My business routinely takes credit cards for amounts in the range of 20-40K and those CC fees are a killer. The credit card companies love us, though…I remember the conversation with the banker.
“What would you say your average ticket is?”
“Oh, about ten thousand dollars?”
Sound of jaw hitting floor…
I’ve heard that the fee for a credit card transaction varies depending on the type of credit card. So that a simple credit card might have a low fee but a cashback or an airline miles card might have a higher one. And the retailer has no way of knowing at the time of transaction. Now I carry and use only one card, which is an airline miles reward card. But if it matters to the retailers, I’m willing to get and use a low-fee card at smaller retailers who are hurt by the higher fees.
And this is the main reason why credit card merchant fees can be so high: The entity that pays the fees (the merchant) doesn’t have any control over whether the fees are paid (since that is decided by the customer), so it can’t take any economic action to lower them. No credit card will even try to compete with another on a fee that is essentially random.
If it becomes routine for merchants to charge the fee to the customer, banks will start marketing “low fee” cards tout de suite and people will use them and those fees will come down.
"how I could buy a hot dog without a pocket full of stupid dollar bills and coins. "
Yeah, money in your pocket, what a drag.
Every time this issue has come up for me (usually at a bar), the clerk just charged my card $10 and gave me the difference in cash. Which I’ve never had a problem with.
Note that you get a low fewer protections if using debit as opposed to credit; I always use credit (or cash). Of course, I don’t like anyone going directly to my bank account.
I get 1% back on my MC. I know that the merchant ultimately pays for this. We would both be better off if he gave me a 2% discount for cash. Also if they weren’t so persnickety about checks.
Last month I made a $400 purchase from a merchant who said he took credit cards, but charged a 3% surcharge. But he was happy to take my check (or rather cheque, this being in Canada). I was happy to save $12 so we both came out ahead.
I don’t understand about the remark that the merchant doesn’t know what the fees will be. What little connection I have had was that you sign up for whatever offered is to your best deal: 15cents a transaction plus .01 of the total; or 5cents plus i% of the total, etc. (sums invented) I have asked merchants whether they preferred cash, check or credit card, and I never had one express an opinion.
It does seem an imposition to offer a CC for a small item.
The consumer still gets ripped off.
Credit card fees are built into the cost of selling products. So with a surcharge you’re getting a fee on top of a fee.
For example:
A product costs $10.00
Breakdown…
Profit $3.00
Employee cost $2.00
Rent $2.00
Theft $0.50
Loss leaders $0.50
Utility expenses and licenses $1.00
Advertising costs $1.00
So you can see when the retailer figures out what to charge they already include the cost of taking credit card in their price. Well at least they should be. This is the same logic, that says, when people shoplift, the honest people bear the cost.