I am going to try and use my AA MasterCard to pay for a new car purchase...when the dealer asks if I want to pay the MC surcharge, does anyone know what a big dealer actually pays as a percentage of the charge amount on a single large transaction vs. the "standard 2% or so" bantered about, so that if he offers to "let me pay the cost", I know what ti expect?

On a related note, what would people here pay?

nologic,

Something I do on high-value transactions, not only as a BUYER, but also as a SELLER...when I sense a reluctance to let me pay by [accept if its me] a credit card...is offer to pay "half the points"...which I firmly mean to be 1.5%.

My guess is that an auto dealer will pay very close to 2%, ranging up to 3% if they don't negotiate w/ their bank or merchant company very well, and for AMEX, 2.5% ranging up to 3.5% or even higher.

IMO, if you offer to cover 1.5%....that is fair and, technically, something they are not allowed to do even (charge points) as a credit card merchant...but theory and practice are two different things...we all know.

What is the maximum percentage you would pay to enable the use of a mileage earning credit card? Is it still worth it if it is over 2%?

Keith

I recall a post where if a retailer displays a credit card logo, they must accept it for all purchases.

My sense is that they pay less than 2% on large ticket items...

I am actually inquiring about Mercedes dealers...I can't imagine they don't have a "good" deal/rate, but wanted to know if anyone had any factually-based knowledge.

If the dealer does any credit card volume at all, the going rate is 1.6% on Visa and MC.
Credit card fees charged to the customer are allowed by MC but are prohibited under the Visa Merchant Agreement.

Huh...so when I bought my car two years ago & wanted to pay with credit card (for the miles), they told me I can only put 20% on the card.

At the time I assumed this was a legal issue, but in fact, it was just the dealer's policy?

I bought a car last month. They don't take it for down payments or purchases, but the take it for auto repairs and parts. I guess I should have agrued a bit more.

I buy 2-4 Chevy trucks per year from a good friend's dealership....He charges me 2% fee. He pays a bit more than that....

yes, it appears they can set limits. I have tried to use visa with several car purchases and would have loved to buy the entire vehicles with my cc, but both dealers limited me to $1000. And fwiw, in the retail grocery industry, merchants I am familiar with pay 2.0 - 2.5% transaction fees even with very high volumes.


[This message has been edited by gregseattle (edited 07-04-2002).]

Anyone know about Mercedes dealers? I am going to try and use my Starwood Amex to charge a car.

What do Mercedes dealers pay?

My company does about $500K/yr in credit card charges - between 4 merchant accounts (one for on-line transactions, one "standard terminal" + discover + amex) - we are a relatively small company... (very small as far as the credit card processors are concerned)

Our lowest rate is for card present transactions: 1.59% for mc and visa. discover is 1.65% Amex is 3.15% - no per-transaction fees.

non-card present transactions for us are slightly more - with internet transactions the most expensive - with amex always more than mc or visa.

Merchants are typically allowed to give a "cash discount" without violating their merchant agreements.... however, our contract specifically prohibits us from a "credit card surcharge".

It's simply bad business to discourage credit cards... our goal is to make the sale and collect the money... If I have a card present transaction, for any amount, I'm thrilled... I know that money will be in my bank in 24-48 hours, and I am protected by my merchant account as long as the signature matches the card.

i can understand why a merchant who may be working with ultra-slim margins may be reluctant to give up 1.5 points -- so these merchants simply have to state that their price quotes are for cash transactions only (and the quoted price reflects a "cash discount") - this keeps them cool with the merchant banks and the customer will respect their honesty.

unfortunately, many merchants have been f%*#ed one too many time, and put policies in place that are not consumer friendly.

your effort to discover the actual discount rate is good -- but in the case of a high volume car dealership, for a visa or mc, if they pay 1.5%, that's probably the maximum rate they pay...

cpd

Our dealerships pay a discount rate of between 1.5 and 1.75 depending on the card.

Merchant rates are based on volumes of course.......as we average 800K a month of CC charges it adds up pretty fast.




[This message has been edited by Carioca Canuck (edited 07-07-2002).]

One of the main reasons car dealers are reluctant to accept credit cards for cars has nothing to do with the discount rate but is related to the recourse the card holder has with the help of the credit card company if he/she is unhappy with their purchase.

Clanson is right......I tried to do the same thing with my recent auto purchase, and despite the fact that there were two dealers across the street from one another trying to sell me essentially the same car, neither would do it even if it meant losing the sale. Your warranty is your warranty, they don't want to be tied up haggling with charge backs to visa/mc/amex, etc. Good luck.