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Dear HN, I'd like to fact check my outrage... If I understand correctly, credit card terms forbid stores from offering two different prices (one for paying wit

by ced 10y ago

Dear HN, I'd like to fact check my outrage... If I understand correctly, credit card terms forbid stores from offering two different prices (one for paying with and one for paying without), because if they didn't, some stores would offer a 2-3% discount for cash, and customers would switch to cash. Meanwhile, most people I've spoken with are happy with the system, because they feel like they're getting money back for free through cashback/reward programs, so credit card companies are incentivized to keep increasing their merchant fees so that they can give more money back to their customers. Restaurants/shops that don't accept credit get less customers, and are forced into the system as well. While the government could do something about it, they don't because they can track every credit card transaction (-> tax revenue), but they can't track cash. And cash-paying customers get to pay the 2-3% "credit card tax" on every transaction, which is so ridiculously backward. I hope Walmart's decision snowballs.

mootothemax 10y ago
It's worth noting that cash is also expensive to handle at scale. In the uk, nearly 20 years ago, the supermarkets started offering "cashback" on every transaction, where you bill would be increased by eg 10 pounds, and in return they'd give you a 10 pound note along with your receipt. The genius being that they could save huge amounts on their cash handling/management fees by moving the value through the card networks instead. (I believe this was via debit cards, which had lower fees and are by far the more popular card type in the UK, possibly in the EU as a whole)
- thesimon 10y ago
  >I believe this was via debit cards, which had lower fees and are by far the more popular card type in the UK, possibly in the EU as a whole Indeed. The debit card charged a flat fee per transaction, so giving the customer money instead of paying the bank 0.x% for cashing it in was a logical choice.
- Havoc 10y ago
  >I believe this was via debit cards yup...the point of sale systems skip the cash-back step entirely if the card is a credit or cheque card.
athenot 10y ago
In the US those terms no longer apply. Merchants can offer 2 different prices (and many already do) for payment with card vs. cash.
- eru 10y ago
  Also doesn't apply in Australia. Aldi charges extra for paying with cards.
  - SyneRyder 10y ago
    And some Australian retailers charge extra for specific cards with higher fees (eg JB Hi-Fi stores have a surcharge for using AmEx or Diners Club cards, which typically charge the merchant more than Visa or Mastercard do). I was going to link to The Good Guys and their "Pay Cash Pay Less" marketing, but it appears they scrapped their cash discount after finding customers increasingly prefer to use electronic payments: http://www.smh.com.au/business/the-good-guys-scraps-cash-discounts-as-consumers-go-digital-20150716-gidha2.html http://www.smh.com.au/business/the-good-guys-scraps-cash-dis...
    - dTal 10y ago
      >scrapped their cash discount after finding customers increasingly prefer to use electronic payments That's a weird reason. Surely that's the whole point of the discount? If customers preferred paying cash, then no discount would be required.
      - ma2rten 10y ago
        I think s/he means they preferred to pay cash despite the discount.
        SyneRyder 10y ago
        No, customers prefer to pay electronically. The linked article points out that cash sales in Australia have crashed from 70% to just 47% and is on a fast decline. I think the point of removing the cash discount is they can use the 'extra' 3% margin earned on those remaining cash sales to subsidize lowering their price via credit card to be more competitive. Their business is based on offering the lowest prices, but the cheapest price was cash only. The discount for cash no longer lures customers to come to their stores, so there's no incentive for the store to continue passing on the discount to the customer.
bkmartin 10y ago
In the United States it used to be this way up until a couple years ago. Now you can offer discounts for paying with cash. There was some case and settlement in 2012/2013(?). Most have to offer a "cash discount" and not a credit card surcharge.
toomanybeersies 10y ago
That's certainly not the case in New Zealand. A lot of restaurants will charge more for credit card, most computer stores will add ~3% for credit cards as well. Also, most appliance stores will give you a better discount when haggling if you pay with cash/debit card.
- philliphaydon 10y ago
  Singapore too.
chinathrow 10y ago
> Meanwhile, most people I've spoken with are happy with the system, because they feel like they're getting money back through cashback/reward programs I am not happy with the system since I categorize the money back programs essentially a corruption of the buyers in order to keep them on the card. I want to pay safe, fast and easy. No higher prices and no cashback incentivation program needed for me.
skrause 10y ago
In the European Union the fee a bank can charge the merchant for a transaction is now capped to 0.3% (https://www.gov.uk/government/news/credit-and-debit-card-fees-to-be-capped https://www.gov.uk/government/news/credit-and-debit-card-fee...) and that seems to work fine. Interestingly just around the time when this was introduced in mid-2015 all major German supermarket chains suddenly started to accept Visa/MasterCard; before they only supported the German Girocard system. The fees Visa and MasterCard demanded before were probably way too high. Compared to that the 2-3% fees in the USA really seem to be very high as well.
- tehwebguy 10y ago
