13 ms·

> I'm weary of government intervention in capping prices, but I'm not sure what's the alternative here Instead of capping prices, you could simply require any

by mdasen 3y ago

> I'm weary of government intervention in capping prices, but I'm not sure what's the alternative here Instead of capping prices, you could simply require any fees to be paid by the cardholder. Combine that with a standard for payment processing so that lots of companies could compete for payment processing and fees would drop really fast. If someone is using a POS terminal like Toast or Square, it should be trivial for them to support lots of new payment companies if they're all adhering to a standard. If consumers have to pay the fee, they're going to shop around for the lowest-fee card (just as many shop around for the highest-reward card now). You wouldn't need government caps. You could tell stores "once you accept payments with the new system, the consumer is responsible for the fees." This would drop fees really fast - even for stores that didn't upgrade their credit card machines. If Walmart, Target, CVS, etc. all update their machines quickly, I'm going to find a card with a low fee. Then when I use that card at a non-upgraded shop, they have to pay the fee, but it's a much lower fee since I had shopped around for a low fee. The issue right now is that the person choosing the card doesn't feel any of the pain. As the article notes, Visa (Canada) charges 1.25% for a regular consumer card or 2.08% for a premium card. I will pay with a premium card since it will give me nice rewards and I don't feel the additional 0.83% that the store has to pay. If I did have to feel it, I would make different decisions. If you're looking to change behavior, align people's incentives. Another commenter said that they're capped at 0.3% in Europe. Consumers might hate the idea of paying 0.3% additional, but I think credit card companies would drop below that cap if consumers had to pay it. I think they'd look to make it up on interest or other things. As you note, credit cards can come with 2% rewards so they're essentially giving you the whole interchange fee back already. Make consumers shop around for the lowest fee cards. The problem is that stores need to take the cards that consumers have with little option to forgo the fees. If Bank of America had a no-fee card while Chase charged 1.5%, consumers would move to BofA if they felt the fee.

