I don’t see how you can believe that since we are here discussing it’s bearing and we have all these stories about how it has affected the marketplace.
Sure. In picking our battles we might want to consider what we actually are trying to win and it’s long range effect.
Are we interested in winning a victory over our neighbors while supporting a larger threat that has essentially backed them into a corner? Are we interested in punishing our neighbors for reacting to the realities of the marketplace which you seem to think is perfectly acceptable?
So you don’t think that lots of small shop owners implementing min purchases and surcharges is a market issue? It’s just the “problems of individual store owners”? It seems to me enough are doing it that disregarding it in a market analysis would be foolish.
How about all the anecdotes from other posters including the OP?
The only reason we are here having this discussion and in the threads like it, is because the problems of the local merchant has some bearing on the marketplace.
While continuing to do business with others who don’t keep their agreement with you. Let’s not pretend it’s about honesty when dishonesty is acceptable if it serves you.
That’s a justification through semantics. The actual actions reflect something else.
I think I see your point but I can’t agree. IMO if was really about honesty then people would stop doing doing business with both offenders.
If we can justify our own actions and call it reacting to the realities of the marketplace, then we ought to be able to understand our local merchants and cut them some slack.
That’s what a minimum purchase sign or small surcharge says to me. If I want to help out my neighborhood business man I’ll pay the charge or make a point to carry cash. I won’t blackball him as dishonest while still supporting the company that backed him into that corner and is also dishonest with me.
I find a certain value in treating the business relationship as still being a human being relationship. Maybe that’s because I’ve spent so much time on both sides of the counter.
I don’t know where to begin. Should I start an “Ask the CC Stooge” thread?
Not necessarily. I will not answer any pricing questions in detail, as this information is highly proprietary.
Actually, no. If we were only accepted in large, high volume merchants, we would be in a world of trouble. The ideal position is to have merchants with varied volumes and behaviors. Some drive scale, some drive profitability, some drive coverage. The best situation is to be accepted in both global and neighborhood merchants.
The price is typically set at the franchise level. There are more ins and outs to this, but again, proprietary information.
Sure. But again, look at your overall portfolio of price points and payment types.
If you really do not believe that plastic drives volume at your store, by all means, make a sound business decision and cancel all acceptance.
Unless the merchant is party to the fraud or fails to process the transaction as he should, the card issuer (or occasionally the acquirer in special cases) absorbs the fraud loss. The merchant does not.
The agreement asks the merchant to make sure the card is signed. That is the only requirement. You are not asked to verify the signature.
Does the signature on the receipt match the name, not signature, on the card? If you produce a receipt that was forged by a fraudster, you will not absorb the loss. The card issuer will.
If the card says John Smith and the signature on the receipt says Jane Doe, then I think you will get charged back. If the signature matches the name printed on the card, then your cashier followed the correct procedure and the loss is absorbed by the issuer. The merchant gets paid.
Look, man, I live in your neighborhood as well. Pay cash so you don’t benefit some great megalithic corporation, and I am out of a job. My company produces a product that consumers, quite frankly, love so much they pay fees for it. I do not appreciate how you are framing this issue.
That makes sense. I do appreciate you taking the time to explain.
Meaning the local Micky D owner negotiates his own deal then?
Okay. I mentioned it because it’s the specific detail we are discussing rather than a more generalized “Credit Cards good or bad?” thing
Never said that or implied it.
Well, checking the Visa agreement linked in this very thread it says.
Will I find something similar on the Master card agreement? How else am I to interpret that?
I think I get your drift. If the signatures are reasonably close then the merchant is not at fault, but it sure seems to ask the merchant and employees to compare the two signatures. It seems to me if the signatures are to far off the issuer has a reason to do a charge back even if the names are the same.
I’ve checked thousands of signatures over the years and some are very hard to compare. Mainly the folks who use an indistinct scribble. There was also an issue of family members getting permission to use the card but were not actually authorized users. Just yesterday a husband gave me his wife’s unsigned card and her last name wasn’t even the same as his. Pretty careless.
I’ve also dealt with lots of fraudsters. Some are real professional and an fool an inexperienced clerk. What about stolen account numbers on a manufactured card?
Who pays for that?
I repeat. We are talking about local merchants having $10 dollar minimums or in this case, an ice cream shop charging .25 cents extra for paying for ice cream with a CC. Both are technically against the Merchant agreement. I’ve encouraged posters to cut the local merchant some slack and be a little more understanding. I see no reason we both sides of the business can’t be profitable. It’s not an all or nothing proposition.
I know the market place has embraced CCs. I use mine and I love my debit card. I don’t mind paying a reasonable fee for the service provided. I’m not condemning CCs as a whole nor am I in any way suggesting you should lose your job. That’s not the issue. You and your company do indeed provide a service that people including me like using. I also know from my own involvement in business for some years that the worker or even management does not sent company policy, but that’s another issue.