  One big item: The rate you are describing is just interchange, it went from an average of 0.9% to a cap of 0.3% in the UK. Merchants are not just paying 0.2% to 0.3% on DC/CC transactions.
  - germanier 10y ago
    To put this into context: Most (small) German merchants could pay less than 1% in total fees for credit/debit card transactions if they were switching their acquirer. Large chains pay less than half of that from everything that is publicly known. For German debit cards (Girocard) the large merchants pay a total fee of 0.15% which is probably much cheaper than cash handling.
    - skrause 10y ago
      And maybe that's a season why we haven't seen Apple Pay in Germany so far. In the USA Apple gets 0.15% of each transaction, but that would be pretty difficult in Germany if 0.15% is already the total transaction fee.
      - thesimon 10y ago
        UK has the same interchange rates and they have Apple Pay. The German banks are just too greedy and invested in their own shitty Girocard scheme which doesn't even support tokenization which would be required for Apple Pay.
needusername 10y ago
> credit card terms forbid stores from offering two different prices This is known as surcharging. The rules differ by country, the same goes for interchange. To give you an example: my country it was forbidden to forbid the merchants to do surcharging (no really). Essentially the merchants where allowed to do surcharging. Then interchange was regulated down and the ban on forbidding surcharging was lifted. In theory the acquirers or payment schemes could forbid the merchants to do surcharging. AFAIK none of them did. What you can do as a card holder is file a charge back over the surcharge amount. These get accepted.
- criddell 10y ago
  Do the laws look at discounting the same as surcharging? In other words, offer a discount for cash rather than a surcharge for credit?
  - needusername 10y ago
    I don't know.
kcole16 10y ago
In Portugal, very few places accept credit cards, or even debit cards in many cases. This is mainly so the businesses can avoid the crazy fees. It's inconvenient, but the prices are probably slightly cheaper, so people don't really complain.
- brador 10y ago
  It's also used by those business as a way to avoid paying the full taxes owed by underdeclaring profits. Notice the trend of high cash countries and low tax revenue/struggling underclass. Spain, Portugal, Eastern Europe, Greece.
  - thesimon 10y ago
    Restaurants in Germany as well. When you ask them why they don't accept cards, they usually say something like "I don't like government surveillance" and you know whats up. Some countries in the EU started requiring cash registers and receipts and some merchants were able to make some quite good revenue improvements in the month they were introduced :)
- alkonaut 10y ago
  Portugal is in the EU so how come CC fees can exceed the EU maximum which is a fraction of a percent? (and likely less than the cost of cash handling for all but the smallest merchants).
  - Silhouette 10y ago
    I suspect you're misunderstanding that that limit applies to. Until you are taking substantial revenues as a merchant, you are surely going to be paying more than a small fraction of a percent in credit card processing fees one way or another.
    - alkonaut 10y ago
      Small merchants probably pay north of 2-3% to some intermediary provider (I hope a future regulation will cap this as well). I still see almost no merchants that don't take credit cards here though - likely because when card use reaches a critical mass you 1) lose too much business if you don't accept cards (I can go 6 months without touching cash) and 2) The amount of cash shrinks to a point where there marginal cost of the next cash transaction is also pretty high, e.g if you do 1000 card transactions and only 10 cash transactions in a business day then each cash transaction has to carry 1/10th of the cost of cash handling for the day.
abalone 10y ago
> credit card terms forbid stores from offering two different prices I don't know about (aboot?) Canada but the Durbin amendment outlawed that restriction in the U.S. So any merchant is free to offer a discount for cash. But as you rightfully note, consumers are generally happy with the card system. Many receive a 1-2% discount or other benefit via reward programs, so the opportunity to steer consumers to cash via discounts is limited. See: http://blog.legalsolutions.thomsonreuters.com/wp-content/uploads/2011/10/durbin_amendment.pdf http://blog.legalsolutions.thomsonreuters.com/wp-content/upl...
morgante 10y ago
> I hope Walmart's decision snowballs. Why? The alternative would be that companies either don't accept credit cards at all (inconvenient) or charge an extra 2-3% for credit card purchases. I don't see how that is any fairer than forcing cash customers to pay the full price as well. Somebody is losing either way, and I see absolutely no reason that cash should be privileged.
- bryanlarsen 10y ago
  "Somebody is losing either way, and I see absolutely no reason that cash should be privileged." It makes a huge difference. A market economy depends on prices to guide behaviour. It's very important to make sure that all costs are internalized.
- cookiecaper 10y ago
  It's more fair because the consumer pays a 2-3% premium for the convenience of a credit card vs. counting out cash, and people who don't want that convenience aren't obliged to pay for it with universal price inflation. Since this is a choice that the consumer makes, it's reasonable to make him pay for it. In practice, I think most traditional retailers like it when consumers use cards because it makes their lines go faster and wouldn't really increase their prices for most card carriers if they were allowed to do so (AMEX might be a different story). The cashier doesn't have to wait for the consumer to fumble around for the correct combination of bills and coins, the customer doesn't have to wait for the cashier to count out change, and that means the line moves faster and the retailer can process more transactions and make more money.