ivan_gammel 3y ago
You won’t sell this idea in Europe. Here the price tag for anything is the full amount you pay - including all commissions and taxes. People use debit cards, the paid amount is immediately deducted from bank account. If customers are forced to calculate how much they actually will spend on each transaction, they will instantly switch back to cash.
- f6v 3y ago
  You can show the full price and the breakdown at the same time. That’s how it works eg in the Airbnb app: I see the price host charges and the fee I pay to Airbnb. The taxi apps show their fee as well.
  - kelnos 3y ago
    That doesn't work in a brick and mortar store where they wouldn't know your card's fee until you go to pay. Also doesn't work online if you're not signed in, or if it's the first time you've visited that store and you haven't given them a card number yet.
    - kmlx 3y ago
      but they would know how much tax the customer would have to pay.
- Symbiote 3y ago
  In Denmark, the additional fees charged for foreign (non-EU I think) or corporate cards are passed on to the customer. The price says 100DKK, but they pay 101.50DKK or whatever it is.
  - carlosjobim 3y ago
    That's probably not the card fees, but the currency exchange.
    - wodenokoto 3y ago
      No, that’s the card fee. At point of sale you usually choose which side does the currency exchange (you choose on the terminal if you want to pay in home or local currency)
    - Symbiote 3y ago
      Here's a sticker from a self checkout at a large supermarket (Føtex): https://imgur.com/a/w9sg1ey https://imgur.com/a/w9sg1ey It says (roughly) "Payment cards without fee: All Danish and foreign debit cards" "Payment cards with fee: 0.9375% Danish issued; 1.75% foreign issued."
e63f67dd-065b 3y ago
As a sidenote I hate that sales tax is not shown on the price tags here in the US. I strongly believe that you should be able to walk out of the store paying the price shown on the price tag -- not a cent more. This obviously clashes with the obvious solution of making credit card surcharges a thing and letting consumers deal with it. I genuinely don't know what's the best solution here -- I think the EU did a good job, but I'm skeptical of government intervention generally, so I'm trying to come up with more structural solutions that make it so it's competition that drives the price down, not government price caps. Edit: Actually I think there's a simple solution: the fee should be assessed on the consumer side, not on the merchant side. Your issuing bank charges you 200bps on your end instead of taking it from the merchant cut. The net effect is the same. People would hate it, and it would never happen, but it's fun to think about :/
- xhendrick_neues 3y ago
  The sales tax surcharge does seem awkward On the other hand, that's probably why sales tax is around 5%? whereas VAT is 20%+
  - badcppdev 3y ago
    There's a great map of the US on Wikipedia showing the Sales Tax by County ( https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#/media/File:Sales_tax_by_county.webp https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat... ) Sales Tax ranges from 0% through to 12%
    - carlmr 3y ago
      But still OP's point stands. If the VAT was more visible, people might be less accepting of it, like with credit card fees.
      - Broken_Hippo 3y ago
        I'm in Norway. There is no real way to avoid knowing what the VAT on things are. I have to pay it if I order from Amazon or Etsy, for example. If I order from the US, I pay later. Every sales receipt has the VAT right on the receipt. I can see it every single time. If I order from inside the country, I can see it before I pay. It isn't hidden. It isn't secret. It wasn't even secret to an immigrant that didn't yet understand enough Norwegian to know. What I do get is to be reasonably certain what I'm going to pay when I get to the cash register. I don't have to do mental gymnastics with a total if I'm tight on money - like I have many times in the US. It won't change if I'm in a different part of Norway. There simply aren't as many price surprises like that.
bombcar 3y ago
> Instead of capping prices, you could simply require any fees to be paid by the cardholder. This has begun. Many restaurants near me have a credit card fee, as does at least one car repair place. No fee of paying with cash/debit.
- withinboredom 3y ago
  That is usually against the card-processing agreement. If you want to have fun, you can report them to Visa/MC and watch that go away within a few days.
  - hyperbovine 3y ago
    Nope, this is completely (laws vary by state) legal as of ten years ago. https://www.lawpay.com/about/blog/credit-card-surcharge-rules/# https://www.lawpay.com/about/blog/credit-card-surcharge-rule...
    - deleted 3y ago
      [deleted]
    - withinboredom 3y ago
      Legal, yes, you're not going to go to jail for it. However, in accordance with the contract they signed to get access to the card network… they probably are not allowed to do this. Each card issuer has a dedicated form to report this activity.
      - arcticbull 3y ago
        Parent provided you a link explaining how this changed 10 years ago. You are unequivocally allowed in the United States to pass along credit card surcharges in all but two states. It's permitted by law, and it's permitted by merchant agreements! If you don't believe parent, and you don't believe me, I hope you believe Visa's own FAQ. > Q. Can I add a surcharge to card transactions? > As a result of a legal settlement to resolve claims brought by a group of U.S. merchants, merchants in the U.S. and U.S. territories may add a surcharge to certain credit card transactions, starting January 27, 2013. Merchants who choose to surcharge must follow consumer disclosure and other requirements agreed to as part of the settlement. [1] https://usa.visa.com/dam/VCOM/download/merchants/surcharging-faq-by-merchants.pdf https://usa.visa.com/dam/VCOM/download/merchants/surcharging...
rippercushions 3y ago
This is pretty much what Australia does: credit card surcharges have to be clearly disclosed and must be commensurate with the actual fees. Nevertheless, partly thanks to COVID, cash usage is way down and many people seem happy to pay the standard 1.6%-ish for the convenience.
kalleboo 3y ago
Where I'm from in the EU, many shops are happy to go card-only because the card fees (with the aforementioned EU regulation) are lower than the costs and crime risk of dealing with cash (which for supermarkets etc that handle a lot of it might mean paying a security company to show up with an armored truck, having to prepare change, staff pocketing some of it, etc) So if we're making customers pay the fees for their preferred payment method, is it also OK to charge cash customers a surcharge?
acherion 3y ago
> Instead of capping prices, you could simply require any fees to be paid by the cardholder. This already happens in Australia. The price is the price, until you go to pay and if the shopkeeper sees you pull out a credit card, would adjust the total to include a 1.5% surcharge (Visa or Mastercard, and you'll likely be turned away if you pull out a different card like Amex). The problem with this is that especially since Covid, a massive percentage of in person sales are done via contactless credit card payment, sometimes even with the screen of the terminal not even in view of the cardholder. Some sellers have caught on to this and are charging _much_ more than the 1.5% -- three sushi handrolls at the store around the corner of my workplace would cost about 9 AUD to buy (already includes GST), but the shopkeeper then added a whole 1 AUD on top for surcharge. I protested and have not shopped there since, but there's still plenty of customers at that store. More and more stores are adding 50c or 1 AUD on top to cover surcharge for items well under 10 AUD, I'm guessing because calculating 1.5% is not trivial for a lot of people, and are ripping off their customers. Calculating 2.08% in your head to make sure the shopkeeper is not pulling a sly one on you unfortunately is not something a lot of people are going to do.
- lathiat 3y ago
  The excessive fees have been illegal for a few years now. They can only charge the actual cost incurred. Worth a lodging a complaint about them: https://www.accc.gov.au/consumers/pricing/card-surcharges https://www.accc.gov.au/consumers/pricing/card-surcharges
- arcticbull 3y ago
  > The price is the price, until you go to pay and if the shopkeeper sees you pull out a credit card, would adjust the total to include a 1.5% surcharge (Visa or Mastercard, and you'll likely be turned away if you pull out a different card like Amex). That's not required in AU, btw, it's optional. It's up to the merchant.
jpambrun 3y ago
I much more value the consumer protection laws that prevents surcharges to be added to the advertised price. If we open that door we will end up with tons of junk fees.

