the contrary, cash is just as costly to a merchant to handle as credit cards. Back in 1995, I worked on Mondex*, an international smart card-based micro-payment system, for RBC. The sole benefit to the banks involved (which included many of the fifty largest in the world) was reduced cash handling costs. They had thousands of business cases for the sales teams to illustrate to merchants how much they could save by replacing cash sales with Mondex.

One of the big attractions for advent of bank debit card usage for big merchants is the reduction in cash handling costs. In fact, many merchants realized that they could even get the consumers to help them out further: “cash back” on a debit purchase means that there’s even less cash to handle than the consumer’s product purchase. Win/win for the merchant.

  • Sadly, for a variety of reasons, Mondex failed. This despite MasterCard purchasing 51% and pouring even more money into development.
    [/QUOTE]

That last line kinda blows that theory don’t it. :slight_smile: I kid.

That’s interesting but I notice you say debit several times. My boss told me just today that debit purchases {where the customer uses their PIN} are much cheaper to process than a CC purchase. Other merchants have indicated the same thing. Are you speaking of an actual charge on a CC which accrues interest if not paid off, or a debit card purchase that comes out of your checking account.

You’re also talking about something over ten years ago. The rising trend in minimum purchases and surcharges is more recent than that. I can imagine the way banks do business with the merchants has also changed. Have you anything more recent?

91

[QUOTE=doreen]
There aren’t individual large cash deposit fees. Frequently, banks will charge a business a per transaction fee , and there are apparently sometimes limitations on the amount of cash which can be deposited per month without a charge. I checked the fees for Chase Business Checking . The regular monthly fee includes between 250 and 1000 transactions (defined as a deposits and all other customer-initiated debits and credits.) Excess transactions result in a .40 per transaction fee. The fee does not depend on the amount of the debit or credit. If a business deposits $2000 from 1000 sales or $2000 from 20 sales, the cost remains the same. Depending on the account, between $10,000 and $40,000 per month in cash deposits are free. But remember, all of the cash coming in doesn’t necessarily get deposited- suppliers may be paid in cash, and it’s not uncommon for a business to cash employees’ paychecks.

Credit cards however, charge a per transaction fee ( transaction defined as each communication between the merchant and the processing network)and a percentage fee based on the amount of sale as well as a monthly fee. According to this site http://www.yournew.com/ecommerce.cfm, transaction fees range between .25 and .50 while the percentage fees range between 2.5% to 5%. With credit card sales, there is a difference depending on the number of individual sales. Assuming a .25 transaction fee, 1000 $2 sales will result in per transaction fees of $250, while 20 $100 sales will result in transaction fees of $5. If the store with the smaller average sale gets the 2.5% percentage fee ( and it probably doesn’t), that’s another $50 in fees . That’s $300 in fees on $2000 in sales. Plus, there may be transaction fees on the bank account for the deposits. There might be some profit left, but not much.
I’m certain Cerowyn is correct regarding big merchants- but just because it’s cheaper for Target to take credit cards doesn’t mean the same goes for Dunkin Donuts.
[/QUOTE]

Why thank you. At last some solid information and numbers. It’s pretty revealing don’t you think so Dr. Deth?

Please consider this info, what the poster from the average convienience store said, and try to see if your assumption about cash being just as expensive, still rings true.

92

[QUOTE=Taber]
So, if reporting it won’t do anything, why all this hullabaloo about whether he should report it?
[/QUOTE]

The idea is that enough complaints will get their merchant agreement yanked and they will no longer be able to take CCs or, they will feel threatened enough to comply. The evidence I’ve seen indicates that while the CC companies may issue an “official” warning they will rarely pull the merchants account because they profit from it too much.

That means they have little intention of honoring their agreement with the consumer.
My point was I see very little outrage about that while the independent struggling merchant gets bitched about and called dishonest. My 2nd point is that it’s unreasonable and naive to think consumers can add service and convenience to you spending habits without footing some of the bill. If it costs them profit margin then they have every right to pass that on. Why would you expect anything else?