- mgbmtl 10y ago
  Interac (debit cards) charge 5 to 10¢ per transaction and that's about it (+ presumably a fixed monthly fee). Everyone has an Interac card (if they have a bank account). One problem with Interac, however, is that most banks have limits on how many transactions can be done per month, or pay additional fees. The fees can easily add up to ~ 100-150$/year for an average bank account. We can go around it by leaving 2000-3000$ at all times in the bank account, or get a credit card. Win-win for the bank. So yeah, Visa deserves the pushback.
- 10y ago
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lisper 10y ago
> If I understand correctly Yes, you have this exactly right. It is one of the most diabolical scams ever. It is essentially a 2-3% private tax on the entire retail economy. If the government did that, the torches and pitchforks would come out in an instant. But because the cost is hidden behind regular retail prices, no one cares. (Well, that's not quite true. The merchants care. But they are too busy running their businesses to organize an effective opposition.)
- ams6110 10y ago
  It's not a scam. It's a service. You may be too young to remember when a person had to carry a significant amount of cash around all the time, and/or a checkbook, to pay for routine purchases. When every payday involved going to the bank, waiting in a queue to deposit your check and get enough cash to get through to the next payday. It was a PITA. Compared to the convenience of direct deposit, ATMs, and card transactions, most people would think it's well worth slightly higher retail prices.
  - lisper 10y ago
    > It's not a scam. It's a service. It's both. The cash-back part is a scam. They take 3% out of your back pocket and hand you back 1% and you think you've gotten a good deal. Modern technology enables secure money transfer to be provided at an order of magnitude less cost than the credit card companies charge. Competition is supposed to take care of egregious inefficiencies like this, but the banks have an effective monopoly, enough regulatory capture to keep out competition, the ability to fob all the risk of fraud onto the merchants (who pass it on -- tacitly) to the consumer, and hence no incentive to change, and so they don't. That is the scam. > You may be too young LOL, I'm 52.
    - manufacturious 10y ago
      Credit cards do more than just move money around, though. And capping fees isn't ever going to be practical without shifting the risks around. I pay for most things with a credit card. Here are the value-adds that I receive in exchange: * net-25 payment terms (eg free short term credit) * anti-fraud: the money isn't actually taken from my account until I make a payment at the end of the month. This gives processors some skin in the game to solve fraud. * warranty extensions * risk of losing cash, either by loss or theft * centralized accounting. No data entry. I'm not saying the system is perfect. It can definitely be improved. But, personally, that's a pretty nice set of value that I receive in exchange for using the cards. Is 2-3% excessive? Probably could be cut back. But if I'm getting 1% back, we're now talking 1-2% that it costs me. Seems likely that a big chunk of that is due to fraud, which isn't something that would disappear by legislating lower rates. (additionally, it opens the opportunity for me to churn cards. I haven't done the math, but I open 2-4 accounts per year and receive ~$500 in rewards. $1k in signup bonuses is at least 3-4% of my credit card spend. For those who are able to safely take advantage of the system, you actually can be net-positive PLUS receive the benefits above) I do understand the frustration for people using cash, because they typically pay for these features regardless of whether they want to. I also sympathize with folks who want their purchases to remain more anonymous. For me, however, the value is greater than the cost.
kylehotchkiss 10y ago
Does this apply to gas stations? I see a few in (rural) Virginia offering "cash prices" sometimes seeming more than 3% cheaper.
- bsilvereagle 10y ago
  Gas stations make most of their money off the convenience store and not the pumps. If you pay cash, you have to walk into the store so you're more likely to buy a high margin candy bar. The greater than 3% discount could be trying to incentivize entering the store.
ams6110 10y ago
The "terms" may forbid that practice (discount for cash) but I see it all the time especially at smaller merchants. I also see it on any "public" transaction. Try to pay your property or income taxes, university tuition, etc. using a credit card -- there will be a "processing fee" tacked on.
cmurf 10y ago
I agree. The Visa Mastercard Amex system in the U.S. is crap. And I'm glad that Congress capped debit card transaction fees while issuers screamed bloody murder, and then as a result dropped all rewards from debit card purchases. But now it's on a level playing field akin to cash. But the terms that forbid passing on the transaction fee cost to the consumer is wrong. It's an externality that causes us to all make the wrong choices. The business gets hit with variable transaction feed per customer, but that's aggregated, the merchant has no way of knowing which cards cause the highest fees to be incurred. If it were possible to charge the actual cost of transaction to the customer right at the moment of sale as I line item, just like government tax, we'd all be making smarter choices. We don't even have to cap the cost, if people could see this, they'd overwhelmingly make a smarter choice possibly even driving the cost down less than the debit card fee cap.
