I’ve noticed in the last week that merchants are now charging me a 3% credit card “recovery” fee for using my card. This apparently only started after the Visa/Mastercard settlement with the Merchants Association. I wonder if there was a clause in the agreement that merchants could now add the fee/charge to customers, since up till now I’ve never had this charge. But what gets me is that the agreement lowered the base percentage, but “permitted?” the higher charge ONLY on the premium reward cards, which I don’t have, yet the merchants are going that route on all cards. Does anyone know anything about this?
I’ve seen this for the last year or so, mostly at smaller businesses though. My vet, the people who treat our property for fire ants, the HVAC company - they all offer a 3% discount for cash or check. Which of course is actually a 3% surcharge for using a CC.
At least in the USA, something changed several years ago to void all of the merchant agreement card prohibitions against swipe fees.
They’ve been spreading across the country ever since. And spreading from small businesses quickly to regional or national chains. I’m surprised you are just now seeing this? Do you use your credit card often or rarely?
Around here I pay swipe fees on probably half my credit card purchases.
It’s been going on longer than that. It’s common to see it where I live. I always take cash or my checkbook, just in case. I don’t pay swipe fees.
I’m not in the US, but I’ve heard a little about this in the context of warnings to European tourists about how weird American card-charging practices are. (None of these shenanigans are legal here.)
Is this relevant?
Has increased our use of cash as well.
I try to avoid paying those fees as well. I will use cash or a check.
I see it popping up more frequently lately but it has been going on for several years or more where I live.
My car mechanic, some restaurants, and my HVAC company are a few that come to mind.
When I enter a business I have never been in before, the first thing I do is walk up to an employee and ask whether they charge extra for paying by credit card. I don’t wait until I get to the cashier to find out.
It’s about 50/50 these days: larger chain stores usually don’t charge wipe fees, while smaller stores often do. I realize they are trying to reduce their operating costs, but they can just add the 3% to the price, and most people wouldn’t notice it.
I’ve never heard of it called a ‘recovery fee’ normally just a ‘surcharge’ for using a credit card. And, like others said, they’ve been allowed for years now. It’s probably just that your regular store just started charging them. FWIW, before merchants could add a surcharge, they were still allowed to give a cash discount, so even before it was allowed, there was still a way around it.
Something newer that’s been spreading, at least at restaurants, is instead of a, for example, 3% surcharge on the entire bill, they just add it for the tip.
We [merchants] pay different rates for different cards, but there’s no way to know at the POS what type of card you have and charge fees for some and not for others, so it’s just one charge across the board. I’ve had some credit card processors, when discussing fees, mention that I should tell my cashiers to try and persuade people to use cards that have cheaper rates. I’m not sure how they expect us to do that. If I don’t know what the difference is between a “Visa Signature Preferred” and “Visa Non-Debit Advantage”, I’m not sure how you expect my cashier to know the difference by looking at them, know which one is cheaper, and convince a customer to use one over the other.
In any case, something I’d like to see is for a POS to be able to retrieve what the merchant will be charged for that specific transaction, and pass that along to the customer. We talk about how customers that pay with cash are still paying slightly more in order to cover the business’ credit card fees. If the POS could pass along the exact fees associated with that swipe, stores would only have to pass along the overhead fees, which would be considerably less, to all the customers.
I think customers would, very quickly, start moving to cards with lower fees. I could see that being the beginning of the end for rewards cards where whatever you get back is worth less than the fees you’re charged to use the card.
Tipping is something altogether different as we know.
I live in a city with a large tourism industry. Lots and lots of people from non-tipping cultures come here. Many, many restaurants have been adding 18%, not 3%, to the bill as an automatic tip for several years now. Commonly you could ask for it to be waived and they would, under the social expectation that you’d tip whatever you normally do. Probably more for US definitions of “you” than foreign definitions of “you”.
Back when I traveled regularly for work I’d see that much more frequently in big US cities with many international travelers than I’d see in smaller US cities with few to none.
I have finally been seeing some backlash on that and some few restaurants around here that used to do the automatic tip thing have stopped.
There’s even an industry term for that: “autograt” short for “automatic gratuity”.
thanks to all who replied; what I find interesting from everyone is that in previous threads in September 1 and May 2024, many people said they don’t even carry cash,
I often see a “cash versus credit” difference in gasoline and have for several years. What I hate is when it’s sprung upon you at the pump.
I can’t say that I’ve seen an uptick in local non-gasoline stores that have a credit card surcharge. Maybe that will come to my area soon.
Can I avoid the swipe fee by paying with a debit card?
In my experience, sometimes. A local breakfast place does that, but you hand them the card and mention it and hope they press the right Debit button.
Of course, I don’t get any cash back on my debit card and I get 4% back on dining, so I can still cover a 3% fee on dining purchases.
Merchant still pays something for debit, but less than a credit transaction.
Weirdly, the case that allowed these fees for using credit said that merchants can charge more for credit but cannot discount for cash. As if those are somehow different…
Way back in 1984 I got a discount on stereo speakers by paying cash. Only it wasn’t a “cash discount”, it was a “negotiated” price “if I pay cash tonight”. Seems about as legit as the rule cited above!
While I’m no more a fan of interchange fees than the next person, all that infrastructure isn’t free. I think the real problems are the lack of transparency and the often abusive relationship between issuers and merchants.
Remember also that there are multiple parties taking their bite: the processor, the brand, and the issuer. And it all mostly Just Works. The fact that people can survive without carrying emergency cash is pretty amazing.
I’m a fan of my mechanic, who has a big sign on the desk notifying customers of a 3% charge for using a credit card, but they’ll be happy to take a debit card, cash, or a cashier’s check (but not a personal check, thank you.)
For small business, the real advantage to cash is they can keep it off the books and not pay income taxes on it.
So you and I have to make up the difference. Think twice before “helping” small business offload their rightful tax burden onto yourself. At a a minimum insist on a 20% discount over the advertised cash price for anything actually paid for in cash. They’re still money ahead at that rate.
I think one positive for Credit cards vs cash is that there’s nothing for burglars to get as opposed to cash in the register, so hopefully less theft
Cash took a nose dive at the height of Covid, as I remember it, because folks didn’t want to touch other peoples’ germ-laden money.
It’s curious, I’m only aware of gas stations doing this (because they advertise it in those huge price signs). The difference is often 10 cents per gallon, which comes out to around 3% at the prices around here. I would think I would have noticed it for regular retail stores – although I don’t check my receipts every time, I do often enough that I would expect to have seen it. Unless they are sneaking it in, in some invisible way, like mashing it in with the sales tax or something. But I would expect that to be illegal. So I wonder if there is some state-level control on what they can do? It’s puzzling.
Burglary is one way for merchants to lose cash. There’s also the short-change artists, cashier errors and even the cash-handling charge from the bank. (It may not be free to receive cash from the bank, particularly if you expect them to deliver it.)