No Stupid Questions

They always have.

In the past it was just by increasing the prices of things to cover it.

Now they’re talking about why they’re doing it in the hopes we won’t be pissed at them and pissed at the credit card people.

The credit card companies have always tried to prevent merchants from doing this by inserting language prohibiting either credit card surcharges or cash discounts into the contract agreements with the merchants. Obviously, credit card companies want to make it easy and convenient for consumers to use their credit cards.

I can't immediately find it, but at some point I think 10-15 years ago, some merchants sued the credit card companies over this, and they won a court ruling that said that the clauses forbidding cash discounts and surcharging are unenforceable. As a result, merchants are now free to do it, but there are various rules. And some state legislatures have started to get involved with regulating things.

I have not yet seen it normalized but I have seen the opposite. 5% discount for cash. I mean effectively its the same thing. EDITED - thought I would mention there was a well known burger place in my area run by some brothers who would only take cash. They had a sign with the location of the nearest cash machine. I think they decided the credit card machines were not worth the hassel and its the kind of place that had a line out the door the whole time they are open.

I've been in the POS business for 25 years, and deal with the credit card side a lot.

A very large part of this is POS companies often have a relationship with the credit card processor (or are owned by a processor), and make a lot of money from the processing fees. The higher the fee on the processing account, the more they make.

So they convince the merchant (restaurant or store) that they can have a free system by passing the cost to the customer. Often times they are just waiving the monthly subscription fee, but some will also give the merchant free hardware as well (with a multi year contract).

Then they jack up the fees on the processing side: Since the merchant no longer has to pay the 2.5% - 3% fee that they were paying before, they allow the credit card / POS company to charge them 3% - 4%, and then pass it to the customer.

This is why I'm always late on my water bill. The longer I wait, the smaller the percentage of the bill it is.

thank conservatives for pushing the cost of raw goods up, lowering margins.

if your margin is 5% you sure as fuck dont want to be pushin 3% to visa

That's been a thing since the beginning of the cards being implemented. In the US they've tried to make it illegal, but like, economics doesn't work that way. The store owner needs to make a profit, so the fee is going to the customer.

Smaller local convenience stores in Canada, often had a CC charge added probably 20 or more years ago.

When people generally carried cash they would've been reluctant to pay with a card if it was 2% more expensive.

When banks provide a business with a card reader, they want that business and it's customers to use it - if customers continue to use cash then the bank isn't getting 2% on those sales. So they did their best to avoid card charges being passed on to the customer. The business would pay the 2%, and just build it in to all their pricing.

Depending on jurisdiction maybe the clerk could add a card fee manually, but my point is the merchants weren't encouraging it.

Now that people generally don't carry cash, the banks / merchants are in competition with each other rather than competing with cash. About 5 years ago a new merchant / card facility operator emerged in Australia which gave businesses the option of automagically adding the charge to sales, so the customer would pay instead of the business owner.

For a restaurant or something that's a pretty great deal. For even a relatively small restaurant with a half dozen staff, it might be a third or half of one annual salary in savings.

The majority of restaurants in my area have changed over to merchant facilities offering this type of fee structure.

In the long run, customers aren't really paying more. Restaurants are always going to charge as much as they can. If every restaurant is doing the same thing then everyone is on equal footing, charging as much as they can, just like before when everyone absorbed these fees.

I'm guessing times are getting tough and if a business gets $100,000 in revenue (before expenses) per month but is paying $3,000+ in credit card fees, they see that large expenditure and start wanting to recoup those fees.

Personally as a business I find the "one and done" nature of credit cards much better than dealing with cash, checks, or trusting PayPal. So the fee isn't that big of a deal to me.

What I really hate is businesses that charge 4%+ surcharges, they probably pay more like 3.5% and are just gouging the customers. Or they are getting a terrible rate from their bank.

In the early days of CC you were charged per transaction.

Then you weren't.

Now they're doing it again.

I've seen it vary by card and vendor many times.

Edit: by Early Days I mean when electronic clearing became ubiquitous in the early 90's, as the clearing houses charged per cleared transaction. Before that you literally mailed the card that was imprinted via the credit card machine.

I've seen it a lot for over a decade. It is usually small businesses who did it since the cost to manage cash is almost zero. There was a reform bill which said that you couldn't charge more for credit, but there wasn't anything about giving a discount for cash.

I've been seeing it more for places with large transactions because the 3% is meaningful for those businesses.

Large companies don't do it because credit is preferable for them.

Only chiming in for statistics. Where I live NC, USA; Almost nowhere charges a fee for credit/debit card use unless it's a third-party ATM. But even then those typically are only there to account for cash-only payments like lottery or coin changers.

Not saying that it doesn't suck, but I acknowledge that if your entire business is providing ATM services, a one-time sale is money lost, which is money that would go to support/maintenance.

I work at the dry-clean counter of a laundromat, and it's cheaper to use quarters (which everyone has and can be exchanged anywhere) than to manufacture proprietary payment options. We only have like 6 machines that take credit cards, and they put a $10 hold on the account.

Compared to a $3 ATM fee to change $20 into quarters, it's a million times more efficient, economically and ecologically.

Apparently it depends on the state, or at least it used to. A friend that ran a small supermarket told me that some states don't allow the fee to get passed along, some did. He ended up just doing the 3% discount for cash route on large purchases.