- techsupporter 10y ago
  > If it were possible to charge the actual cost of transaction to the customer right at the moment of sale as I line item, just like government tax, we'd all be making smarter choices. > We don't even have to cap the cost, if people could see this, they'd overwhelmingly make a smarter choice possibly even driving the cost down less than the debit card fee cap. The two problems I have with this are: 1) I'm not a partner in the business. I have zero interest in seeing fees and other costs "deaggregated," especially if I have virtually no control over them. And I am cynical enough to think that, since meaningful control is not really a thing, the marketplace will rapidly descend into "everybody does this and they all charge roughly the same fee so there's really no competition at all," like the random fees on telco stuff. Besides, under the current system, if the cost of taking cards is too onerous, stop taking cards. One of the most annoying trends in business in the last decade or so is the idea that the base price of an item or service almost seems to come out to be the amount of profit the merchant expects to receive and 14 items of below-the-line fees make up the actual cost of doing business. I don't care what a merchant's cost of doing business is. Put a price on the item, preferably the out-the-door price but that's just wishing for a pony, and if I'm willing to pay it, I will. 2) Unless and until the day arrives that the entire value of my transaction account can't be wiped out just because I dared use my plastic payment card at a merchant with less-than-realistic security measures, I flatly refuse to use a debit card. Yes, I know that I am technically not liable for fraudulent purchases on a debit card but the several-day delay between "oh shit this bad thing happened" and "ahh my money is back where it should be" is unacceptable. As is the stunning lack of any other consumer protections on a debit card ("had a problem with a merchant? Sort it out yourself, puny customer," is the reaction on a debit card). The merchant clearly receives a benefit for taking cards as do I. But our interests are not aligned to the point that I should be the only one picking up the cost of that benefit. (Oh, and it irritates me out of all proportion to the provocation how a lot of merchants handle the fees. "Your total will be $5.19." presents card "Oh, now your total will be $5.47 because card surcharge that's buried on a label sitting under the till." Grrrrrrrr.)
callmeed 10y ago
Not exactly. (In the US) It used to be that a store could offer a "discount" for using cash but not a "fee" for using credit/debit. The most common example is gas stations-many have been doing this forever. However starting in 2013 merchants can now charge a processing/convenience fee. This came about as per of a class action lawsuit I believe. There are still several state and municipal laws and nuances to consider though.
mark_l_watson 10y ago
In the USA it I'd common to get gasoline 10 cents a gallon cheaper us you pay cash. Also, I gave had stores in the small town I live in tel me that they prefer getting cash, and I try to oblige them.
Fej 10y ago
Jet charges less if you use a Visa or MasterCard debit card. I wonder if that violates the terms.
imgabe 10y ago
I feel like cash has a ton of disadvantages that people ignore when they complain about credit card fees. First, I have to find an ATM somewhere. Luckily my bank reimburses ATM fees, but many don't. Plus, I can only take out $20 at a time. If I want to buy something that costs $5, I take $20 out (+ a $3 fee which is 15%, a hell of a lot more than credit cards charge). Now, do you think I'm going to put the remaining $15 back into the bank? Hell, no. I'll find something else to spend it on. So this $5 purchase effectively cost me $23. That 2-3% doesn't sound too bad.
- myself248 10y ago
  I pay 1 or 2 ATM fees per year, because I just look for credit unions, and the vast majority of CUs are in mutual networks where ATMs are fee-free for each other's members. Even while traveling -- finding a CU ATM in the Denver airport put a big grin on my face. What ATMs do you use where you can only take out $20 at a time? I usually see caps of $200-300 and once in a while, on the nasty-fee ATMs they're $100 but I just find another one. By your logic, when I'm out of cash and make a $300 withdrawal to buy a $3 snack with it, the other $297 evaporates instead of sitting in my wallet like real money. It's weird to me that so many people refrain from carrying cash on the logic that they might be mugged or lose their wallet. Okay, those things could happen, but how often? I've been mugged zero times and lost my wallet once in the last 20 years. Assume I had $150, half my usual withdrawal amount, in the wallet at the time. How long does it take someone to rack up $150 in ATM fees while trying to avoid that exposure? Quite a bit less than 20 years! I'd wager most people spend more on fear fees than they'd potentially lose if they simply carried the cash, because the loss events are so very rare. As for compulsively spending money in one's pocket, http://www.nbc.com/saturday-night-live/video/dont-buy-stuff/n12020 http://www.nbc.com/saturday-night-live/video/dont-buy-stuff/...
mattkrea 10y ago
This. I work in the payment processing industry and I am just disgusted in the way everyone operates (particularly Visa / MC). Low security, trying to push liability, etc. All of this to shave money off of the transactions at just about every step of the way.
true_religion 10y ago
My company is tiny in terms of revenue (<1,000,000 per year), and our interchange fees with VISA are 1.5x% . I have a hard time believing that a giant like wallmart can't negotiate a better rate. 2-3% is the top rate applicable only high risk traffic with the card not present.