by mdasen 3y ago

ivan_gammel 3y ago

You won’t sell this idea in Europe. Here the price tag for anything is the full amount you pay - including all commissions and taxes. People use debit cards, the paid amount is immediately deducted from bank account. If customers are forced to calculate how much they actually will spend on each transaction, they will instantly switch back to cash.

f6v 3y ago
You can show the full price and the breakdown at the same time. That’s how it works eg in the Airbnb app: I see the price host charges and the fee I pay to Airbnb. The taxi apps show their fee as well.
- kelnos 3y ago
  That doesn't work in a brick and mortar store where they wouldn't know your card's fee until you go to pay. Also doesn't work online if you're not signed in, or if it's the first time you've visited that store and you haven't given them a card number yet.
  - kmlx 3y ago
    but they would know how much tax the customer would have to pay.
Symbiote 3y ago
In Denmark, the additional fees charged for foreign (non-EU I think) or corporate cards are passed on to the customer. The price says 100DKK, but they pay 101.50DKK or whatever it is.
- carlosjobim 3y ago
  That's probably not the card fees, but the currency exchange.
  - wodenokoto 3y ago
    No, that’s the card fee. At point of sale you usually choose which side does the currency exchange (you choose on the terminal if you want to pay in home or local currency)
  - Symbiote 3y ago
    Here's a sticker from a self checkout at a large supermarket (Føtex): https://imgur.com/a/w9sg1ey https://imgur.com/a/w9sg1ey It says (roughly) "Payment cards without fee: All Danish and foreign debit cards" "Payment cards with fee: 0.9375% Danish issued; 1.75% foreign issued."

e63f67dd-065b 3y ago

As a sidenote I hate that sales tax is not shown on the price tags here in the US. I strongly believe that you should be able to walk out of the store paying the price shown on the price tag -- not a cent more. This obviously clashes with the obvious solution of making credit card surcharges a thing and letting consumers deal with it. I genuinely don't know what's the best solution here -- I think the EU did a good job, but I'm skeptical of government intervention generally, so I'm trying to come up with more structural solutions that make it so it's competition that drives the price down, not government price caps. Edit: Actually I think there's a simple solution: the fee should be assessed on the consumer side, not on the merchant side. Your issuing bank charges you 200bps on your end instead of taking it from the merchant cut. The net effect is the same. People would hate it, and it would never happen, but it's fun to think about :/

xhendrick_neues 3y ago
The sales tax surcharge does seem awkward On the other hand, that's probably why sales tax is around 5%? whereas VAT is 20%+
- badcppdev 3y ago
  There's a great map of the US on Wikipedia showing the Sales Tax by County ( https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#/media/File:Sales_tax_by_county.webp https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat... ) Sales Tax ranges from 0% through to 12%
  - carlmr 3y ago
    But still OP's point stands. If the VAT was more visible, people might be less accepting of it, like with credit card fees.
    - Broken_Hippo 3y ago
      I'm in Norway. There is no real way to avoid knowing what the VAT on things are. I have to pay it if I order from Amazon or Etsy, for example. If I order from the US, I pay later. Every sales receipt has the VAT right on the receipt. I can see it every single time. If I order from inside the country, I can see it before I pay. It isn't hidden. It isn't secret. It wasn't even secret to an immigrant that didn't yet understand enough Norwegian to know. What I do get is to be reasonably certain what I'm going to pay when I get to the cash register. I don't have to do mental gymnastics with a total if I'm tight on money - like I have many times in the US. It won't change if I'm in a different part of Norway. There simply aren't as many price surprises like that.

