daniel59

It would kill cc rewards programs in the process though.

jamflyer

+1. Will use cash where net effect results in lower price. I love the credit card game, but cash rules.

sdsearch

Read that link carefully. It requires that stores radically change signage if they are going to do this. It says the have to spell out at the first place the consumer sees that a Visa card is accepted, so on the door and at the cash register. How many retailers are going to want to go through this (especially right away)?

California allows discounting for cash (it cannot be phrased as "surcharge for credit card") at gas stations (at least in some areas), but even then, only some, not all, gas stations partake in this. It's probably more than half of them in some places along the 99 in the Central Valley, but it's a tiny fraction in Orange County. And then, in places where discounting for cash is common, some gas stations tout "same price for credit cards and cash"!

So I doubt it'll be impossible to find a place without a surcharge (at least for a long time), but you may have to choose between several merchants to avoid it.

Nick92

Good point but realistically, some merchants will impose surcharges and not comply with the signage requirements. How many have signs that demand ID or minimums (before those were allowed)? Still I don't expect many to implement this either. I rarely see minimums and surcharge is a good way to discourage business. I know I won't even walk into a surcharge store.

jspira

This (the "checkout fee") is not limited to Visa. It is the result of a class-action suit against credit card processors and several large banks and was several years in the making.

More than a handful of states prohibit surcharges by the way (see article below for details).

5 Things You Need to Know About the New Credit Card Checkout Fees

mia

daniel59's post has been added to the established thread.

JEFFJAGUAR

So.....can an online merchant carge a surcharge to a resident of a state that prohibits surcharges? And how are the gasoline companies getting away with the surcharges they are currently imposing for use of a credit card? And what is the legal distinction between a prohibited credit card surcharge and a legal cash discount?

ipeaches

Per this NYT article:

"And despite the settlement, the extra fees are still illegal in 10 states that prohibit credit card surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. That means national retailers that have outlets in those states can’t impose them anywhere, according to the federation."

I would venture to guess that this would apply to online merchants as well?

JEFFJAGUAR

But many if not most gasoline stations in New York are charging surcharges on gasoline purchases....if it says the cash price is $3.67/gallon and the credit card price is $3.77/gallon on the signs, then I am paying a 10¢ surcharge on each gallon of gas I buy, am I not?

And I remember many many moons ago. NY State had a law prohibiting the banks from putting annual fees on credit cards (some misguided banking superintendent Muriel Siebert helped pushed legislation doing away with that good law) but in any event then came a ruling by the Supreme Court that the location of the bank not the residence of the cardholder determined what laws applied and lo and behold banks such as Citibank moved their credit card operatons to South Dakota while Chase moved its to Delaware so they could charge fees for credit cards.

So will airlines for example re-locate their credit card operations in states where these surcharges are allowed and then start charging surcharges if you buy tickets with a credit card? And of course we have the examples now where people who are dumb enough to do business with a bank whose credit cards apply foreign transaction fees are nailed for these fees even if they buy their tickets from an American travel agency paying in US dollars if the foreign airline processes its credxit card sales with a foreign bank (I know it's not quite the same thing as it is not the airline that collects and keeps the surcharge but to the consumer the net effect is the same).

cbn42

Why would it kill rewards programs? If anything, it will make them better, because credit card issuers will see a loss of business due to the surcharges, and will need to enhance the rewards to get some of that business back.

cbn42

The federation is quite confused. No state can block a company from imposing a surcharge in another state. There is no reason a store can't impose a surcharge in Nevada just because they also do business in California. They may not want to, but that is a different matter.

Currently, state laws prohibiting surcharges apply to all merchants, including online. Assuming that this settlement gets approved and surcharges become permitted, it is possible that some online retailers will impose surcharges on CA, TX, etc. residents, claiming that they are not subject to state jurisdiction because they have no physical presence in the state. This would be similar to how online retailers avoid collecting sales tax. I don't know how this would go down, but it's interesting to think about.

Happy

Here in South Florida, some gas stations now have 2 prices - one is for cash payment one is for credit card payment. Needless to say they only advertised the cash payment rate on their billboards - but when you paid at the pump, you suddenly discovered the rate was not what you pulled in for. This has become an issue for the State's AG office. Now they are required to put a notation underneath the advertised rate being cash payment only. But they put the notation in such small letters that drivers normally wouldn't be able to see it while driving...