by ced 10y ago

mootothemax 10y ago

It's worth noting that cash is also expensive to handle at scale. In the uk, nearly 20 years ago, the supermarkets started offering "cashback" on every transaction, where you bill would be increased by eg 10 pounds, and in return they'd give you a 10 pound note along with your receipt. The genius being that they could save huge amounts on their cash handling/management fees by moving the value through the card networks instead. (I believe this was via debit cards, which had lower fees and are by far the more popular card type in the UK, possibly in the EU as a whole)

thesimon 10y ago
>I believe this was via debit cards, which had lower fees and are by far the more popular card type in the UK, possibly in the EU as a whole Indeed. The debit card charged a flat fee per transaction, so giving the customer money instead of paying the bank 0.x% for cashing it in was a logical choice.
Havoc 10y ago
>I believe this was via debit cards yup...the point of sale systems skip the cash-back step entirely if the card is a credit or cheque card.

athenot 10y ago

In the US those terms no longer apply. Merchants can offer 2 different prices (and many already do) for payment with card vs. cash.

eru 10y ago
Also doesn't apply in Australia. Aldi charges extra for paying with cards.
- SyneRyder 10y ago
  And some Australian retailers charge extra for specific cards with higher fees (eg JB Hi-Fi stores have a surcharge for using AmEx or Diners Club cards, which typically charge the merchant more than Visa or Mastercard do). I was going to link to The Good Guys and their "Pay Cash Pay Less" marketing, but it appears they scrapped their cash discount after finding customers increasingly prefer to use electronic payments: http://www.smh.com.au/business/the-good-guys-scraps-cash-discounts-as-consumers-go-digital-20150716-gidha2.html http://www.smh.com.au/business/the-good-guys-scraps-cash-dis...
  - dTal 10y ago
    >scrapped their cash discount after finding customers increasingly prefer to use electronic payments That's a weird reason. Surely that's the whole point of the discount? If customers preferred paying cash, then no discount would be required.
    - ma2rten 10y ago
      I think s/he means they preferred to pay cash despite the discount.
      - SyneRyder 10y ago
        No, customers prefer to pay electronically. The linked article points out that cash sales in Australia have crashed from 70% to just 47% and is on a fast decline. I think the point of removing the cash discount is they can use the 'extra' 3% margin earned on those remaining cash sales to subsidize lowering their price via credit card to be more competitive. Their business is based on offering the lowest prices, but the cheapest price was cash only. The discount for cash no longer lures customers to come to their stores, so there's no incentive for the store to continue passing on the discount to the customer.

bkmartin 10y ago

In the United States it used to be this way up until a couple years ago. Now you can offer discounts for paying with cash. There was some case and settlement in 2012/2013(?). Most have to offer a "cash discount" and not a credit card surcharge.

toomanybeersies 10y ago

That's certainly not the case in New Zealand. A lot of restaurants will charge more for credit card, most computer stores will add ~3% for credit cards as well. Also, most appliance stores will give you a better discount when haggling if you pay with cash/debit card.

philliphaydon 10y ago
Singapore too.

chinathrow 10y ago

> Meanwhile, most people I've spoken with are happy with the system, because they feel like they're getting money back through cashback/reward programs I am not happy with the system since I categorize the money back programs essentially a corruption of the buyers in order to keep them on the card. I want to pay safe, fast and easy. No higher prices and no cashback incentivation program needed for me.

skrause 10y ago

In the European Union the fee a bank can charge the merchant for a transaction is now capped to 0.3% (https://www.gov.uk/government/news/credit-and-debit-card-fees-to-be-capped https://www.gov.uk/government/news/credit-and-debit-card-fee...) and that seems to work fine. Interestingly just around the time when this was introduced in mid-2015 all major German supermarket chains suddenly started to accept Visa/MasterCard; before they only supported the German Girocard system. The fees Visa and MasterCard demanded before were probably way too high. Compared to that the 2-3% fees in the USA really seem to be very high as well.

