Merchants charging extra for credit card usage

AlistarWills · Jan 5, 2019

Had a Facebook friend fussing about going to an eatery chain and seeing a sign stating that they were going to charge an extra 3.5% if you use a card.

It’s my understanding that this is a growing trend as the merchant is paying so much in fees for this customer convinence. These fees that the merchants are getting hammered with from the CC companies are funding the rewards programs(cash back/airline miles/gifts/etc).

Frankly the CC company has folks over a barrel. Customer likes the convenience and the merchant must provide it if they want the customer to buy. The CC folks are getting paid twice, charging the merchants for using their service and charging interest to the consumer for not paying off their bill monthly.

I saw a couple months ago that a local merchant (beauty shop/clothing store) was paying in the hundreds of $ every month in fees and they were considering charging more for running cards. I know gas stations often advertise a cheaper price for cash. I know of a furniture store locally that was doing this 15 years ago because in the owners words “I’m not paying for your rewards.”

Have you all seen a growing trend in merchants charging more for card usage and what is your take on it?

The Facebook friend is basically saying that if the merchant doesn’t eat it as operational costs then they won’t shop there. Others commented that the merchant should just go up on their prices but to me that has the potential to hurt them with competitive pricing.

crimsonaudio · Jan 6, 2019

Re: Merchants charging extra for credit usage

All CC companies I'm aware of (the major cards) actually dictate that a merchant cannot charge more for the use of the card, though they never know unless someone turns them in.

I lookout card fees as the cost of doing business - I can wait to see if a check clears or I can have the guaranteed cash right now. I'll take the guaranteed cash and pay a small percentage for that every time.

The only time the inclusion of a fee would affect my purchasing of something would be when purchasing something expensive where I might be able to pay a slightly higher per item price and still save a lot of money by not paying the merchant fee.

Bamaro · Jan 6, 2019

Re: Merchants charging extra for credit usage

It used to be against the law in Md (not sure if it still is) to charge extra to use a CC but merchants could give a discount to customers paying with cash.

twofbyc · Jan 6, 2019

Re: Merchants charging extra for credit usage

Bamaro said:
It used to be against the law in Md (not sure if it still is) to charge extra to use a CC but merchants could give a discount to customers paying with cash.

They do that here at some gas stations, cash price is lower than cc price.
I’m almost done with credit cards - have to have one for travel, but that’s it. Now some stores are charging $1-$2 to get cash on your debit card with your purchase. They don’t pay swipe fees on debit cards, and most convenience stores have minimum purchase amounts for any card purchase.
In the stores defense - I’d never go in and brag about all the airline miles I’m getting for my purchase; the store is the one paying for your miles.
We’re moving towards all cash purchases ( except gas). Card companies screw business owner and customer alike.

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4Q Basket Case · Jan 7, 2019

Re: Merchants charging extra for credit usage

You pay for your conveniences.

If you don't like the card companies' fees, you can pay with cash or check. If the merchant won't accept your method of payment, and you don't want to use a card, take your business elsewhere.

Free market at work.

twofbyc · Jan 7, 2019

Re: Merchants charging extra for credit usage

4Q Basket Case said:
You pay for your conveniences.

If you don't like the card companies' fees, you can pay with cash or check. If the merchant won't accept your method of payment, and you don't want to use a card, take your business elsewhere.

Free market at work.

Yep - it’s still a “relatively” free country.
Does anyone still write checks? [emoji848][emoji41]
I like the freedom to call out price gouging and egregious behavior that makes life tougher on consumers.

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AlistarWills · Jan 7, 2019

Re: Merchants charging extra for credit usage

We still write checks. I refuse to do the debit card. Only use the CC for gas and when we just have to. The more that plastic swipes the more you open yourself up to identity theft. I don’t need an HVAC mechanic with a weak password causing my CC to get stolen ( see Target intrusion as example)

twofbyc said:
Yep - it’s still a “relatively” free country.
Does anyone still write checks? [emoji848][emoji41]
I like the freedom to call out price gouging and egregious behavior that makes life tougher on consumers.

Sent from my iPhone using Tapatalk

Crimson1967 · Jan 8, 2019

Re: Merchants charging extra for credit usage

If you pay cash, you are still paying the fees because that is part of the business’ expenses that they use to determine how much they charge.

Places that charge extra for credit cards aren’t forcing cash people to subsidize your airline miles.

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twofbyc · Jan 8, 2019

Re: Merchants charging extra for credit usage

AlistarWills said:
We still write checks. I refuse to do the debit card. Only use the CC for gas and when we just have to. The more that plastic swipes the more you open yourself up to identity theft. I don’t need an HVAC mechanic with a weak password causing my CC to get stolen ( see Target intrusion as example)

I don’t write five checks a year; online banking works for me.
Not worried about cc getting stolen so much; most cc companies will only hold you liable for a maximum of $50 in fraudulent charges, if anything at all. Debit cards are different; had my debit info stolen ( scanner) but credit union caught it early; someone charged $90 worth of gas in High Point, NC. They are not liable to cover any losses, though; my credit union did reimburse the $90.

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twofbyc · Jan 8, 2019

Re: Merchants charging extra for credit usage

Crimson1967 said:
If you pay cash, you are still paying the fees because that is part of the business’ expenses that they use to determine how much they charge.

Places that charge extra for credit cards aren’t forcing cash people to subsidize your airline miles.

