Retailers To Force Consumers To Pay ‘Swipe Fee’

Retailers Ready To Force Consumers To Pay ‘Swipe Fee’ For Using Plastic NEW YORK (CBS 2) — Every time you use your credit card, the store pays up to 3 percent of your total purchase to the credit card company. It’s called a “swipe fee” and now some fed-up retailers are getting ready to pass this cost on to you, in the form of a surcharge.
 
While others want to reward you for paying with cash.
 
Paper or plastic? It’s a simple choice, but it’s about to get a lot more complicated, CBS 2’s Emily Smith reported.
“You’re going to start to see retailers really weighing what they’re going to charge consumers for using a credit card,” said Kelli Grant of Smart Money magazine.
 
That’s right, major retailers — from supermarkets to drug stores — may soon be charging you more if you choose to pay for an item with a credit card, instead of paying with cash.
 
“An extra 2 to 3 percent,” Grant said.
 
It’s all because Visa-MasterCard and several major banks settled a long running lawsuit alleging they conspired to fix “swipe fees.”
 
As part of the settlement, retailers are now allowed to charge customers a surcharge if they pay with plastic.
“It’s going to be, for consumers, an interesting dance of convenience versus cash,” Grant said.
Grant, a consumer expert, said up until now most business owners rolled the cost of processing a credit card into the prices customers pay. But for businesses that sell small-ticket items and are hit hard by 3 percent swipe fees, it may make more sense to ask for the surcharge.
 
“To actually discourage people from paying credit when they think ideally you should be paying cash,” Grant said.
Conversely, retailers may also start offering discounts to those paying with cash, a practice that’s not completely foreign and seems to be growing with small business owners.
 
“If you want to pay by cash, we’ll be more than happy to give you a cash discount for not using a credit card,” said Tony Dicesare of Auto Body Service in New Jersey.
 
It’s becoming such a popular practice there’s even a website that tracks businesses that offer “discounts with cash” by zip code.
 
“If I can get an incentive to do so, I have no problem doing that,” one consumer told Smith. Overall, people Smith spoke with have mixed feelings on the cash-versus-credit options. “Merchants are going to do what the merchants are going to do and people are either going to pay it or not,” one person said.
 
But consumer experts said it’s a great way to help your bottom line.
 
“Not only are you able to stick within your budget but you might actually save a little bit of money, too,” Grant said.
If you’re buying an expensive item, experts said it’s better to pay with a credit card so you’re protected should the product be defective or not as advertised.
 
These changes won’t happen overnight. Computer systems, price tags and employees will all have to be updated by stores who choose to offer two different prices for cash and credit.
 
http://newyork.cbslocal.c...fee-for-using-plastic/

in oregon, this practice is common at gas stations. probably because we have no self service and a conversation is always necessary to purchase gas.

Here too...NJ is the only other full-service no option for anything else State for gas. You can always tell New Yorkers who don't know this (even though it's always been the case) or think it's silly when they jump out of the car to try to get to the pump...or have to get out of the car to supervise the process. We roll our eyes the same way others do in return when we are in another State and pumping gas does not come naturally...so they think the delay is on purpose.

Something has to give in the battle of the credit card payments. Small business suffers when there is no minimum purchase requirement and many people have become so accustomed to the notion of not carrying cash or want to get every last bonus mile with every cent they spend....even for purchases under a dollar (which I think is obnoxious whether you can do it or not).

When it was time for my children to have their own accounts...the man at Chase went on and on about making sure they paid for purchases with their debit card! Get used to it...even if it's a small amount. I said...excuse me. No.

Here are the issues I see:
1) Each retailer will have to estimate how much business they will lose by charging a credit card surcharge, and will that be enough to make it a losing proposition.
 
2) Consumers will have to decide, when they don't have enough cash, will it be cheaper or more expensive to pay a cash machine fee. And retailers will have to decide what to do with customers who don't have enough cash, and leave their purchases on the counter while running to get the cash. Or if they won't allow it, have the customer say, "OK, you can put it back. I'm going somewhere else!"
 
3) Will people go back to using checks, which can be much more expensive for the retailer (bounced check fees are ridiculously high, probably illegally high, although the latter is hard to prove).
 
Bart

I owned a retail store for 15 years.  The credit card fees took a big chunk out of my bottom line when trying to compete with the lowest price sales.  Profit margins on high ticket items are not what the mass majority of purchasers think they are.  We work on 12 to 20 percent not considering the costs of doing business.  Keystone purchasing and selling are a thing of the past.
 