tehwebguy 10y ago
One big item: The rate you are describing is just interchange, it went from an average of 0.9% to a cap of 0.3% in the UK. Merchants are not just paying 0.2% to 0.3% on DC/CC transactions.
- germanier 10y ago
  To put this into context: Most (small) German merchants could pay less than 1% in total fees for credit/debit card transactions if they were switching their acquirer. Large chains pay less than half of that from everything that is publicly known. For German debit cards (Girocard) the large merchants pay a total fee of 0.15% which is probably much cheaper than cash handling.
  - skrause 10y ago
    And maybe that's a season why we haven't seen Apple Pay in Germany so far. In the USA Apple gets 0.15% of each transaction, but that would be pretty difficult in Germany if 0.15% is already the total transaction fee.
    - thesimon 10y ago
      UK has the same interchange rates and they have Apple Pay. The German banks are just too greedy and invested in their own shitty Girocard scheme which doesn't even support tokenization which would be required for Apple Pay.

needusername 10y ago

> credit card terms forbid stores from offering two different prices This is known as surcharging. The rules differ by country, the same goes for interchange. To give you an example: my country it was forbidden to forbid the merchants to do surcharging (no really). Essentially the merchants where allowed to do surcharging. Then interchange was regulated down and the ban on forbidding surcharging was lifted. In theory the acquirers or payment schemes could forbid the merchants to do surcharging. AFAIK none of them did. What you can do as a card holder is file a charge back over the surcharge amount. These get accepted.

criddell 10y ago
Do the laws look at discounting the same as surcharging? In other words, offer a discount for cash rather than a surcharge for credit?
- needusername 10y ago
  I don't know.

kcole16 10y ago

In Portugal, very few places accept credit cards, or even debit cards in many cases. This is mainly so the businesses can avoid the crazy fees. It's inconvenient, but the prices are probably slightly cheaper, so people don't really complain.

brador 10y ago
It's also used by those business as a way to avoid paying the full taxes owed by underdeclaring profits. Notice the trend of high cash countries and low tax revenue/struggling underclass. Spain, Portugal, Eastern Europe, Greece.
- thesimon 10y ago
  Restaurants in Germany as well. When you ask them why they don't accept cards, they usually say something like "I don't like government surveillance" and you know whats up. Some countries in the EU started requiring cash registers and receipts and some merchants were able to make some quite good revenue improvements in the month they were introduced :)
alkonaut 10y ago
Portugal is in the EU so how come CC fees can exceed the EU maximum which is a fraction of a percent? (and likely less than the cost of cash handling for all but the smallest merchants).
- Silhouette 10y ago
  I suspect you're misunderstanding that that limit applies to. Until you are taking substantial revenues as a merchant, you are surely going to be paying more than a small fraction of a percent in credit card processing fees one way or another.
  - alkonaut 10y ago
    Small merchants probably pay north of 2-3% to some intermediary provider (I hope a future regulation will cap this as well). I still see almost no merchants that don't take credit cards here though - likely because when card use reaches a critical mass you 1) lose too much business if you don't accept cards (I can go 6 months without touching cash) and 2) The amount of cash shrinks to a point where there marginal cost of the next cash transaction is also pretty high, e.g if you do 1000 card transactions and only 10 cash transactions in a business day then each cash transaction has to carry 1/10th of the cost of cash handling for the day.

abalone 10y ago

> credit card terms forbid stores from offering two different prices I don't know about (aboot?) Canada but the Durbin amendment outlawed that restriction in the U.S. So any merchant is free to offer a discount for cash. But as you rightfully note, consumers are generally happy with the card system. Many receive a 1-2% discount or other benefit via reward programs, so the opportunity to steer consumers to cash via discounts is limited. See: http://blog.legalsolutions.thomsonreuters.com/wp-content/uploads/2011/10/durbin_amendment.pdf http://blog.legalsolutions.thomsonreuters.com/wp-content/upl...

morgante 10y ago

> I hope Walmart's decision snowballs. Why? The alternative would be that companies either don't accept credit cards at all (inconvenient) or charge an extra 2-3% for credit card purchases. I don't see how that is any fairer than forcing cash customers to pay the full price as well. Somebody is losing either way, and I see absolutely no reason that cash should be privileged.

bryanlarsen 10y ago
"Somebody is losing either way, and I see absolutely no reason that cash should be privileged." It makes a huge difference. A market economy depends on prices to guide behaviour. It's very important to make sure that all costs are internalized.
cookiecaper 10y ago
It's more fair because the consumer pays a 2-3% premium for the convenience of a credit card vs. counting out cash, and people who don't want that convenience aren't obliged to pay for it with universal price inflation. Since this is a choice that the consumer makes, it's reasonable to make him pay for it. In practice, I think most traditional retailers like it when consumers use cards because it makes their lines go faster and wouldn't really increase their prices for most card carriers if they were allowed to do so (AMEX might be a different story). The cashier doesn't have to wait for the consumer to fumble around for the correct combination of bills and coins, the customer doesn't have to wait for the cashier to count out change, and that means the line moves faster and the retailer can process more transactions and make more money.
mgbmtl 10y ago
Interac (debit cards) charge 5 to 10¢ per transaction and that's about it (+ presumably a fixed monthly fee). Everyone has an Interac card (if they have a bank account). One problem with Interac, however, is that most banks have limits on how many transactions can be done per month, or pay additional fees. The fees can easily add up to ~ 100-150$/year for an average bank account. We can go around it by leaving 2000-3000$ at all times in the bank account, or get a credit card. Win-win for the bank. So yeah, Visa deserves the pushback.
10y ago