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Many businesses won’t accept cards that give airline miles because their fees are higher(specifically, AMEX but I went in one place that wouldn’t accept a Venture card). Maybe the ones charging extra for cc usage do accept those cards and are simply making those folks pay for it.

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Bamaro · Jan 8, 2019

Re: Merchants charging extra for credit usage

twofbyc said:
Many businesses won’t accept cards that give airline miles because their fees are higher(specifically, AMEX but I went in one place that wouldn’t accept a Venture card). Maybe the ones charging extra for cc usage do accept those cards and are simply making those folks pay for it.

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I thought fees were uniform within the issuing company (Visa, Master Card etc) and not determined by issuing bank (Citi, Chase etc) or the banks 'rewards' plans.

Crimson1967 · Jan 8, 2019

Re: Merchants charging extra for credit usage

My credit card gives me hotel points and the name of the chain is on the card. Never had it refused.

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twofbyc · Jan 8, 2019

Re: Merchants charging extra for credit usage

Bamaro said:
I thought fees were uniform within the issuing company (Visa, Master Card etc) and not determined by issuing bank (Citi, Chase etc) or the banks 'rewards' plans.

It wasn’t that way 9 years ago - transaction fees were set by the merchant service ( people who handle your cc transactions, not visa/mc). They are most definitely NOT all the same - “ merchant service” can be a bank (really high fees) or third party businesses. We never accepted Amex because their fees were so high; when you operate in a market where profit margins are tight, you save money where you can.
The credit card companies themselves do not process your transactions. Swipe fees are charged by the company selling you the equipment and processing your transactions ( although you could by cc machine from third party but you had to find a compatible merchant service).

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DzynKingRTR · Jan 10, 2019

Re: Merchants charging extra for credit usage

My credit cards are for travel/gas only. I pay them off every month anyway and I get an alert when it is used for anything.

Crimson1967 · Jan 21, 2019

Re: Merchants charging extra for credit usage

There is a small mom/pop restaurant where I live that doesn’t take plastic. Every now and then someone gripes about it on the local Facebook page we have the same conversation we are having here.

Someone posted on there once the city utilities (not sure exactly which one) charges a fee for using a credit card.

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day-day · Jan 21, 2019

Re: Merchants charging extra for credit usage

Our online auto license tag renewal charges a fee if paying with credit card so we use electronic check for it.

We wear our credit card out taking advantage of the rewards along with the convenience. I hate fooling with coins.

AlistarWills · Jun 21, 2019

Re: Merchants charging extra for credit usage

Just to add to this...just found that UAH tacks on an extra 2.85% to whatever you are paying if you use credit to pay tuition/fees and such.

BamaHoHo · Jun 22, 2019

Re: Merchants charging extra for credit usage

Crimson1967 said:
There is a small mom/pop restaurant where I live that doesn’t take plastic. Every now and then someone gripes about it on the local Facebook page we have the same conversation we are having here.

Someone posted on there once the city utilities (not sure exactly which one) charges a fee for using a credit card.

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Alagasco now Spire and Alabama Power have been doing it for years.

Go Bama · Jun 22, 2019

Re: Merchants charging extra for credit usage

twofbyc said:
Yep - it’s still a “relatively” free country.
Does anyone still write checks? [emoji848][emoji41]
I like the freedom to call out price gouging and egregious behavior that makes life tougher on consumers.

Sent from my iPhone using Tapatalk

Yep, my wife and whatever woman is in front of me in the check out line at Wal Mart.

4Q Basket Case · Jun 22, 2019

Re: Merchants charging extra for credit usage

twofbyc said:
Yep - it’s still a “relatively” free country.
Does anyone still write checks? [emoji848][emoji41]
I like the freedom to call out price gouging and egregious behavior that makes life tougher on consumers.

Sent from my iPhone using Tapatalk

After some reflection, I don't see it as gouging.

Yes, it is expensive, but the consumer has other options easily available. And as I mentioned in my original thoughts, if the merchant won't accept the method of payment the consumer is offering, the consumer is free to find one that will.

To me, gouging is charging an outrageous price when (or, more often, precisely because) the consumer has true need of the product, and no realistic options.

An example would be charging $50 for a bag of ice in an area where the electrical grid was wiped out by a natural disaster, and it's the only ice within 50 miles. Even then, you can make the economic argument that, as distasteful as the price is, it will attract others to bring ice into the area way sooner than if it were the normal $2.50 a bag.

So if you're in the affected area, but not the poor schmuck having to fork over $50, you actually benefit from the gouging by getting more access to more ice sooner than you would have if the gouging hadn't existed.

Put another way, we don't view a hotel in New Orleans charging $500 a night for the CFPNCG, when the room normally goes for half that, as gouging. Expensive? Yes. Taking advantage of the inelastic demand curve? Definitely.

But gouging? No. Because, while they may want to go to the game really badly, nobody truly needs to go to the game. Plus, if they want to go all that much, but don't want to pay the New Orleans price, they can stay somewhere else and drive in -- the outskirts of New Orleans, Baton Rouge, Biloxi, or Slidell, for example.

So to put themselves in the position of forking over $500 for a $250 room, they have to make two choices, neither of which are forced, and both of which have multiple alternative options. First, they have to decide to go to the game. Second, they have to decide to stay in a prime location within walking distance of the stadium. In other words, they freely chose to pay $500.

Merchants charging extra for credit card usage

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