jamesinclair

Yet another local spot to me has added a fee - 3.99%

storewanderer

Payment processors who will "set merchants up with no fee card acceptance" (code for set the merchant up to surcharge the customer) are out in force going after small businesses.

The only solution is to communicate to the small business owner why you do not like this policy and why you will be taking your business elsewhere, purchasing less than you did before, find their policy inconvenient and suggest it should be inconvenient for them and riskier for them to encourage cash too.

tmiw

It seems that Senator Durbin's credit card competition bill did get introduced (though whether it'll be considered this term is questionable). It seems that the second network can't be Visa or MC and can't be affiliated with the issuer (so something like ChaseNet wouldn't be acceptable either if I'm interpreting the bill correctly):

There are also provisions that ensure that Visa and MC can't, for instance, block some other network from supporting device verification (e.g. if you use Apple Pay). However, given that even contactless doesn't tend to use any verification these days, I'm not sure those provisions would have much impact.

cbn42

Interesting... so then what can the second network be? It would have to be either Discover, Amex, or a new yet-to-be-created network.

Perhaps the debit networks could be used for this purpose? But they have different fee structures and different consumer protections.

tmiw

JCB could make a comeback, too. Then again, they (and UnionPay) both use Discover in the US so neither would be all that much different than just having a Discover/Visa cobranded card or something.

As for consumer protections, I envision a lot of customer complaints when people find out Walmart (for example) routed their CC transaction over NYCE or something without their approval and thus have no chargeback rights. Or that the trip delay protection they thought their card had doesn't apply when WN or Spirit decides to route their payment not over the MC network.

Eujeanie

My auto mechanic has started charging more for CC payments - understandable, his right to do so. But my question is if he is right about what he told me...I'm calling BS but not to his face since he is a great mechanic.

He is charging 3.5% whether you use an Amex, Visa or anything else. I did say "even on Visa and MC which usually are less?" - he said "oh yes, so many people have cards that pay rewards and the cc companies charge us merchants more for those cards than cards that don't offer rewards" - Huh? Can that be true? I looked on line and it said V/MC are in the 1.5%-2.5% range, Amex higher.

I still think 3.5% is high to charge across the board, but maybe I'm wrong? In any case, I wrote a check...

josephstern

This is a really complicated area, but in short, this depends on the processor. If your mechanic is using something like Square, he's likely getting charged a flat rate for all credit cards (and maybe even all cards, debit or credit). If he's got an 'interchange plus' account with a processor, then yes, he's paying a different rate depending on the type of card, whether he swipes it or uses the chip or keys it in, etc.

So you'd have to make a guess about how sophisticated he is financially and then try to figure this all out.

My guess is that he's on a 'tiered' plan like Square and it's all smoothed over and he sees some blended rate like 2.9%, and the processor tells him to just charge 3.5% and that's all there is to it.

Eujeanie

He's a very small, local one of a kind shop - I think he has maybe 6 or so employees, 4 mechanics and 2 alternating part time office people. Not a chain or even a local multi-unit chain.

It was more what he said about he gets charged more for people using cards that provide rewards (which to me is there any other kind??) and those that don't (even my no-fee Amex gives me Hilton points).

I'm not even sure about swipe/chip - no terminal for me to use - I hand over my card (or I used to) and just got a receipt.

josephstern

Sure - there are straight up bank credit cards that have no points program attached to them at all. There are also secured cards and plenty of debit cards. It pains me when I see people using them, but on the flip side, they're all subsidizing our rewards.

rasheed

He is not allowed to charge more than what he pays, that is the Visa/MC policy. 3.5 is not unusual. By the way, you could pay with debit or check and avoid the fee if he is following the rules.

Could he get a better deal? Perhaps. Does he care much? Unsure, looks like he feels he won't lose business over the fee issue.

josephstern

I've never heard that a vendor can't charge more than they pay. That's interesting. And I just today got an invoice that reads "Effective September 15, 2015, we will be charging a convenience fee of 4% for all credit card transactions over $3,000.00." These guys are definitely not paying 4%. So if that's the law or in the language of the merchant agreement, plenty of merchants don't adhere to it.

storewanderer

The Visa Rules clearly read the surcharge cannot be more than the merchant's rate of acceptance.

If you try to report a merchant violation to Visa for a surcharge they will not take the violation unless the surcharge is greater than 4% for a US merchant.

How do I prove the merchant surcharge amount is more than their rate of acceptance? No way to prove that. So reporting merchants for surcharging I find to basically be a dead end. I just don't go to such merchants.

I think what is happening is these merchants who are now surcharging have made arrangements with their card processor for "fee free" card acceptance. Their card processor jacks up the processing rate to 3.5% and the merchant doesn't care since it is all being passed on to the customer now. Yet there are other processors out there who will process cards at just 2%.

I'd tell the auto mechanic to go shop card processors because the rate of the one he is using is, frankly, too high. Even if he wants to pass the fee on to the customers, there is a difference between passing 2% on to the customer vs. passing 3.5% on to the customer.

bigbuy

I have read in the past that cards with rewards do cost more to process. Cannot remember the source, but it was about 3 years ago. The response from American Express on this issue was that folks with a higher tier card were likley to spend more as that group was generally in a higher income bracket.

Eujeanie

He almost went under during Covid because no one was driving/therefore not needing maintenance so I'm glad he's still around. I'll just continue to pay by check. But thanks to many of these responses I can see where he's coming from. And unfortunately he's not alone, around here many, many local businesses have the 2-price system.

tmiw

Considering that Square charges 2.6% + 10c if the merchant's properly inserting or tapping cards (and is a fairly well known higher expense option as far as processors go), I would think that 3.5% would raise enough of a suspicion to at least ask the merchant's processor what they're charging. It could still legitimately cost the merchant 3.5%, of course, but the networks just assuming that it does seems a bit off to me.