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USA Merchants Reach Credit Card Surcharge Rights Agreement [Effective 1.27.2013]

USA Merchants Reach Credit Card Surcharge Rights Agreement [Effective 1.27.2013]

Old Jul 13, 2012, 8:37 am
  #46  
 
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Originally Posted by mia
I expect that merchant card surcharges would produce a similar initial negative reaction, but if presented as a discount for payment with a debit card they will be popular and enduring.
I agree, if merchants offer debit (for example) as a discount over a credit card, then more consumers may take the discount over the ability to defer payment / get points / have extended warranty / etc.

Adding a credit card surcharge seems very risky for the business to me, but offering a discount for debit is probably seen as a carrot as opposed to a stick. Many of my customers understand the cost of using credit cards, especially premium cards. Some would still take the points, some may opt for some cash off.

I am in Canada, and debit is very prevalent here, and the fees are typically 5 to 8 cents per transaction.
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Old Jul 13, 2012, 10:14 am
  #47  
 
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Originally Posted by Often1
Credit cards cost money to issue
The cost of physically issuing a credit card isn't really not that expensive. Majority of the cost is postage.

Basing on info from 2010:
http://www.creditcards.com/credit-ca...ocket-1276.php

Postage 61 cents
Activation sticker 3 cents
Processing 27 cents
Shipping to processor 3 cents
The actual plastic 17 cents

Total: $1.11


Note that this just for the typical mag-stripe credit card in the US. Add in an EMV chip, it may cost a bit more.
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Old Jul 13, 2012, 12:20 pm
  #48  
 
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There already is competition in the credit card processing area. Typically AMEX and Discover charge more per transaction as Visa/MC that is why you see a few places that don't take AMEX or Discover. Also AMEX and Discover do allow surcharges but only if all other cards are surcharged as well. So if the merchant wants to charge CC customers extra, just accept only Discover or AMEX.

I know banks have their faults but the merchants are being greedy and selfish with this. They want the increased sales and volume credit cards bring, and they want it for free. Cash and check have their fees as well. There is no such thing as a completely free method of payment for a merchant. They just want to have their cake and eat it too.

One thing for sure the banks and retailers need to compromise on this and not screw the customer over. One argument the retailers have is for small amounts the processing fees eat up their profit margin. If someone charges a 3 dollar coffee or 4 dollar bag of chips on their card the merchant actually loses money.

Ok so allow a surcharge on purchases less than 10 dollars to make up the profit margin, and leave high ticket purchases alone. Or the banks should greatly lower the processing fee for purchases less than 10 dollars, and in return don't give any rewards on it. So instead of 1 mile per dollar spent, we have 1 mile per dollar spent on total purchases greater than 10 dollars or whatever. Instead of a flat fee per transaction plus a percentage, for small purchases just charge a small percentage.

The banks and retailers need to work something out that doesn't greatly harm the customer.
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Old Jul 13, 2012, 12:28 pm
  #49  
mia
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Originally Posted by Dadaluma83
There already is competition in the credit card processing area.
Some but MasterCard and VISA's contracts both require the merchants to accept all of their cards, or none. Their market share makes it less practical to decline all MasterCards or all VISA cards than to decline American Express or Discover. Allowing merchants to reflect transaction cost differentials should create greater competition. Having some is good, having more will be better.
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Old Jul 13, 2012, 3:21 pm
  #50  
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Originally Posted by Dadaluma83
There already is competition in the credit card processing area. Typically AMEX and Discover charge more per transaction as Visa/MC that is why you see a few places that don't take AMEX or Discover. Also AMEX and Discover do allow surcharges but only if all other cards are surcharged as well. So if the merchant wants to charge CC customers extra, just accept only Discover or AMEX.

I know banks have their faults but the merchants are being greedy and selfish with this. They want the increased sales and volume credit cards bring, and they want it for free. Cash and check have their fees as well. There is no such thing as a completely free method of payment for a merchant. They just want to have their cake and eat it too.

One thing for sure the banks and retailers need to compromise on this and not screw the customer over. One argument the retailers have is for small amounts the processing fees eat up their profit margin. If someone charges a 3 dollar coffee or 4 dollar bag of chips on their card the merchant actually loses money.

