Credit Card Checkout fees for Visa/Mastercard purchases in most states begins 1/27/13

Discussion in 'Other Credit Card Programs' started by Max M, Jan 24, 2013.  |  Print Topic

  1. Max M

    Max M Gold Member

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    Haven't seen this mentioned yet....

    Effective starting this Sunday, merchants will be allowed to charge "credit card check out fees", up to a 4% fee, for using Visa and Mastercard--- Amex users are exempt:

    http://money.msn.com/credit-cards/a...775e29b3b&ocid=vt_twmsnmon&buffer_share=3baf1

    While most large retailers won't probably charge these fees, this is a slight game changer in the world of miles earned from credit cards.
     
  2. yaychemistry

    yaychemistry Silver Member

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    Just to note from the article: These fees are specifically banned by state law in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas

    I'm guessing that chains that have stores in one or more of these states probably won't charge the fee any time soon either.
     
  3. DTWBOB

    DTWBOB Silver Member

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    You already see it at some gas stations where there are two prices, one for cash, one for credit cards....

    and at 4% the store is making money on the deal.

    Bob H
     
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  4. marcwint55

    marcwint55 Gold Member

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    In California there are many small business that charge a 50 cent fee for using credit cards. I don't know if it is legal or not, but I have never argued about it as I don't mind the merchant trying to recoup some of their costs. I would not be happy with a 4% fee and would not pay it.
     
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  5. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

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    The cost is already included in the price, just like the cost of lighting the store. So by adding a fee does anyone think they are going to drop their prices by 4% ?
     
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  6. Sun W Kim

    Sun W Kim Active Member

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    The motivation here is to really encourage, cash and debit cards (the new check).

    If the price is already built into the product, then those businesses are reduce prices by 4% will correctly charging the 4% to the actual customers that cost them 4% more. When you work on thin margins in highly competitive markets, it could be a strong differentiation between businesses.
     
  7. DTWBOB

    DTWBOB Silver Member

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    Actually, most credit card fees to merchants are on the order of 3%....

    States that charge sales tax are also going to make money on this !

    DTWBOB
     
  8. murakami

    murakami Silver Member

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    It is all about the illusion that the store isn't the one raising the prices, but that they had to because of "the man" driving up their cost of business.
     
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  9. RestlessLocationSyndrome
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    RestlessLocationSyndrome Silver Member

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    Scenario: I walk into a store and want to buy a $700 suit. I see the price but at check out, I am told that I will be charged an addition $28 to use a credit card. I naturally don't walk around with $800 in cash so I just decline to make the purchase. I then go home and purchase it on the internet where I will not get charged the $28 fee... and may even use a mileage mall / cash back portal.

    If anything, this will further accelerate the movement of shoppers using brick and mortar stores as display / trial locations where they will then just go home and purchase online.... (if not in the store on their smartphone).

    Just look at what is happening to Best Buy even before this credit card fee starts and the future doesn't look too bright for a brick and mortar who decides to implement the fee.
     
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  10. arkleseizure
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    arkleseizure Silver Member

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    Right. Because the handling, storage, transfer, and depositing of cash has 0% cost to the business. Nor is there any risk of theft when sitting on a pile of money.

    Not that I expect to find myself in many situations where this happens, but I'll gladly just head back where I came from if I encounter this fee.
     
  11. flyingdawg
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    flyingdawg Gold Member

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    If a business can't absord or build-in the cost (to the product) associated with accepting a certian currency - in this case certian branded credit cards, then maybe they shouldn't accpet Visa/MC to begin with.
     
  12. Mapsmith
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    Mapsmith Gold Member

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    Does that mean that any of the Airlines based in New York or Texas will not be able to charge a Credit Card Convenience fee if the Airlines in say Arizona, Washington, or Illinois decide to start charging for using a credit card???
     
  13. paladin87
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    paladin87 Silver Member

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    So..most stores that charge a 50c fee on purchases under 10 or $15 (that is usually the case) don't bother you, but a 4% fee would? So, if you buy a $3 drink and they charge you the equivalent of 17% more, you are ok. If they charge you 4% though, you are totally against it? Personally I do not like either scenario.
     