I'm a firm believer that the card holder should be the one who pays the fee on the card rather than the retailer who accepts it.
 
The credit card companies should have been paying me to accept their cards, not the other way around.
 
Would I charge a surcharge to take a charge card?  No.
Would I give a discount to those paying cash?  No.
 
I always factored the 2 -3 percent charge into the price I charged.
 
Win some, lose some.
 
 

What is "Keystone purchasing and selling"?
jack

Keystone used to refer to a 100 percent markup over wholesale. It was very common in the furniture business. I'm guessing Mar was referring to something like that.

When I was running a golf course cafe, you'd be surprised how often some dude would come up, want a candy bar for $1 and give me a card. There was a sign saying "$5 minimum purchase required for credit card transactions" that they would always rest their elbows on while giving me the card. I'd say about 10% of the time the idiot would get pissed and leave the candy bar and walk away. The other 90% understand and would either pull out the cash , or buy $4 more of stuff.
 
I think this is the best policy.

Surcharge or no surcharge...........lets all face it folks.........  The NET has provided us ALL a much cheaper way of doing business!
I can buy items (even BIG ticket items) for MUCH less then I can from any retail store from the NET.  I pay NO surcharges and in most cases I pay NO tax.
Those items range anywhere from cell phones, furniture etc and yes..........even BBQs/Grilles!
Its no wonder small business are losing so much revenue!
 

I bought every thing in, and including my trailer on Ebay. LOL Traveled some miles for pick ups but still saved a ton of money. I also bought my step van on Ebay. But come to think of it what does that have to do with the point? LMAO. I paid cash to the sellers on a lot of my items.

The no tax on internet purchases is coming to an end.  Bummer since I buy a lot online. SUPPOSEDLY it's the non-internet stores that are complaining about the unfair advantage. But I often pay more in shipping than I would have in taxes.  Beats driving to one of the three "large" towns in NM trying to find something! Today, I ordered some ice cream scoops from Sam's Club. Paid tax on it but no shipping. No extra for my debit card either.
 
We are still a cash only business. Does not seem to hurt. David is off the street and going to do festivals & events only now.

Michael is correct about Keystone... 100% markup.
We'd all be better off without charge cards, but I do use mine often.
I also buy a lot of items on Ebay, but they're usually items I can't get around here.  I like leaving the house every now and then. 
 
For years I didn't accept American Express because they charged me 1% higher than the other card providers.
 
I looked at the total percentage rather than the difference between providers.  When I finally started to accept it sales went up.
 
It could have been the area where my store was located, but those people love their American Express cards and loved to hand it over for purchases.  Prestige card?  Maybe.
 
Would these people pay more to use it?  Possibly because I rarely saw cash.
 
 

Credit card payments are so popular in California. People come in to Mc Donald's just for the 42 oz soft drink for $1 pay with credit card....freshen-up for their visit to the prison....and try to use the same cup on the return. People.

I use my card often and I would avoid places personally that charged a markup.  I can see both sides of the story.  Some people charge minimums already, that to me is acceptable.  Make the transaction worthwhile.  But to charge an additional 3%, it just looks bad.
 
On small transactions of a dollar no big deal but on big ticket purchases, this becomes an issue

At least when cash is king...those soft drink purchases and more do not add up for those silly enough to carry credit debt...and they pile up to be paid a fortune over months or even years. Yikes.

For those of you that don't know.  A dollar purchase at 2% and a hundred dollar purchase at 2% should be the same, no?
 
I was also charged a per transaction fee... the number of swipes per month.  So, those one dollar purchases hurt at the end of the month.
 
That charge came from my bank.  They get you as many ways as they can.

What a difference in total fees @ 1 transaction x 100 vs. 100 x 1 to get to $100.

All the more reason to pay cash when you can! 
I got rid of all my C/Cs a long time ago and found that if I cant pay cash for it......I dont need it!

I shop locally with cash because I have ZERO desire to lift assemble install or shop for additional items like adapters cables filters (they are thrown in) with free delivery and perfect installation with free service until I am back for the next item and they pay the sales tax (it's 3.5% in a UEZ). Winner take all.

Michael Hoffman

Keystone used to refer to a 100 percent markup over wholesale. It was very common in the furniture business. I'm guessing Mar was referring to something like that.

I thought 100% markup was only possible if you obtained the item for free.
 