Ok so allow a surcharge on purchases less than 10 dollars to make up the profit margin, and leave high ticket purchases alone. Or the banks should greatly lower the processing fee for purchases less than 10 dollars, and in return don't give any rewards on it. So instead of 1 mile per dollar spent, we have 1 mile per dollar spent on total purchases greater than 10 dollars or whatever. Instead of a flat fee per transaction plus a percentage, for small purchases just charge a small percentage.

The banks and retailers need to work something out that doesn't greatly harm the customer.
But people can get around it by buying prepaid CCs that are worth >$10 in the second option.
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Old Jul 13, 2012, 3:53 pm
  #51  
 
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Credit Card Surcharges to be Allowed

Gulp

http://www.npr.org/blogs/thetwo-way/...with-retailers
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Old Jul 13, 2012, 4:12 pm
  #52  
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Moderator action

Mountain Trader's post has been appended to the established thread, and the title has been updated because the settlement has been announced.
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Old Jul 13, 2012, 4:48 pm
  #53  
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Originally Posted by chelmkamp
I stayed at the Crowne Plaza in Auckland one week before they tacked on their credit card fee, and again two weeks later. The base price of the room was the same it was when I booked several months before, the same as it was advertised on their website, but I paid 3% more for my second stay. I had no say in the matter -- I had already booked the hotel months prior, and didn't find out about the CC fee until the second time I checked in. By that time, I wasn't able to get out of my booking and go to a hotel without the fee. According to Visa Asia, this was all permissible because of new NZ laws.

This is the key issue. I'm fine with merchants working the cost of business (including accepting credit cards) into the advertised price. I'm NOT fine with businesses tacking on fees to allow them to skirt advertising the real price of the service or product to the consumer.
It takes time for changing costs to be reflected in prices. If a store's rent goes up by 10%, they aren't going to bump up their prices by 10% overnight. Assuming the Crowne Plaza isn't the only hotel in Auckland, sooner or later they will need to adjust their prices downwards in order to reflect their new costs, or some other hotel will do so and take their customers.

As I said earlier, interchange fees are a small percentage of the total cost, and prices are constantly in flux due to dozens of factors, so it is impossible to run a controlled experiment.
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Old Jul 13, 2012, 5:05 pm
  #54  
 
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Originally Posted by mia
Some but MasterCard and VISA's contracts both require the merchants to accept all of their cards, or none. Their market share makes it less practical to decline all MasterCards or all VISA cards than to decline American Express or Discover. Allowing merchants to reflect transaction cost differentials should create greater competition. Having some is good, having more will be better.
Many education institutions do decline Visa and only accept MC/AMEX/Discover.
I have also seen merchants with PayPass terminals that only accepts MasterCard.

I have no problem with merchants that only accept Visa or MC or AMEX, or debit only for that matter, because they clearly display the network's decal on their door so I know before I enter the store instead of finding out after I finish a meal and ready to pay.

It creates massive confusion for consumers if merchants are allowed to accept some but not all Visa / MC Credit Cards.

As if it's not complex enough already? "Yes you can use this World MasterCard but not that World Elite MasterCard?"
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Old Jul 13, 2012, 5:11 pm
  #55  
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Originally Posted by Ragnarok
Many education institutions do decline Visa and only accept MC/AMEX/Discover.
I have also seen merchants with PayPass terminals that only accepts MasterCard.

I have no problem with merchants that only accept Visa or MC or AMEX, or debit only for that matter, because they clearly display the network's decal on their door so I know before I enter the store instead of finding out after I finish a meal and ready to pay.

It creates massive confusion for consumers if merchants are allowed to accept some but not all Visa / MC Credit Cards.

As if it's not complex enough already? "Yes you can use this World MasterCard but not that World Elite MasterCard?"
In Canada, Tim Hortons used to be that way and only accepted MC until a 2 months ago, when they could accept Visa.
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Old Jul 13, 2012, 5:15 pm
  #56  
 
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Originally Posted by drwilliams
I agree, if merchants offer debit (for example) as a discount over a credit card, then more consumers may take the discount over the ability to defer payment / get points / have extended warranty / etc.
I agree.

A grocery store that I go frequently only accepts pin-based Debit cards, but I still go there a lot.

This is partially because they are consistently cheaper than its competitors, so I can see the savings passed to me.

However I don't see the other businesses who have been accepting credit cards lowering their prices after they can charge a surcharge for card use.

Why will they even consider passing the savings to the consumers if their customers have been shopping at their businesses and are fine with their prices?
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Old Jul 13, 2012, 6:04 pm
  #57  
 
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Originally Posted by Redhead
The first time this happens, I will leave my purchases there and call the manager over to explain why I am not making my purchase and go to a store without the surcharge.
I think a very important fact is the studies that show that customers who buy with credit cards tend to spend a lot more than those who spend cash. Maybe I would go into a store, buy something for a dollar, and tell them I had been planning to spend about $100 but have no extra cash on me, and will not pay a surcharge to use a credit card.
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Old Jul 13, 2012, 7:05 pm
  #58  
 
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It will be interesting to see how all this plays out the rest of the year. I read the earliest the surcharges can take effect is early 2013.

Lots to find out the rest of the year. Which businesses are most likely to impose the surcharge? we all know gas stations for sure since they already offer cash and credit prices.

How about grocery stores? Department stores? restaurants? Also most importantly to us FTers what about online commerce? A credit card is almost a necessity for online shopping. Will amazon, ebay/paypal, surcharge? Will airlines? Hotels? Car rentals?

It gets particularly complicated for online shopping as some states forbid surcharges by law.

I wonder what this will do to current signup bonuses we all know and love? About Jan or Feb 2013 I had planned on cancelling my United explorer card since the annual fee is due and opening up a sapphire preferred instead. Then depending on how next year goes I will decide to cancel or keep the SP. One thing for sure I am for sure never paying a surcharge on a credit card purchase. I won't even enter the store. That was a relief to read at least that if a store will surcharge, it has to be disclosed upfront on the entrance to the store.

will be interesting to see how this plays out.
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Old Jul 13, 2012, 8:24 pm
  #59  
 
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Overall, I think that these savings will be shared between consumers and businesses, but the FlyerTalk community that rakes it in on credit-card sign on bonuses are the folks that are going to get gored.

The CC profit model has shifted from risky debt that people might have trouble paying off to one based on volume, and a decrease in interchange fees is going to affect the profitability of Amex SPG or Chase Sapphire Preferred customers (folks that probably don't carry a balance but might have huge monthly spends). As that profitability is reduced, the sign up bonuses and awards are going to shrivel up disproportionately.

I'm going to snag as many bonuses as I can in the next 6-8 months; I feel this bizarre gravy train of travel perks for credit card sign ups is at risk.
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Old Jul 13, 2012, 8:31 pm
  #60  
 
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Originally Posted by Dadaluma83
It will be interesting to see how all this plays out the rest of the year. I read the earliest the surcharges can take effect is early 2013.

Lots to find out the rest of the year. Which businesses are most likely to impose the surcharge? we all know gas stations for sure since they already offer cash and credit prices.

How about grocery stores? Department stores? restaurants? Also most importantly to us FTers what about online commerce? A credit card is almost a necessity for online shopping. Will amazon, ebay/paypal, surcharge? Will airlines? Hotels? Car rentals?

It gets particularly complicated for online shopping as some states forbid surcharges by law.

I wonder what this will do to current signup bonuses we all know and love? About Jan or Feb 2013 I had planned on cancelling my United explorer card since the annual fee is due and opening up a sapphire preferred instead. Then depending on how next year goes I will decide to cancel or keep the SP. One thing for sure I am for sure never paying a surcharge on a credit card purchase. I won't even enter the store. That was a relief to read at least that if a store will surcharge, it has to be disclosed upfront on the entrance to the store.

will be interesting to see how this plays out.
In my area, several gas stains have a different price for cash & credit. I drive right on by them, esp since their cash price is no different from the "no difference" price 1/4 mile away.
I hope amazon and the other large e-stores don't add the surcharge (I think some are based in surcharge-banned states). I hardly ever step into a real store (except grocery) and won't support a local store that adds the surcharges (sorry, small local business).

I think the airlines and hotels will add the surcharges. They already have in several countries where it is allowed.
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