cbn42

The airlines are an oligopoly, so they really do not compete on price. Therefore, they did not need to decrease their prices when the fee was suspended. In the retail market, which is far more competitive, it is more likely that the savings would get passed on to the customer, especially in larger towns with many stores.

travelinfoo

I hope you are right.

The UK allowed CC/debit card surcharges. Many merchants, most in the travel industry, began to tack on higher and higher surcharges, above and beyond what they were charged by the CC companies. Their courts had to intervene and rule that they could not charge more than what was being charged to them by the CC companies. So, the precedent to gouge was seen in the UK when the surcharges were allowed.

Also the problem of not disclosing the surcharge until the very end was deemed noncompetitive since the final price could not be seen until the end. The US has already had problems with this with the airlines (and hotels) not disclosing all the taxes and fees upfront in the advertised prices.

kebosabi

Of course there has to be a limit to how much they can pass onto the consumer. CC/debit card fees are one thing, but if that pandora's box is opened, what next?

Should the supermarket for example, then be allowed to pass along the cost of freight to bring the groceries to the store to the consumer because of high gas prices? Should a gallon of milk be different from store A to store B within the same retail chain because store A is closer to the milk supplier than store B? Should the supermarket charge a "freezer electricity fee" for ice cream and frozen TV dinners because of increased cost in electricity?

There is a limit to what merchants can do that makes sense to the consumer level. Some will also play a wait and see game; if their competitor does it and can still maintain profit, then they'll go along. But if they see their competitor lose their customer base to theirs, then they'll go against the idea.

mia

I do not foresee a broad return to cash or checks. Initially I expect some type of incentive to pay by PIN verified debit card rather than by credit card. We already see some of this in tax payments and other government payment systems. The chain merchants will not want to discourage payment by card because they collect enormous amounts of data about individual shopping patterns. Smaller merchants are more likely to prefer cash.

Merchants need to balance the cost of accepting credit cards against consumer's reluctance to buy if the money is immediately deducted from our bank accounts. Flyertalkers use cards to earn rewards, but we should remember that most people use cards because they need to borrow money and carry a balance.

Dadaluma83

You know I wonder how the airlines feel about this? Are they getting excited about charging credit card users an extra 3% of the fare or so? You know they will jump on that opportunity once it is legal to do so.

However the airline industry also stands to take a good hit because of this. Airlines make a boat load of money from banks buying miles from them in bulk to award to the users of their co branded cards. If only a few merchants adopt the surcharge then people would just shop at places that don't charge a surcharge and the airline still gets that revenue from miles, while surcharging people who book tickets without their co branded card. I can see it now no credit card surcharges will be offered as a "perk" on co branded cards once this comes into effect.

However if most merchants adopt the surcharge, a lot of people will just cancel their co branded cards, I know I can only speak for myself but I am not paying 3% for earning one mile. If most merchants adopt the surcharge I will cancel any card with an annual fee and just keep a no frills no annual fee card just for emergencies or where I had to use a credit card, like for a car rental or hotel booking. I refuse under any circumstance to get a checkbook, and I would really rather not get a debit card because I would rather not have a number directly linking to my checking account. I would hope an alternative would be brick and mortar stores starting to accept paypal or paying with a smartphone, with no fees of course but that can have its own security issues as well.

This sucks.

AA_EXP09

And that those people help keep our rewards higher as they pay hundreds in interest every month.
I found a HELOC at prime MINUS 1/2% though which isn't bad.
But, I don't need one.
Interestingly enough in Canada we have that system already (Interac) but more banks (TD, RBC, CIBC) have Visa Debit cards now.

AA_EXP09

Or for your situation you could go to Mexico and buy stuff since its so close.

Quip

Aren't we already paying for these fees (the price I pay for a good or service should cover all costs associated with providing me that service including the cost of handling payment)? I seriously doubt adding a fee to take credit cards would make exchange more equitable - it would only make it more difficult for consumers to understand the true cost of goods which gives the merchant an unfair advantage.

travelinfoo

Paying with cash to avoid the surcharges also means losing some of the protections that comes from using CC. Now we have extended warranties, help with poor service or bad goods, protection from bankruptcy of businesses prior to provision of goods/services, and for some, 30 day price guarantees and baggage insurance.