  14. lusfort

    lusfort Silver Member

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    This bodes well for Amex, Watch the stock pop on Monday
     
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  15. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Why? This isn't exactly coming as a surprise.
     
  16. bigx0

    bigx0 Gold Member

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    Or one can argue less merchants will choose to accept Amex since they can't recoup their costs.
     
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  17. anabolism
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    anabolism Gold Member

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    I'm not sure a suit is such a good example...typically, a suit is something that you need to try on, and usually needs some minor alteration for a reasonable fit.

    Your general point about this driving more people to online shopping may be the case, but I have my doubts that most people will walk out when encountering it. I suspect it's more likely that, having already committed to the purchase, a typical response will be anger and a begrudging purchase, but a lost long-term customer who will go elsewhere next time.

    That's what I think most people won't do.
     
  18. lusfort

    lusfort Silver Member

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    It came as a surprise to me pr maybe I'm just ill informed, I'm not sure how many people have gotten prior notice to this.

    Good point, But I think the plastic culture in American is currently too ingrained in everyone's lifestyle.
    Be it for necessity or convenience, if the store is going to charge me 4% if i use a Visa or Mastercard, I'll choose to use my Amex. If they do not accept the Amex, I'm going to take my business somewhere else.

    Either way, as a savvy business owner, The interchange fee would have already been calculated as part of the selling cost of the item. I'd rather quote prices to already have reflected the cost of the fees, then put up a lower price and then start charging my customers a tax on top of that.

    Assuming that you are a profit making enterprise and are paying a rough corporate/tax rate of 35%, your true cost of absorbing this fee is only 4%*(65%) = 2.6% due to the tax shield.
     
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  19. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    From the article:

    "Here's why I'm asking the question. Last summer, there was an antitrust settlement between merchants and Visa, MasterCard and big banks about credit card interchange fees. These are the "swipe" fees merchants pay to the networks (like Visa) to process your payments when you use your card. "
    ...

    "This settlement also gave merchants the legal right to add a "checkout fee" when you use a credit card to pay for purchases. These fees could start popping up as soon as Sunday.
    "

    So clearly, this won't come as a surprise to the stock market.

    There is also another thread here where we discussed the settlement when it was originally reached.
     
  20. arkleseizure
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    arkleseizure Silver Member

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    I see no material difference between our perspectives on this; but you are right, most people will just go with the flow, at least for the first purchase.
     
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  21. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    A lot of gas stations must be run by non-savvy business owners :)
     
  22. anabolism
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    anabolism Gold Member

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    My guess is that from a marketing perspective, customers would rather see a discount for cash rather than a surcharge for a credit card purchase. I think people in general prefer an unexpected bonus to a penalty. But what do I know?
     
  23. kenbo
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    kenbo Silver Member

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    I am more likely to pay cash on transactions less than $10. Anything more than that, and I'm using a credit card. If some merchant wants to charge the 4% fee, then I'll go elsewhere.

    I have pretty much abandoned using a debit card because I don't like the idea of using a card with direct access to my money.
     
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  24. zpaul

    zpaul Gold Member

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    From what it looks like, in CA and the other states mentioned, it is illegal. However, in the past, it was simply "against the rules."

    Before this settlement there was specific language in the contract signed between the merchant and the credit card company that said that any purchase made using a credit card with the Visa/MC logo on it had to be treated the same as a cash transaction. If there's no fee for paying cash, they couldn't charge a fee for paying with a Visa/MC. I'm not a lawyer so I can't comment on exactly what it would be called if a merchant signs this agreement and then charges a fee (breach of contract?), but if the credit card company found out about it they could have terminated the merchant's ability to accept that card as a form of payment.
     
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  25. MSY-MSP
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    MSY-MSP Silver Member

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    Little late to the party in this thread, but oh well. For me this would be a good thing, if Texas would allow me to do this type of charge for my business. I currently have an issue where I pay fees on behalf of clients and then bill the client back for the fees. However, because of various ethics rules I am not permitted to discount fees that i pay on behalf of a client and that includes eating the interchange fees (unless pro-bono). So in order to stay on the right side of the rules, if i want to take a credit card i have to up the cost of the fees to the client to include the other fees. Well being a Texas Company I cannot do that. So I end-up with two options "Cash or Checks" or ask my clients to pay the fees directly themselves.
     

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