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lisper 10y ago

> If I understand correctly Yes, you have this exactly right. It is one of the most diabolical scams ever. It is essentially a 2-3% private tax on the entire retail economy. If the government did that, the torches and pitchforks would come out in an instant. But because the cost is hidden behind regular retail prices, no one cares. (Well, that's not quite true. The merchants care. But they are too busy running their businesses to organize an effective opposition.)

ams6110 10y ago
It's not a scam. It's a service. You may be too young to remember when a person had to carry a significant amount of cash around all the time, and/or a checkbook, to pay for routine purchases. When every payday involved going to the bank, waiting in a queue to deposit your check and get enough cash to get through to the next payday. It was a PITA. Compared to the convenience of direct deposit, ATMs, and card transactions, most people would think it's well worth slightly higher retail prices.
- lisper 10y ago
  > It's not a scam. It's a service. It's both. The cash-back part is a scam. They take 3% out of your back pocket and hand you back 1% and you think you've gotten a good deal. Modern technology enables secure money transfer to be provided at an order of magnitude less cost than the credit card companies charge. Competition is supposed to take care of egregious inefficiencies like this, but the banks have an effective monopoly, enough regulatory capture to keep out competition, the ability to fob all the risk of fraud onto the merchants (who pass it on -- tacitly) to the consumer, and hence no incentive to change, and so they don't. That is the scam. > You may be too young LOL, I'm 52.
  - manufacturious 10y ago
    Credit cards do more than just move money around, though. And capping fees isn't ever going to be practical without shifting the risks around. I pay for most things with a credit card. Here are the value-adds that I receive in exchange: * net-25 payment terms (eg free short term credit) * anti-fraud: the money isn't actually taken from my account until I make a payment at the end of the month. This gives processors some skin in the game to solve fraud. * warranty extensions * risk of losing cash, either by loss or theft * centralized accounting. No data entry. I'm not saying the system is perfect. It can definitely be improved. But, personally, that's a pretty nice set of value that I receive in exchange for using the cards. Is 2-3% excessive? Probably could be cut back. But if I'm getting 1% back, we're now talking 1-2% that it costs me. Seems likely that a big chunk of that is due to fraud, which isn't something that would disappear by legislating lower rates. (additionally, it opens the opportunity for me to churn cards. I haven't done the math, but I open 2-4 accounts per year and receive ~$500 in rewards. $1k in signup bonuses is at least 3-4% of my credit card spend. For those who are able to safely take advantage of the system, you actually can be net-positive PLUS receive the benefits above) I do understand the frustration for people using cash, because they typically pay for these features regardless of whether they want to. I also sympathize with folks who want their purchases to remain more anonymous. For me, however, the value is greater than the cost.

kylehotchkiss 10y ago

Does this apply to gas stations? I see a few in (rural) Virginia offering "cash prices" sometimes seeming more than 3% cheaper.

bsilvereagle 10y ago
Gas stations make most of their money off the convenience store and not the pumps. If you pay cash, you have to walk into the store so you're more likely to buy a high margin candy bar. The greater than 3% discount could be trying to incentivize entering the store.

ams6110 10y ago

The "terms" may forbid that practice (discount for cash) but I see it all the time especially at smaller merchants. I also see it on any "public" transaction. Try to pay your property or income taxes, university tuition, etc. using a credit card -- there will be a "processing fee" tacked on.

cmurf 10y ago

I agree. The Visa Mastercard Amex system in the U.S. is crap. And I'm glad that Congress capped debit card transaction fees while issuers screamed bloody murder, and then as a result dropped all rewards from debit card purchases. But now it's on a level playing field akin to cash. But the terms that forbid passing on the transaction fee cost to the consumer is wrong. It's an externality that causes us to all make the wrong choices. The business gets hit with variable transaction feed per customer, but that's aggregated, the merchant has no way of knowing which cards cause the highest fees to be incurred. If it were possible to charge the actual cost of transaction to the customer right at the moment of sale as I line item, just like government tax, we'd all be making smarter choices. We don't even have to cap the cost, if people could see this, they'd overwhelmingly make a smarter choice possibly even driving the cost down less than the debit card fee cap.