This discussion is a little more nuanced. No offense intended toward you or your company.
btw, someone asked how aggressively CC companies enforce the no minimum purchase or no surcharge clause. That relates directly to this discussion. Do you have any insight on that? Do you know of some, very few, or lots of merchants who have lost there right to process cards for this specific violation?
The crux of this entire situation is in the hands of the card companies, specifcally Visa and MasterCard. They have a duopoly and they know it. They write the card agreements but the stores don’t get any say. They are not invited, and in fact, prohibited from negotiating. Its either you agree to their terms or you’re stuck with taking only cash.
If Visa and MC would just lower their fees, stores wouldn’t need to ask for minimum charge amounts. But of course, that would mean that the card executives wouldn’t be able to continue getting rich.
Oh, no, the pricing is done at the entire franchise level. Micky D has both franchise and corporate owned locations. In my cc world, they are priced the same regardless of ownership.
You can understand why this is a tricky area. How close do the signatures have to be to protect yourself as a merchant? I don’t know. I suspect this varies enormously in practice. If the size of the fraud is sufficiently small, the acquirer will typically eat the loss rather than duke it out with a merchant over a small amount of money. What these thresholds actually are can vary depending on the size of the merchant and the policies of the merchant acquirer.
If the card is well and truly bogus, then the issuer absorbs the loss. The merchant still gets paid. Both fraudsters and ordinary people do some truly wacky things with their credit cards.
You nailed it. Here’s the thing, though. It costs the credit card company money to acquire you. It costs the company money to service you. Further to pay you, yet more to process your transactions on its network.
Suppose for a moment it costs $500 to get Mr. Neighborhood Merchant set up to accept plastic.
Suppose the variable cost of servicing this merchant is $100 for each additional year: he gets yearly policy mailiers, he calls in occasionally regarding disputes and his account, he gets regular debit ACH to his bank account, etc.
Suppose further that he does $50k in volume per year.
Suppose once more that the all-in rate the CC company charges is 2%. This includes the interchange, the processing fee, and the fee paid to the acquirer.
Suppose, for the last time, that of that 2% discount, 1% hits the CC company’s bottom line. The rest is absorbed by the fixed cost base: it pays salaries, maintains the processing infrastructure, etc.
It takes Mr. Small Merchant an entire year before the credit card company breaks even against the costs of acquiring the merchant, let alone the servicing.
So when you talk about profitability, please consider the large cost incurred by the credit card company to hook you up with the privilege of accepting plastic. Our small merchants are very important to us. It is a pity that they tend to go bankrupt within the first two years. Most stores, just like your own, are never profitable from the point of view of the credit card company.
It’s not all that much more nuanced, really. You are saying that it chaps you that people use CCs on small purchases, and that you should be able to charge a convenience fee. What difference does the size of the purchase make? If the small purchase is for a high margin good, you win. If it is for a low margin good, you probably sell them in sufficient volume that the incremental purchases offset your reduced margin. Honestly, why tack a fee on purchases less than $10 if you can charge for purchases less that $15? How about $20?
I believe that you like your plastic products. Great. But I hope you understand why I have a hard time finding your view consistent. I am not offended, certainly not on behalf of my company. I just work there. I mentioned it the way I did to underscore the us vs. them mentality that can poison these kinds of debates. Small, local business is not superior to big business: obviously we need both and obviously there interests are often aligned. But by privileging one over for fundamentally non-economic reasons, it really can hurt people.
I am not on the operations side, so I do not deal with these issues on a daily basis. What I will say is that if cardholders call to complain, we will call the merchant. There’s no threatening involved or anything. We just remind them that this is not kosher according to their card service agreement, we reinforce the value of accepting our products, and ask if they have any issues with their account. Ninety-nine times out of one hundred, the complaints stop.
But it does appear that merchants are asked to compare signatures right?
When I worked in an electronics chain laptops were a huge target for CC fraud. That’s where I learned to spot the red warning flags that indicate a problem. The professional crooks can be very smooth but I learned that if I had any suspicion call it in. I’m happy to say we were able to get a couple of perps arrested.
We’ve been around for 30 years and did a little over 2 million last year. Not huge, but not bad for not bad for an independent one store business that started small.
I’m sure there are expenses for CC companies that the average joe or even the average merchant doesn’t understand. Still , that industry seems to be doing okay Your explanation seemed a bit low.
looking at post #86
In the OP the merchant sold ice cream. It’s not hard to imagine how a 25 cent transaction fee beats the crap out of the profit margin. Fees are also calculated in part by average sale amount so a store like mine that has expensive items as well as small accessories lowering the average with 2 and 3 dollar credit card sales gets expensive. We want to make money too. There are a lot of variables. All I’m suggesting is that we understand this trend and perhaps give up a little convienience and carry some cash.
You’re right. Small local business is not superior and after years in cooperate stores I’d say I’m prejudice for my independent store now. I’ve been around long enough to see small local guys who are lying crooks, and I’ve seen customers lie through their teeth to save $10 or $20 dollars. I’m only saying we need to look realistically at the marketplace and consider the real people involved as well as the technicalities. It’s a business relationship where we can operate on mutual respect and fair consideration.