Bart

mar52
I was also charged a per transaction fee... the number of swipes per month.  So, those one dollar purchases hurt at the end of the month.

Also, the rate that you pay many credit card companies is (or at least used to be) based on the average purchase size; the higher the average purchase, the lower the rate.
 
Bart

bartl

Michael Hoffman

Keystone used to refer to a 100 percent markup over wholesale. It was very common in the furniture business. I'm guessing Mar was referring to something like that.

I thought 100% markup was only possible if you obtained the item for free.

Bart

Wholesale cost = $100; 100% markup over wholesale = + $100; Selling price = $200

If you get it for free...triple your money!

Don't be shy.

mar52
For those of you that don't know.  A dollar purchase at 2% and a hundred dollar purchase at 2% should be the same, no?

 
No hell no if it were a 2% charge at $1.00 = $0.02   2 cents
                                  2% charge at $100.00 = $2.00.
                                  2% charge at $1000.00 = $20.00
 
Unless I misunderstood your question/point.
jack

Jack, what I was saying was 2% is 2% no matter what the amount, but with the added per transaction fee 100 2% charges on a dollar would cost way more than one $100 charge.
 
One hundred transactions fees on a hundred dollars vs. one transaction fee on a hundred dollars.

Interchange rates...


CATEGORY INTERCHANGE ADD 25 BP + 5 Cents YOUR RATE
Visa Check Cards  
Retail Debit 1.13 % + $0.15 Add 25 BP + 5 Cents 1.38 % + $0.20
Small Ticket ($15 and Under) 1.65 % + $0.04 Add 25 BP + 5 Cents 1.90 % + $0.09
Keyed Debit 1.70 % + $0.15 Add 25 BP + 5 Cents 1.95 % + $0.20
Restaurant Debit 1.29 % + $.010 Add 25 BP + 5 Cents 1.54 % + $0.15
Visa Credit Cards  
Retail Rewards 1 1.75 % + $0.10 Add 25 BP + 5 Cents 2.00 % + $0.15
Retail - All Other 1.64 % + $0.10 Add 25 BP + 5 Cents 1.94 % + $0.20
Retail Small Ticket ($15 & Under) 1.75 % + $0.04 Add 25 BP + 5 Cents 2.00 % + $0.09
Retail Keyed - Rewards & Signature 2.05 % + $0.10 Add 25 BP + 5 Cents 2.30 % + $0.15
Retail Key Entry - All Other 1.95 % + $0.10 Add 25 BP + 5 Cents 2.15 % + $0.15
Visa Commercial Cards���  
Commercial Business to Business 2.20 % + $0.10 Add 25 BP + 5 Cents 2.45 % + $0.15
Commercial Cards Swiped
2.30 % + $0.10
Add 25 BP + 5 Cents 2.55 % + $0.15
Business Cards Keyed 2.35 % + $0.10 Add 25 BP + 5 Cents 2.60 % + $0.15
Corporate Cards Keyed 2.30 % + $0.10 Add 25 BP + 5 Cents 2.55 % + $0.15
Purchase Cards Keyed 2.65 % + $0.10 Add 25 BP + 5 Cents 2.90 % + $0.15
   