I don't know that Paypal gives us the same assurances (aside from short term protection from fraudulent transactions). If a travel service goes bankrupt 3 months after we pay, does Paypal refund the money as a CC would? I thought Paypal gave only 30 days protection.

I think if one of the "big boys" (amazon, walmart, target, etc) do it and still manage to have a price advantage, however small, it'll be accepted by the public and subsequently spread. Many smaller places with smaller margins may implement it early, before any of the big boys, or up their base prices and then claim "no CC surcharge".
I already saw that in the UK. The B&Bs often would add a surcharge for CC; major chain hotels did not. However, the price the B&Bs listed was for the "cash" price, not the CC price. So the price I saw was not the actual price I would be charged with the CC. Also, the surcharge (3-5%) was always higher than their actual CC fees. In Italy, they listed the CC price and offered a discount for cash. This is much more transparent.

It's all in the wording. In both situations, cash payers paid less, which is what the pushers of the US bill are claiming for the consumers - you supposedly pay less without CC. However, I felt like I was getting a discount in Italy; whereas I felt like I was getting hosed in the UK (I was because of their excess charges).

This is a win-win for the business owners. Cash is not that big a deal to handle. Yes, it entails going to the bank and the possibility of theft but it also allows them to hide some of the proceeds from taxes by not declaring it, a much bigger way to profit. That's why businesses prefer cash.
If they are allowed to add a CC surcharge, I see the stores adding more than their costs and using it as a profit center. All it takes for it to be accepted as a cost of business at one of the big stores, e.g., amazon, then the others will quickly follow.

travelinfoo

That is the argument of the ppl pushing the bill: the consumer is paying more because of CC fees to stores. They claim this is for the benefit of the consumer. Some businesses claim they would be charging less if they did not have to cover the CC surcharges.

Only I see this as a way of businesses ADDING to their current prices even though they have already built in the cost of doing CC business. Any savings will NOT be passed onto the consumer.

cbn42

On a related note, does anyone know if the state laws banning surcharges (in CA, NY, and others) would cover airlines?

If airlines cannot charge the surcharge to residents of these states, they are going to be reluctant to charge others.

mtkeller

I concur. Australia allows fees, but it seems like the primary places charging fees for using cards were hotels when I was there. This is particularly anti-consumer, since credit cards are the main option for hotels. Sure didn't seem the rates were any cheaper because of the card fee.

It's a cost of doing business, and handling cash/checks comes with a cost, too. (For cash, sticky-fingered employees also becomes a concern.) I don't see why it should be illegal for Visa/MC to write into their contracts that merchants accepting those cards can't charge a fee for it. Merchants who don't want to factor the fee into their business expenses can see how they do by taking cash/check only.

apk123

Thank you government for "protecting" me, the consumer

mia

This article is not about legislation. It describes a negotiated settlement between MasterCard, VISA and chain store operators.

travelinfoo

This whole issue does involve legislation. The Durbin Amendment to the Dodds-Frank financial reform was brought about to address the issue to debit card swipe fees. It just did not include credit cards. Lawsuits were brought originally for debit and VISA/MC fees, claiming "collusion on swipe fees". Since the amendment covered the debit card fees, with a decrease in the fees charged, the ongoing suits involve the CC fees.

The lawsuit was never in the interest of the consumer though there were claims that decreasing the CC fees would bring the cost of doing business down and therefore the cost-savings passed onto the consumer. It was always in the interests of the businesses that brought the suit. In reality, I think we will see a situation similar to Australia. Surcharges will be added to existing prices. Even though the cost of doing business with CC is already built into existing prices, prices will not decrease because no saving will be passed to the consumer. Instead, it will increase the profits of the businesses, at the expense of BOTH the issuing banks AND the consumer.