techsupporter 10y ago
> If it were possible to charge the actual cost of transaction to the customer right at the moment of sale as I line item, just like government tax, we'd all be making smarter choices. > We don't even have to cap the cost, if people could see this, they'd overwhelmingly make a smarter choice possibly even driving the cost down less than the debit card fee cap. The two problems I have with this are: 1) I'm not a partner in the business. I have zero interest in seeing fees and other costs "deaggregated," especially if I have virtually no control over them. And I am cynical enough to think that, since meaningful control is not really a thing, the marketplace will rapidly descend into "everybody does this and they all charge roughly the same fee so there's really no competition at all," like the random fees on telco stuff. Besides, under the current system, if the cost of taking cards is too onerous, stop taking cards. One of the most annoying trends in business in the last decade or so is the idea that the base price of an item or service almost seems to come out to be the amount of profit the merchant expects to receive and 14 items of below-the-line fees make up the actual cost of doing business. I don't care what a merchant's cost of doing business is. Put a price on the item, preferably the out-the-door price but that's just wishing for a pony, and if I'm willing to pay it, I will. 2) Unless and until the day arrives that the entire value of my transaction account can't be wiped out just because I dared use my plastic payment card at a merchant with less-than-realistic security measures, I flatly refuse to use a debit card. Yes, I know that I am technically not liable for fraudulent purchases on a debit card but the several-day delay between "oh shit this bad thing happened" and "ahh my money is back where it should be" is unacceptable. As is the stunning lack of any other consumer protections on a debit card ("had a problem with a merchant? Sort it out yourself, puny customer," is the reaction on a debit card). The merchant clearly receives a benefit for taking cards as do I. But our interests are not aligned to the point that I should be the only one picking up the cost of that benefit. (Oh, and it irritates me out of all proportion to the provocation how a lot of merchants handle the fees. "Your total will be $5.19." presents card "Oh, now your total will be $5.47 because card surcharge that's buried on a label sitting under the till." Grrrrrrrr.)

callmeed 10y ago

Not exactly. (In the US) It used to be that a store could offer a "discount" for using cash but not a "fee" for using credit/debit. The most common example is gas stations-many have been doing this forever. However starting in 2013 merchants can now charge a processing/convenience fee. This came about as per of a class action lawsuit I believe. There are still several state and municipal laws and nuances to consider though.

mark_l_watson 10y ago

In the USA it I'd common to get gasoline 10 cents a gallon cheaper us you pay cash. Also, I gave had stores in the small town I live in tel me that they prefer getting cash, and I try to oblige them.

Fej 10y ago

Jet charges less if you use a Visa or MasterCard debit card. I wonder if that violates the terms.

imgabe 10y ago

I feel like cash has a ton of disadvantages that people ignore when they complain about credit card fees. First, I have to find an ATM somewhere. Luckily my bank reimburses ATM fees, but many don't. Plus, I can only take out $20 at a time. If I want to buy something that costs $5, I take $20 out (+ a $3 fee which is 15%, a hell of a lot more than credit cards charge). Now, do you think I'm going to put the remaining $15 back into the bank? Hell, no. I'll find something else to spend it on. So this $5 purchase effectively cost me $23. That 2-3% doesn't sound too bad.

myself248 10y ago
I pay 1 or 2 ATM fees per year, because I just look for credit unions, and the vast majority of CUs are in mutual networks where ATMs are fee-free for each other's members. Even while traveling -- finding a CU ATM in the Denver airport put a big grin on my face. What ATMs do you use where you can only take out $20 at a time? I usually see caps of $200-300 and once in a while, on the nasty-fee ATMs they're $100 but I just find another one. By your logic, when I'm out of cash and make a $300 withdrawal to buy a $3 snack with it, the other $297 evaporates instead of sitting in my wallet like real money. It's weird to me that so many people refrain from carrying cash on the logic that they might be mugged or lose their wallet. Okay, those things could happen, but how often? I've been mugged zero times and lost my wallet once in the last 20 years. Assume I had $150, half my usual withdrawal amount, in the wallet at the time. How long does it take someone to rack up $150 in ATM fees while trying to avoid that exposure? Quite a bit less than 20 years! I'd wager most people spend more on fear fees than they'd potentially lose if they simply carried the cash, because the loss events are so very rare. As for compulsively spending money in one's pocket, http://www.nbc.com/saturday-night-live/video/dont-buy-stuff/n12020 http://www.nbc.com/saturday-night-live/video/dont-buy-stuff/...

mattkrea 10y ago

This. I work in the payment processing industry and I am just disgusted in the way everyone operates (particularly Visa / MC). Low security, trying to push liability, etc. All of this to shave money off of the transactions at just about every step of the way.

true_religion 10y ago

My company is tiny in terms of revenue (<1,000,000 per year), and our interchange fees with VISA are 1.5x% . I have a hard time believing that a giant like wallmart can't negotiate a better rate. 2-3% is the top rate applicable only high risk traffic with the card not present.