MasterCard Offline Debit Cards  
Merit 3 - Swiped 1.15 % + $.015 Add 25 BP + 5 Cents 1.40 % + $0.20
Merit 1 - Keyed 1.74 % + $0.16 Add 25 BP + 5 Cents 1.99 % + $0.21
Standard - Keyed without AVS 2.00 % + $0.25 Add 25 BP + 5 Cents 2.25 % + $0.30
MasterCard Credit Cards    
Merit 3 - Swiped - Core Value 1.68 % + $0.10 Add 25 BP + 5 Cents 1.93 % + $0.15
Merit 3 - Swiped - Enhanced Value 1.83 % + $0.10 Add 25 BP + 5 Cents 2.08 % + $0.15
Merit 1 - Keyed - Core Value 1.99 % + $0.10 Add 25 BP + 5 Cents 2.24 % + $0.15
Merit 1 - Keyed - Enhanced Value 2.14 % + $0.10 Add 25 BP + 5 Cents 2.39 % + $0.15
Standard - Keyed without AVS 3.05 % + $0.10 Add 25 BP + 5 Cents 3.30 % + $0.15
MasterCard World & Elite Cards  
Merit 3 - Swiped - World Rate 1.83 % + $0.10 Add 25 BP + 5 Cents 2.08 % + $0.15
Merit 3 - Swiped - World Elite 2.30 % + $0.10 Add 25 BP + 5 Cents 2.55 % + $0.15
Standard - Keyed - World Rate 3.05 % + $0.10 Add 25 BP + 5 Cents 3.30 % + $0.15
Standard - Keyed - World Elite 3.35 % + $0.10 Add 25 BP + 5 Cents 3.60 % + $0.15
MasterCard Corporate & Business    
Face-to-Face Corporate 2.25 % + $0.10 Add 25 BP + 5 Cents 2.50 % + $0.15
Face-to-Face Business 2.30 % + $0.10 Add 25 BP + 5 Cents 2.55 % + $0.15
Face-to-Face Purchasing 2.50 % + $0.10
Add 25 BP + 5 Cents 2.75 % + $0.15
Standard - Corporate - Keyed 2.80 % + $0.10 Add 25 BP + 5 Cents 3.05 % + $0.15
Standard - Business - Keyed 3.05 % + $0.10 Add 25 BP + 5 Cents 3.30 % + $0.15
Data Rate 1 - Corporate 2.75 % + $0.10 Add 25 BP + 5 Cents 3.00 % + $0.15
Date Rate 1 - Business 2.90 % + $0.10 Add 25 BP + 5 Cents 3.15 % + $0.15
Data Rate 2 - Corporate 2.15 % + $0.10 Add 25 BP + 5 Cents 2.40 % + $0.15
Data Rate 2 - Business 2.20 % + $0.10 Add 25 BP + 5 Cents 2.45 % + $0.15
   

mar52


Jack, what I was saying was 2% is 2% no matter what the amount, but with the added per transaction fee 100 2% charges on a dollar would cost way more than one $100 charge.

One hundred transactions fees on a hundred dollars vs. one transaction fee on a hundred dollars.

Ok sorry I didn't understand it that way.  And with the reduction you get on higher ticket items..... But keep in mind these lines from the story
 
"But for businesses that sell small-ticket items and are hit hard by 3 percent swipe fees, it may make more sense to ask for the surcharge.
 
“To actually discourage people from paying credit when they think ideally you should be paying cash,” Grant said.
Conversely, retailers may also start offering discounts to those paying with cash, a practice that’s not completely foreign and seems to be growing with small business owners."
 
And you have to balance that with the cost involved with "These changes won’t happen overnight. Computer systems, price tags and employees will all have to be updated by stores who choose to offer two different prices for cash and credit."
jack

You don't force your customers to do nothin', unless you are the only store within 40 miles or so.  You choose what to do, and customers vote with the wallet. A local c store gave a "cash" discount on gas and charged a very reasonable (less than cost) 5 cent extra for credit cards. They recently switched back to credit cards at no extra charge, and sell gas at 5 cents less than the competition. An employee told me that gas sales dropped by half, and the inside sales (where the profit is) by almost half.
 
Two smaller stations near my house are cash only (always have been). their prices are on the lower side of average, and they seem to be doing well enough to stay in business. 

The easiest solution might be a universal flat standard $.xx surcharge for credit card payments under a universal minimum for credit card purchases. Now that ATM fees are often over $3...it's not outrageous.

At the lowest % rate + per transaction fee...it still totals a total fee of 6% on those $1 transactions. Sometimes up to 12%.

We have a local C store operator/owner that has been building stores in the state at the rate of 2 or more per year. I have known him for several years although I seldom buy gas from him. But his stores now offer free ATMs. No charge to go into the store and get cash. He is seldom the lowest on gas but always right in the ballpark. The only reason I don't go to his stores to shop is everyone no matter your age must show a drivers license to buy beer or cigarettes. Which at my age is crap. LOL
 
But our local sheriff keeps running stings on all the stores  and his stores got nailed once or twice and so now everyone must produce and ID.

We have C-Stores called Quick Chek (no gas station) that have free ATM fees. I think they partner with a local bank. It not only drives so much cigarettes coffee & lottery ticket business in it also helps when someone needs cash & buys a coffee (requesting cash back) and all those fees associated with that.

They proof me too. They look at my license...look at me...ask me when I was born really fast.

best bank deal i had with my last rest was 2.9% + 35 cents on credit cards and 35 cents on debit with NO percentage but you had to have customer punch in 4 digits.
 
the new cc deal at 3.00 is what most are using cause they supply the little white swipe pad for cell phones. cc were always written off as a part of doing biz but the greedy are passing that along to others. its just plain greed,...