Consumer Watch | A new move on credit cards
Fascinating article!
etc. etc.
Sorry, forgot to pose the question at the beginning of the OP.
Is this likely to change retail pricing to comsumers at all, or will the retailers simply pocket the savings?
For as long as I can remember, Sam’s Club hasn’t taken MC or Visa. Only Discover and their own in-house credit.
I’ve used my Mastercard debit card at Sam’s. Odd that the article says Visa debit cards will be accepted, but not Mastercard.
To be honest, if I can’t use my Mastercard debit card there, I won’t renew my membership - I prefer to use my debit card for nearly all of my purchases. I have no interest in applying for credit from them (I do not carry a large quantity of cash) when I already have to pay a fee to join.
Does anyone have additional information on this?
I think they’ll still take debit cards. My local SAMS club takes debit cards, but not credit cards. The whole point of the fight was that Visa/MC was dinging them for an absurb amount relative to the real world credit risk involved. I would guess that they’ll still take your debit card as the cost to them is much lower.
I’m still stunned by the fees involved and the fact that 1.5 billion have been saved so far. What a racket for MC/Visa.
How is this a good deed? If anything the credit cards will raise the rate of the consumer. I doubt that Wal-Mart will lower its prices in return.
The way it works at my retail operation is thus:
At point-of-sale, the customer swipes his/her Visa/MC-branded check card and selects debit or credit for payment. If the customer selects debit, then the transaction is processed through his/her bank’s debit network and the retailer pays the flat debit fee. If the customer selects credit, the transaction is processed through Visa/MC’s network and the retailer pays the credit fee. The fee charged is determined solely on the basis of the customer’s decision of debit or credit.
I don’t find it unreasonable that Visa/MC would charge the same fee for a transaction processed through their network regardless of the type of card processed, and I frankly don’t understand Wal-Mart’s anger.
Our POS system detects if the customer is using a Visa/MC-branded check card. If the customer chooses credit on such a card, it still prompts for a PIN in the hopes that the customer will enter it on autopilot. This way, we are only subject to the lower debit fee. Only rarely will the customer object to entering his/her PIN, and then the transaction will be dinged for the higher credit fee.
I think Walmart/Sam’s Club’s main point was that the Visa/MC debit card fees were absurd and abusive relative to the credit risk involved, and V/MCs system of “all or none” re debit cards the retailer had to accept was quasi-monopolistic. The fact that V/MC caved, and the fact that Walmart has saved hundreds of millions of dollars to date by being able to negotiate rates directly with debit card issuers, illustrates what a racket this was for V/MC.
If nothing else Walmart knows how to calculate the “cost” matrix of an item or service down to the thousandth of a cent, and they knew they were being screwed. Until Walmart came only no one was big enogh to take Visa/MS on.
Maybe someone actually working in finance will chime in here (I don’t ), but I was under the impression that Visa/Mastercard were transactional systems. I thought banks actually pay for the right to issue those cards, i.e., Visa/Mastercard doesn’t assume any risks whatsoever when any transaction takes place. It’s the issuing banks that assume the risks with regard to credit. We all agree Visa/MC charge the merchant a percentage of the transaction. What do the banks have to pay to be able to issue cards? Who get’s the fee that the retailer’s pay for the transaction? Is it the Visa/MC network or the issuing bank?
It is totally reasonable for Visa/Mastercard to charge whatever they want to use their systems. And the retailers have every right to refuse credit cards.
My real point here is that there are a lot of opinions being posted here, but no one seems to be providing any facts.
----rant--------
WHERE ARE OUR EXPERTS? WHY ARE THEY LEAVING THE DEBATES TO AMATUERS LIKE ME? God I hope I can go back to lurk mode where I belong
This is interesting, I wonder wehre it will go. I dislike using my debit card, actually never had, and don’t like the idea of a direct link to my assest. I like the protection that a CC offers and the limited liability. Also a mistake like charging $999.99 instead of $99.99 doesn’t cause my mortgage check to bounce.
I would not renew or get a sams club membership if I could not pay by CC, and would severly limit my trips to walmart as well.
Sorry all, if I could take back my last post, I would. —added nothing to the debate and did not address the OP’s question. I DO promise to go into lurk mode and not disturb this thread again.
