Excellent point, which few bother to consider. In fact, for some businesses the cost of cash is high enough so that they prefer CC. Basicly, if your average transaction is fairly high, a business prefers CC. If it’s low, like $10 or less, then cash is better.
[QUOTE=SeanArenas;10974513
My point is that they pay SOME form of surcharge. So when they run their day’s totals, let’s just say there’s $1,000 in tips for the day. Let’s just said their average surcharge for charging those tips is 4%. 4% of $1,000 is $40, right?
So, the restaurant, who pays a surcharge for accepting money through a credit card, has now accepted $960 in tip money. It must then pay $1,000 in tip money to the wait staff, right?
My point is that the $40 came from somewhere. It certainly didn’t come from me (I’m rewarded with it). It didn’t come from the cc company (they charge that charge to the restaurant). So it either has to come from the restaurant or the server, right?
I hope I’m being more clear.
It seems as though IAmNotSpartacus is the closest to understanding my issue. And his response says he does not “believe” that it would be legal. So, from the person who most closely understands the question, we have a belief/strong suspicion about it.
Has anyone here managed a restaurant, or worked as a server, or knows anyone who’s done these things, or work for a credit card processing company, or is a lawyer, and might know the answer to this question, now that the understanding of the question is hopefully becoming clearer?[/QUOTE]
Well, 1st off all, your rate is about twice as high as reality. It’s much more likely to be closer to 2%, not 4%.
So now we’re only talking $20.
Now, a business also has to pay for fees to depositing large amounts of cash (usually 1%), or armored car fees (much higher) and hold-up insurance, which gets higher depending on how much cash is normally on hand.
So, let us say it’s 1% to handle cash, and 2% for CC. Thus, it’s only a $10 difference.
No, no restaurant I know of tries to pass the CC fees on to their tipped employees. Just like they would not try to pass on the cash deposit fee.
As for rewards, those are paid for by the CC company, directly. Of course, the user pays for them by higher fees and interest.
Well, there are other types of rewards, now that I think of it. Rewards network is one that I use. Use any registered card at any restaurant, and an automatic 5 miles per dollar spent, including tip (it was 10 miles until this year). There, of course, the merchant pays the costs, as it’s really just promotion.
In as many words, yes. Just like any other company, credit card companies have to pass their costs along to customers.