93

I can’t imagine that most businesses pay much in banking fees- certainly, around here, banks would be falling over themselves to get a medium-sized business’ account. I highly doubt they’d be charging them “Large cash deposit fees” and so on.

I also doubt someone big like Target or David Jones pays any banking fees at all… “Look, This Bank, do you want our money or not? If you don’t, I’m sure That Bank down the road will be more than happy to take if off our hands… without any of this “account keeping fee” or “deposit fee” nonsense, mind you.”

94

[QUOTE=Wee Bairn]
Visa says that you can’t ask for ID with a debit/credit card purchase? Do they take full responsiblity for fraudulent charges?
[/QUOTE]

With a credit card purchase, at least, they’re not supposed to require ID to use it, unless the card isn’t signed. Dunno if the same rules apply to debit cards.

Mastercard Merchant Agreement (warning: PDF)
Visa Merchant Agreement (warning: PDF)

[QUOTE=Mastercard]
A merchant must not refuse to complete a MasterCard card transaction solely because a cardholder who has complied with the conditions for presentment of a card at the POI refuses to provide additional identification information, except as specifically permitted or required by the Standard. A merchant may require additional identification from the cardholder if the information is required to complete the transaction, such as for shipping purposes. A merchant in a country or region that supports use of the MasterCard Address Verification Service (AVS) may require the cardholder’s ZIP or postal code to complete a cardholder-activated terminal (CAT) transaction, or the cardholder’s address and ZIP or postal code to complete a mail order, phone order, or e-commerce transaction.
[/QUOTE]

Visa’s wording is much simpler, more straightforward:

[QUOTE=Visa]
Although Visa rules do not preclude merchants from asking for cardholder ID, merchants cannot make ID a condition of acceptance. Therefore, merchants cannot refuse to complete a purchase transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures.
[/quote]

So, they can ask for it, but they can’t require it.

As for whether Visa (or MasteCard) takes responsibility for fraudulent charges, it might say something about it in the agreement, but I couldn’t find it.

What I was told when I worked retail, was that as long as the signatures matched, the credit card company was supposed to take responsibility, but if they didn’t (either because the signature was obviously different, or because the signature was a completely different name (insert story about the person who signed her receipts “Mickey Mouse” here)), the merchant would have to eat it. This may be true, or may have been true at the time but no longer, or may have been a load of manure. No cashier ever bothers to check the signature on the card against the one on the receipt anyway. And the only place that ever asked me for ID was Wal-Mart (they actually had signs up at the registers stating ID was required for credit card purchases) and I haven’t shopped there in years for a whole bunch of other reasons.

95

[QUOTE=cosmosdan]

You first responded to Carnalk but have ignored the question we were trying to ask. Offer whatever opinion and info you like but you might have the courtesy to answer the questions of the people you respond to.
[/QUOTE]

It’s not part of the OP, thus I hardly have to go along with your hijack. You want your hijack responded to, start a new thread, don’t make demands of other posters, demands you have no right to make. I have asked you for cites, have you provided any?

96

[QUOTE=cosmosdan]
Why thank you. At last some solid information and numbers. It’s pretty revealing don’t you think so Dr. Deth?
.
[/QUOTE]

And Cerowyn posted even better info, from her direct experience. Soldi numbers and cites too. Nor has that info shown that CC cost less than cash as it does not consider employee theft, hold-ups, hold-up insurance and shortages. It is comparing only bank charges.

All forms of payment carry risks and costs. What you have yet to show is that CC carry special costs that outwiegh their usefulness to retailers. Clearly, since nearly every retailer accepts them, they do not. If they lose money accepting them, they’d simply stop accepting them. But everyone accepts CC, thus, this seems doubtful. Now, many merchant no longer accept checks, thus I’d accept that checks are just too much trouble and costly for many retailers.