As a result, there are letters to the newspapers and TV stations that to call for drivers to boycott such stations when they found out the rates were for cash only but were not explicitly displayed so, just drove away without filling up. That action seems to have some effect and now less stations practice such.

Happy

You are thinking it backward.

The rewards are supported by the merchant fees,i.e. the merchant fees.

So you think the CC companies would incur more cost to dole out more rewards when their source of income is reduced because less customers are using their CCs thanks to the surcharge?

One of the reasons why the retailers pushed really hard to get this finally became law is because the CC companies charge hefty merchant fee, especially on the reward cards (these days what card does not have some kind of reward?) The merchant fee can be as high as 3% or more. That is why a lot of government agencies or schools or even utilities charge the "convenience fee" of 3% if you want to pay with a CC - they dont want to support the CC companies' reward programs. And with the government agencies and schools, they shouldn't. (taxpayer's money is used to run the government agencies and schools.)

Now if more and more retailers would impose the surcharge, more and more customers would turn to use cash instead of using a CC - after all, 3% is not a small sum especially in today's 0% interest rate environment.

When less and less customers using reward cards, there would be less and less revenues / profits for the CC companies to support the programs. The CC companies are not running a charity, but a profit-seeking business.

Are you so naive that the CC companies are there for their generosity to hand out the rewards instead of making a profit?

JEFFJAGUAR

When these programme first started maybe 20 years ago, it was claimed they were not surcharges but cash discounts. And at the beginning, the pumps priced the purchase at the credit card price and there was a chart showing the cash discount. Then, as this was a royal pain in the butt to a degree, many of the petrol stations begain having separate pumps and islands for cash vs. credit card. But they still claimed these were cash discounts to get around both state regulations and the visa/mc regulations (although many oil bfrtands had their own credit cards too and imposed the surcharges oops gave cash discounts).

Then pumps began to appear that were capable of doing both types of transactions. And almost as soon as stations invested in these new pumps, some of the oil companies pushing the surchares/cash discounts dropped the programmes as they found that people paying with a card tended to say fill it up whereas people paying cash might say $10 worth please (of course at a time when you actually got some gas for $10...today you're lucky to get 3 gallons). Only within the last couple of years have these illegal programmes began appearing again. To me, it's also a violation when utilities and state governments and the New York City Parking Violations Bureau add surcharges to take credit cards and I wonder why those consumer advocacy groups allow them to get away with these gross violations of law (as does the IRS of course get away with it too and for years the IRS couldn't resolve the issue with visa and so the programmes that accepted credit cards for payments of taxes, did not take visa. I don't know if that has changed recently).

But here's the way I try to rationalize it in my own mind. The illegal petrol station surcharges, at least illegal here in NY, I use only my Pen Fed rewards card. It gives a 5% rebate on petrol pur4chases so I say to myself I'm still coming out 2% ahead and of course quafrterly some of the rewards programmes go up to 5% on petrol while my BofA 1-2-3 card, the successor to the late Schwab card, gives 3% on petrol so I would brfeak even there. But the nice thing about the Pen Fed programme is they give you the rebate immediately on the statement each month unlike those other programmes where you have to accumulate at least $25 to get the rebate.

reft

US State law usually does not allow them to collect less than 100% than what is owed. Put another way, if they bill you $10 for taxes, they must show they collected $10 for the tax coffers, and not $8.50.

Some utilities are quasi-governmental and can discount, others can not. This has non-CC implications, as a municipality can't trade off discounting to increased cash flow or make deals to clear off a large tax bill and get needed cash. There are good reasons for this. Without this a city's number one taxpayer would withhold their taxes until the city has to make a deal. Some do anyway.

State laws usually don't apply to the states themselves, so the consumer groups go pound sand on this one.

Of course, your state law may vary, and if I recall, some states may be trying to make CC payments easier.

Creeping in behind all this may be an increase in non-CC EFT processed payments, which lack the perks of CC payments, and maybe the protections. ACH is 60% US Government and 40% private -- tack a 1 or 2% fee into the process there and the government has a new tax / revenue source, in direct and indirect competition with MC, VS, DFS and AX. (As an example, you can no longer purchase a US Savings Bond w/o ACH; Cash and CC's can't be used.)