I have a Visa check card, and I usually use it as credit, because if I use it as debit I’m liable for “non-home-bank ATM” charges.
If I were forced to use it as debit, I think I’d just prefer not to shop there, or use cash.
Visa is a not-for-profit organisation. It’s a cooperative of banks that issue Visa cards. Visa runs the transaction network for the benifit of the banks. So who gets those transaction fees? I’m guessing most of it goes into running the network or back to the banks since we’re not-for-profit.
You’d think I’d know more about this stuff, considering I’m a tech for Visa’s network. I guess I just never paid attention to the accounting side of things.
Somebody needs to shout out to ** The Green Feather **. He’s been there longer than me. I believe ** panche ** works for MC.
Well how can I pass a call like that. Hi, Theios! How’s the GF?
As to the OP. I think the retailers will pocket the savings. I don’t work in retail so I don’t know how all of the costs shake out, but Walmart is so mind numbingly big that any change in transaction costs results in huge totals. A difference of a penny per transaction results in millions gained or lost depending on who gets the penny.
I think the greatest loss to the card carrying customer is the change that Walmart forced that merchants don’t have to ‘honor all cards’. When you see the Visa/MC logos on the front door or the cash register, you don’t know if they are willing to take your type of card or not. ‘We take some Visa/MC but not others.’ Or how about when you are at the register and the transaction doesn’t go though. Is it because of the type of card you have, the type of cards the merchant accepts, does the minimum wage cashier have a clue? If I run into this, I’ll shop some were else. I think that merchants who follow Walmarts lead are going to take a big hit in sales.
That’s pretty much my take on it.
IF they don’t take my card, then there is going to be a shopping cart full of frozen goods that someone is going to have to put back. If this happens a lot in one day they are going to absorb some losses in spoiled product.
With this in mind, they are going to have to spend the extra labor hours, @ roughly $5 or $6 per hour? instead of the transaction fees. One way or another the cost will be put back on the retailer and they will have to adjust their prices accordingly. It’s a very basic retail concept. The cost of business is reflected in the prices. Eventually, the consumer pays. Whether it’s a transaction fee or a higher retail price.
It ALWAYS comes back on the consumer, or what would be the point of being in business?
I know this is getting way off topic, but, most places that take debit cards also allow you to get cash back. This is a much better deal then using an ATM from another bank. I’ve never been charged by my bank for using a debit card at a store.
So before this move, consumers had three choices of credit cards at Sam’s Club: Visa, MasterCard, and Sam’ Club credit cards.
Now, their only credit card option is Sam’s Club.
Explain to me please: this reduction of consumer choice and increase in Sam’s monopolistic practices is a “good deed” because…?
I have to agree as well with the idea that lack of consumer choice is bad for business. It’s used to irritate me to no end awhile back when I had to go to the ATM at Sam’s because they wouldn’t let me use my debit card. I complained every time, then they started taking them. Now, they’re not going to take my MC debit card again. Well, I for one am tired of being jerked around by Wally World. I already pay a membership fee and I refuse to get a credit card even if I could qualify for one which isn’t likely. To put it simply, I don’t want to pay the fees to another bank. I’ll ignore it if it’s built into the price and I’m still paying for something cheaper at store A than B. But the value is lost when buy a 5 lb. bag of chicken breasts for $7.99 only to pay another $3 to the bank for ATM fees.
So, why don’t I write a check? Because debit transactions are guaranteed to be paid or denied right there at the register, are quicker, and are easier. Seems to me that it makes more sense to the vendor to accept debit over checks (Sam’s does accept checks.) Does anyone know the how much it costs to collect on a bad check? It’s got to be way more than the debit fee. And how much does Wal-Mart lose each year on uncollected checks? And this is a wise business decision?
When my SC renewal form comes in the mail this June, I’ll be sure to send it right back with the words, “NO DEBIT, NO CREDIT, NO THANKS!” written on it.
Does anyone know if COSTCO takes MC debit cards?
I also have a debit card. I use it as credit card because if I don’t have enough money in the bank it will usually (once it did not!) get declined preventing me from over drafting and getting huge fees. I know I should keep track of my money but this makes for a good safety net if I make a mistake.
Sign up me up for not shopping there. No “good dead” goes unpunished;)
Make that “good deed”