Got a cite? Yeah, I know ya got nothing. That’s why you keep demanding we go off into your hijack, something no one else is interested in. Nice try at diversion, but it’s not working*. “Hey look, it’s the Winged Victory of Samothrace!”* :stuck_out_tongue:

97

So much opinion, so little time.

I am a finance manager in the merchant business for one of the largest credit card issuers in the world. We acquire & service millions of merchants globally. We negotiate card acceptance contracts for some of the largest merchants in the world.

I have only a few comments since it is 1AM in NY, but I can gladly come back later if folks are interested in a big, evil CC company man’s point of view.

Believe it or not, we care quite a bit about merchant satisfaction. We spend hundreds of millions of dollars on it.

Credit cards have been around for the past 30 years. Their economics is already baked into the price of goods. If they aren’t in your store, you have my sympathy: since your competitors understand that plastic is omnipresent and plan accordingly, your life must be kind of difficult.

For those nostalgic for the days of cash and check, please try to recall your losses due to bad checks and NSF fees. Now, your friendly credit card issuer bears all of that risk when plastic is used. If a cardholder does not pay his bill or defaults, you as the merchant have already been paid. If this person paid by check, you would not only not be paid, you would be stuck with an additional fee. We lose billions upon billions of dollars to fraud and bankruptcy every year so that merchants don’t have to. Unfortunately, we have to charge for this service.

It is against the merchant agreement to verify ID for several reasons. First of all, merchants hate this. Their cashiers are not professional graphologists; merchants do not want to train their cashiers to verify signatures nor do they wish to assume the liability for when their employees would err. It is hard enough to get them to process a transaction smoothly and to follow all of the normal procedures. Second, checking ID is a form of passive plastic suppression. Don’t have ID? Sorry, you need to pay in cash. This is a major customer dissatisfier, so the merchant agreement will prohibit it. If you accept plastic, you take plastic without any further restrictions.

In the case of most dispute (unless there is a special arrangement present), if the merchant can prove that the transaction was handled according to the BAU submission policy, then the merchant does not get charged back and the credit card issuer eats the fraud loss. In most cases, this involves nothing more complicated than verifying that the transaction took place and mailing in a copy of the receipt.

98

It looks like this thread turned into a shitstorm before I had a chance to post, but I was gonna say…

I am of the opinion that the cost of credit is built into the purchase price of virtually every consumer item these days (maybe less so on lower cost items like ice cream), so I agree it’s wrong for a business to heap transaction charges on top. My favorite local taco shop charges $.80 every time I make a credit/debit purchase there, regardless of the purchase price. While I strongly oppose the practice –I only mildly objected, and didn’t pursue action because I also feel somewhat for a small local independent trying to compete with the ubiquitous Taco Bells/Del Tacos of the world. I just maintain my protest by only going there when I have cash.

I have found that many businesses that rely heavily on credit-based purchases, such as furniture stores, will readily accept or offer a cash discount. Ice cream vendors, IDK.

99

[QUOTE=DrDeth]
And Cerowyn posted even better info, from her direct experience. Soldi numbers and cites too.
[/QUOTE]
“His experience.” Welsh name forms notwithstanding, I’m not female. :slight_smile:

cosmosdan, I’ll post something detailed for you tomorrow. I mentioned the Mondex situation because they went to a great deal of trouble to document merchant cash handling costs as part of their sales effort. I’ve been the CTO for a company that implemented a credit card system for restaurants as part of a loyalty program, and served on a Board of Directors with the EVP responsible for all card products at a $300 billion bank. All much more recently than 1997.

100

All I want to say is that I am truly curious how it might shake out after exhaustive debate whether having no minimum charge is worth it and how much that answer depends on business type or size. So please go ahead and plunge that issue. But:

The fact remains that individual small business owners will have their own specific opinions, concerns, paranoias, and costs. I ask again, would a “cash payer rebate” offend anyone? Beside DrDeth, I mean. :stuck_out_tongue: