USA Merchants Reach Credit Card Surcharge Rights Agreement [Effective 1.27.2013]
Jul 14, 2012, 3:39 pm
#76
Moderator: Manufactured Spending
Join Date: Jul 2011
Posts: 6,580
Even merchants that accept credit cards still accept cash, so they need to have security. The cost of the safe doesn't double if the volume of your cash transactions doubles. And these days check fraud is increasingly rare.
Jul 14, 2012, 4:25 pm
#77
Join Date: Nov 2010
Posts: 580
This report does a great job of describing the hidden costs for cash payments and why the merchants complaining about them seem to be exaggerating:
http://www.laweconcenter.org/images/...nterchange.pdf
Of interest from this report (I am sure that most of the frequent fliers on this board knew this):
"Thus even before taking into account the full social costs of legacy payment systems, these forms of payment may impose costs on merchants that approach or exceed the costs of cards. In fact, a number of airlines, including American, United, Southwest, JetBlue, US Airways, and Alaska Airlines, probably in response to this reality, have eliminated in-flight cash payments altogether and opted to accept only cards."
http://www.laweconcenter.org/images/...nterchange.pdf
Of interest from this report (I am sure that most of the frequent fliers on this board knew this):
"Thus even before taking into account the full social costs of legacy payment systems, these forms of payment may impose costs on merchants that approach or exceed the costs of cards. In fact, a number of airlines, including American, United, Southwest, JetBlue, US Airways, and Alaska Airlines, probably in response to this reality, have eliminated in-flight cash payments altogether and opted to accept only cards."
Jul 14, 2012, 4:59 pm
#78
Join Date: Feb 2010
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AA & others stopped selling GCs in NJ, due to new onerous record keeping laws in New Jersey.
Jul 14, 2012, 5:01 pm
#79
Moderator: Manufactured Spending
Join Date: Jul 2011
Posts: 6,580
This report does a great job of describing the hidden costs for cash payments and why the merchants complaining about them seem to be exaggerating:
http://www.laweconcenter.org/images/...nterchange.pdf
Of interest from this report (I am sure that most of the frequent fliers on this board knew this):
"Thus even before taking into account the full social costs of legacy payment systems, these forms of payment may impose costs on merchants that approach or exceed the costs of cards. In fact, a number of airlines, including American, United, Southwest, JetBlue, US Airways, and Alaska Airlines, probably in response to this reality, have eliminated in-flight cash payments altogether and opted to accept only cards."
http://www.laweconcenter.org/images/...nterchange.pdf
Of interest from this report (I am sure that most of the frequent fliers on this board knew this):
"Thus even before taking into account the full social costs of legacy payment systems, these forms of payment may impose costs on merchants that approach or exceed the costs of cards. In fact, a number of airlines, including American, United, Southwest, JetBlue, US Airways, and Alaska Airlines, probably in response to this reality, have eliminated in-flight cash payments altogether and opted to accept only cards."
But in any case, the final test should be the merchants themselves. If merchants say that credit cards are more expensive to process than cash, I will always believe that over some report from an academic organization.
Jul 14, 2012, 5:40 pm
#80
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Do you think that merchants could say no fees on GCs paid with CC so that they would encourage people to instead carry a store credit balance?
What about this scenario ?
I live in Canada.
I can buy Home Depot GCs here at Rexall and not pay the fee.
I am allowed to use these in the US.
This way, I get around the fee.
Also works for Shell and Bed Bath + Beyond.
What about this scenario ?
I live in Canada.
I can buy Home Depot GCs here at Rexall and not pay the fee.
I am allowed to use these in the US.
This way, I get around the fee.
Also works for Shell and Bed Bath + Beyond.
Jul 14, 2012, 7:53 pm
#81
Join Date: Jan 2009
Location: LAX
Posts: 670
The most frustrating part of this is that, if surcharges are in fact imposed, we are essentially being charged twice for the CC processing charges.
The processing charges incurred by merchants are a cost of doing business. Any well run business factors in its cost when setting its prices. (Yes, ALL costs of doing business are passed onto the customer.) So, presumably, as CC payments have become more common over the years, merchants have raised their prices to factor in this cost. Thus, the processing charges are already being paid by the consumer, just not as a separate line item. If they now add the surcharge as a separate line item, we are paying that charge twice (the 2-3% gradual price rise over the years + the explicit newly added surcharge).
The correct way to do this would be to give cash users a discount, as current prices should already reflect the processing charges.
The processing charges incurred by merchants are a cost of doing business. Any well run business factors in its cost when setting its prices. (Yes, ALL costs of doing business are passed onto the customer.) So, presumably, as CC payments have become more common over the years, merchants have raised their prices to factor in this cost. Thus, the processing charges are already being paid by the consumer, just not as a separate line item. If they now add the surcharge as a separate line item, we are paying that charge twice (the 2-3% gradual price rise over the years + the explicit newly added surcharge).
The correct way to do this would be to give cash users a discount, as current prices should already reflect the processing charges.
Jul 14, 2012, 8:18 pm
#82
Join Date: Jul 2007
Posts: 1,762
The most frustrating part of this is that, if surcharges are in fact imposed, we are essentially being charged twice for the CC processing charges.
The processing charges incurred by merchants are a cost of doing business. Any well run business factors in its cost when setting its prices. (Yes, ALL costs of doing business are passed onto the customer.) So, presumably, as CC payments have become more common over the years, merchants have raised their prices to factor in this cost. Thus, the processing charges are already being paid by the consumer, just not as a separate line item. If they now add the surcharge as a separate line item, we are paying that charge twice (the 2-3% gradual price rise over the years + the explicit newly added surcharge).
The correct way to do this would be to give cash users a discount, as current prices should already reflect the processing charges.
The processing charges incurred by merchants are a cost of doing business. Any well run business factors in its cost when setting its prices. (Yes, ALL costs of doing business are passed onto the customer.) So, presumably, as CC payments have become more common over the years, merchants have raised their prices to factor in this cost. Thus, the processing charges are already being paid by the consumer, just not as a separate line item. If they now add the surcharge as a separate line item, we are paying that charge twice (the 2-3% gradual price rise over the years + the explicit newly added surcharge).
The correct way to do this would be to give cash users a discount, as current prices should already reflect the processing charges.
The programs have come back in the last year and a half of supposed "cash discouns" which are credit card surcharges. If I pay more for using my credit card, I am being charged a surcharge. Of course, it became even hairier to try to resolve these issues once the Durbin Amendment was passed allowing cash discounts (in effect telling the cc companie they could not put in their merchant agreements prohibition of cash discounts as well as taking out the provisions from merchant agreements prohibiting minimum purchases under $10.
As far as I know, this is where it stands today.
Jul 14, 2012, 9:25 pm
#83
Join Date: May 2008
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To me, this whole thing seems almost picture-perfect. Not in a selfish sense (selfishly, I'm petrified that the people who use cash, debit cards, or non-rewards cards will stop subsidizing my rewards points) but in an economic sense. There seems to be no reason why merchants shouldn't be allowed to set their prices and pricing structures as they choose. What we have/had here is a classic case of antitrust, a small number of sellers with market power in a market characterized by high barriers to entry, collectively using that power to control the market and inhibit competition.
Hoping not to provoke a re-debate of NFIB vs. Sebelius (the Obamacare decision), I will say that it would seem very much to be a legitimate exercise of the commerce clause, should Congress choose to do so, to override state laws pertaining to surcharges (or banning same) in interstate payment systems.
To an economist, there is no difference whatsoever between a credit card surcharge and a cash/debit/check discount. But we are not lawyers, and we don't really care to step on their turf and prefer that they stay off ours.
Merchants don't need some think tank - right, left, or center - telling them what drives their costs. In my own small business, it's not an issue at all (I'm a consultant, nobody would think of paying me with a credit card), but if it were, I would happily tell any think tank that wants to tell me which payment system is best for me to kindly kneel down and kiss my ***. And an economist would say the same thing, and say that the ultimate "decision" will be made by the collective wisdom of millions of businesses sending, receiving, and acting on market signals.
I don't know what the heck will happen. Some types of businesses, like automobile and furniture retailers, already discourage credit card payments. Some, like online retailers and airlines (who are essentially online retailers) will never be in a position to accept cash, but might well give discounts for debit vs. credit cards. The market segment of people who need the credit aspect of cards, vs. convenience, will have little choice.
What I'm most curious to see is whether merchants will charge different fees for different kinds of cards, and how they will be disclosed. That could be quite complex, and fascinating.
Hoping not to provoke a re-debate of NFIB vs. Sebelius (the Obamacare decision), I will say that it would seem very much to be a legitimate exercise of the commerce clause, should Congress choose to do so, to override state laws pertaining to surcharges (or banning same) in interstate payment systems.
To an economist, there is no difference whatsoever between a credit card surcharge and a cash/debit/check discount. But we are not lawyers, and we don't really care to step on their turf and prefer that they stay off ours.
Merchants don't need some think tank - right, left, or center - telling them what drives their costs. In my own small business, it's not an issue at all (I'm a consultant, nobody would think of paying me with a credit card), but if it were, I would happily tell any think tank that wants to tell me which payment system is best for me to kindly kneel down and kiss my ***. And an economist would say the same thing, and say that the ultimate "decision" will be made by the collective wisdom of millions of businesses sending, receiving, and acting on market signals.
I don't know what the heck will happen. Some types of businesses, like automobile and furniture retailers, already discourage credit card payments. Some, like online retailers and airlines (who are essentially online retailers) will never be in a position to accept cash, but might well give discounts for debit vs. credit cards. The market segment of people who need the credit aspect of cards, vs. convenience, will have little choice.
What I'm most curious to see is whether merchants will charge different fees for different kinds of cards, and how they will be disclosed. That could be quite complex, and fascinating.
Jul 14, 2012, 9:35 pm
#84
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They're also purchases where there's heavy business spend. Airlines and hotels no doubt believe that many customers will pay the surcharge, bill their company or clients as a cost of doing business, and continue to reap the credit card rewards they've always enjoyed.
The folks really left out in the cold will be leisure travelers that pay their own way. For them, the economics may well turn against use of credit cards. I've seen overseas fees of up to 4 pounds for using a CC to buy a train ticket costing 65 pounds. No way is any rewards card worth that kind of premium.
Jul 14, 2012, 9:59 pm
#85
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Yes, and these tend to be large purchases.
They're also purchases where there's heavy business spend. Airlines and hotels no doubt believe that many customers will pay the surcharge, bill their company or clients as a cost of doing business, and continue to reap the credit card rewards they've always enjoyed.
The folks really left out in the cold will be leisure travelers that pay their own way. For them, the economics may well turn against use of credit cards. I've seen overseas fees of up to 4 pounds for using a CC to buy a train ticket costing 65 pounds. No way is any rewards card worth that kind of premium.
They're also purchases where there's heavy business spend. Airlines and hotels no doubt believe that many customers will pay the surcharge, bill their company or clients as a cost of doing business, and continue to reap the credit card rewards they've always enjoyed.
The folks really left out in the cold will be leisure travelers that pay their own way. For them, the economics may well turn against use of credit cards. I've seen overseas fees of up to 4 pounds for using a CC to buy a train ticket costing 65 pounds. No way is any rewards card worth that kind of premium.
I already have $18K worth though.
Jul 15, 2012, 10:34 am
#86
Join Date: Aug 2010
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Merchants (and their associations fighting the other end of this battle) have an agenda too, just like the think tank who did this report. Consumers also have an agenda, but don't typically have a man in the ballgame.
I, for one, will tend to believe a well-made argument based on an objective analysis of data. Show me the data suggesting consumers in NZ and Ozzie have been handed cheaper prices following the addition of surcharges for CC users, and I'll reconsider my position.
Jul 15, 2012, 10:59 am
#87
Join Date: Mar 2010
Posts: 468
So, i caught the tail end of a news report on NPR this morning where they concluded saying that it was expected that large retailers would not add a surcharge for CC use, only smaller retailers. I found this curious as Kroger, which operates numerous supermarkets across the US under a variety of names, was actually a party to this action. I would therefore anticipate that they plan to add a surcharge.
I heard this report driving back from the grocery where I once again had to check out and bag all my groceries at a self- service kiosk, through which the most convenient payment options are credit cards and debit cards. I usually try to keep people employed by going through the lanes with actual cashiers, but the lines were so long..
All my local grocery stores, including Kroger, Meijier, and Walmart have these kiosks and have reduced the number of registers staffed with cashiers. Kroger wants me to check myself out and bag my groceries and then give me only two convenient payment options, debit and credit cards. And it seems that next they will begin charging me if I use one of those options. It is very annoying, and I do not have any viable alternatives to these stores, at least where my purchase of perishables are concerned. I would definitely shift as many of my purchases to other providers as I can. For example, if Kroger imposes the surcharge and Amazon does not, I can buy many of these items
from Amazon and I will. At least I will be helping keep the local UPS guy employed
I heard this report driving back from the grocery where I once again had to check out and bag all my groceries at a self- service kiosk, through which the most convenient payment options are credit cards and debit cards. I usually try to keep people employed by going through the lanes with actual cashiers, but the lines were so long..
All my local grocery stores, including Kroger, Meijier, and Walmart have these kiosks and have reduced the number of registers staffed with cashiers. Kroger wants me to check myself out and bag my groceries and then give me only two convenient payment options, debit and credit cards. And it seems that next they will begin charging me if I use one of those options. It is very annoying, and I do not have any viable alternatives to these stores, at least where my purchase of perishables are concerned. I would definitely shift as many of my purchases to other providers as I can. For example, if Kroger imposes the surcharge and Amazon does not, I can buy many of these items
from Amazon and I will. At least I will be helping keep the local UPS guy employed
Last edited by travelpye; Jul 15, 2012 at 11:31 am Reason: Typos
Jul 15, 2012, 11:15 am
#88
Join Date: Jul 2007
Posts: 1,762
So, i caught the tail end of a news report on NPR this morning where they concluded saying that it was expected that large retailers were not expected to add a surcharge, only smaller retailers. I found this curious as Kroger, which operates numerous supermarkets across the US under a variety of names, was actually a party to this action. I would therefore anticipate that they plan to add a surcharge.
I heard this report diving back from the grocery where I once again had to check out and bag all my groceries at a self- service kiosk, through which the most convenient payment options are credit cards and debit cards. I usually try to keep people employed by going through the lanes with actual cashiers, but the lines were so long..
All my local grocery stores, including Kroger, Meijier, and Walmart have these kiosks and have reduced the number of registers staffed with cashiers. My thought is that Kroger wants me to check myself out and bag my groceries and then give me only two convenient payment options, debit and credit cards. And then next will begin charging me if I use one of those options. It is very annoying, and I do not have any viable alternatives to these stores.
I heard this report diving back from the grocery where I once again had to check out and bag all my groceries at a self- service kiosk, through which the most convenient payment options are credit cards and debit cards. I usually try to keep people employed by going through the lanes with actual cashiers, but the lines were so long..
All my local grocery stores, including Kroger, Meijier, and Walmart have these kiosks and have reduced the number of registers staffed with cashiers. My thought is that Kroger wants me to check myself out and bag my groceries and then give me only two convenient payment options, debit and credit cards. And then next will begin charging me if I use one of those options. It is very annoying, and I do not have any viable alternatives to these stores.
Jul 15, 2012, 11:38 am
#89
Join Date: Nov 2010
Posts: 580
I noticed that the National Association of Convenience Stores has rejected the settlement.
http://uspolitics.einnews.com/pr_new...and-mastercard
Does this mean that it might not go through? Most of the other news reports have seemed to describe it like this is a done deal, but if one of the major plaintiffs does not agree to the settlement, I am wondering whether it could go to a trial instead (which, with appeal,s would make this really long and drawn out before new rules are implemented). Does anyone have information about this?
http://uspolitics.einnews.com/pr_new...and-mastercard
Does this mean that it might not go through? Most of the other news reports have seemed to describe it like this is a done deal, but if one of the major plaintiffs does not agree to the settlement, I am wondering whether it could go to a trial instead (which, with appeal,s would make this really long and drawn out before new rules are implemented). Does anyone have information about this?
Jul 15, 2012, 3:13 pm
#90
Join Date: Apr 2004
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The one other thing that gives me a little bit of hope is the fact that three of the nation's most populated states, California, New York, and Texas, are among the states that will still prohibit credit card surcharges. Because of the large populations in these states, I am hoping that credit card companies and retailers will come up with nation-wide models that will follow the rules of these states.
https://www.oag.state.tx.us/agency/weeklyag/2006/1106cc_faqs.pdf
Basically, the middle paragraph in the third column states discounts for paying with cash are legal in Texas. So the retailer can just call it a cash discount instead of a surcharge for a credit card and all is well.
This article goes on to state that all 10 states that have laws against credit card surcharges also have this loophole where they allow cash discounts.
http://www.fivecentnickel.com/2011/1...rd-surcharges/
In Texas, I see cash discounts for diesel fuel at gas stations all the time. The loophole is so huge, the law against surcharges seems meaningless to me.