bombcar 3y ago

> Instead of capping prices, you could simply require any fees to be paid by the cardholder. This has begun. Many restaurants near me have a credit card fee, as does at least one car repair place. No fee of paying with cash/debit.

withinboredom 3y ago
That is usually against the card-processing agreement. If you want to have fun, you can report them to Visa/MC and watch that go away within a few days.
- hyperbovine 3y ago
  Nope, this is completely (laws vary by state) legal as of ten years ago. https://www.lawpay.com/about/blog/credit-card-surcharge-rules/# https://www.lawpay.com/about/blog/credit-card-surcharge-rule...
  - deleted 3y ago
    [deleted]
  - withinboredom 3y ago
    Legal, yes, you're not going to go to jail for it. However, in accordance with the contract they signed to get access to the card network… they probably are not allowed to do this. Each card issuer has a dedicated form to report this activity.
    - arcticbull 3y ago
      Parent provided you a link explaining how this changed 10 years ago. You are unequivocally allowed in the United States to pass along credit card surcharges in all but two states. It's permitted by law, and it's permitted by merchant agreements! If you don't believe parent, and you don't believe me, I hope you believe Visa's own FAQ. > Q. Can I add a surcharge to card transactions? > As a result of a legal settlement to resolve claims brought by a group of U.S. merchants, merchants in the U.S. and U.S. territories may add a surcharge to certain credit card transactions, starting January 27, 2013. Merchants who choose to surcharge must follow consumer disclosure and other requirements agreed to as part of the settlement. [1] https://usa.visa.com/dam/VCOM/download/merchants/surcharging-faq-by-merchants.pdf https://usa.visa.com/dam/VCOM/download/merchants/surcharging...

rippercushions 3y ago

This is pretty much what Australia does: credit card surcharges have to be clearly disclosed and must be commensurate with the actual fees. Nevertheless, partly thanks to COVID, cash usage is way down and many people seem happy to pay the standard 1.6%-ish for the convenience.

kalleboo 3y ago

Where I'm from in the EU, many shops are happy to go card-only because the card fees (with the aforementioned EU regulation) are lower than the costs and crime risk of dealing with cash (which for supermarkets etc that handle a lot of it might mean paying a security company to show up with an armored truck, having to prepare change, staff pocketing some of it, etc) So if we're making customers pay the fees for their preferred payment method, is it also OK to charge cash customers a surcharge?

acherion 3y ago

> Instead of capping prices, you could simply require any fees to be paid by the cardholder. This already happens in Australia. The price is the price, until you go to pay and if the shopkeeper sees you pull out a credit card, would adjust the total to include a 1.5% surcharge (Visa or Mastercard, and you'll likely be turned away if you pull out a different card like Amex). The problem with this is that especially since Covid, a massive percentage of in person sales are done via contactless credit card payment, sometimes even with the screen of the terminal not even in view of the cardholder. Some sellers have caught on to this and are charging _much_ more than the 1.5% -- three sushi handrolls at the store around the corner of my workplace would cost about 9 AUD to buy (already includes GST), but the shopkeeper then added a whole 1 AUD on top for surcharge. I protested and have not shopped there since, but there's still plenty of customers at that store. More and more stores are adding 50c or 1 AUD on top to cover surcharge for items well under 10 AUD, I'm guessing because calculating 1.5% is not trivial for a lot of people, and are ripping off their customers. Calculating 2.08% in your head to make sure the shopkeeper is not pulling a sly one on you unfortunately is not something a lot of people are going to do.

lathiat 3y ago
The excessive fees have been illegal for a few years now. They can only charge the actual cost incurred. Worth a lodging a complaint about them: https://www.accc.gov.au/consumers/pricing/card-surcharges https://www.accc.gov.au/consumers/pricing/card-surcharges
arcticbull 3y ago
> The price is the price, until you go to pay and if the shopkeeper sees you pull out a credit card, would adjust the total to include a 1.5% surcharge (Visa or Mastercard, and you'll likely be turned away if you pull out a different card like Amex). That's not required in AU, btw, it's optional. It's up to the merchant.

jpambrun 3y ago

I much more value the consumer protection laws that prevents surcharges to be added to the advertised price. If we open that door we will end up with tons of junk fees.