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There's a simpler explanation to why merchants don't charge extra for credit card purchases: The cost of accepting cash is not zero. The logistics of drop safe

by tlb 14y ago

There's a simpler explanation to why merchants don't charge extra for credit card purchases: The cost of accepting cash is not zero. The logistics of drop safes and daily deposits plus losses due to counterfeiting, robberies and pilfering can cost a similar amount to the 3-4% credit card fees. That's why merchants aren't grumbling too much.

InclinedPlane 14y ago
Also, the convenience of accepting cards leads to increased sales, so it's not worth penalizing use of cards.
Domenic_S 14y ago
Even simpler explanation: the cost of interchange fees are already priced in to the retail cost of goods. In other words, cash buyers are subsidizing the interchange fees, your Rewards Points, Cash Back deals, etc. This is evident especially at gas stations. Many have "cash only" prices that are lower than credit prices; Arco generally has the lowest gas prices but accepts only cash or ATM (with an additional ATM fee). It's been policy for a while now that you simply can't charge more for (just) credit card transactions (you could however discount cash purchases). That landscape is changing recently [1][2], but we haven't seen its full effects yet. [1] http://www.dailyfinance.com/2012/07/19/3-reasons-why-credit-card-surcharges-are-an-empty-threat/ http://www.dailyfinance.com/2012/07/19/3-reasons-why-credit-... [2] http://www.dailyfinance.com/2013/01/24/new-credit-card-checkout-fee-starts-sunday/ http://www.dailyfinance.com/2013/01/24/new-credit-card-check...
freshhawk 14y ago
That's a valid point surely but it's not a simpler explanation. The simple explanation is that you will have your ability to accept credit cards pulled if they find out you are charging more for CC purchases, although you are allowed to have a "cash discount" just as was stated. It's in every agreement. I'm a bit shocked that people are arguing about this actually, but I guess accepting credit cards and setting up card present accounts isn't exactly a universal experience. I'm not sure how/if this was recently changed in the US, my knowledge is 5+ years out of date now and I'm not in the US either.

by tlb 14y ago

InclinedPlane 14y ago

Also, the convenience of accepting cards leads to increased sales, so it's not worth penalizing use of cards.

Domenic_S 14y ago

Even simpler explanation: the cost of interchange fees are already priced in to the retail cost of goods. In other words, cash buyers are subsidizing the interchange fees, your Rewards Points, Cash Back deals, etc. This is evident especially at gas stations. Many have "cash only" prices that are lower than credit prices; Arco generally has the lowest gas prices but accepts only cash or ATM (with an additional ATM fee). It's been policy for a while now that you simply can't charge more for (just) credit card transactions (you could however discount cash purchases). That landscape is changing recently [1][2], but we haven't seen its full effects yet. [1] http://www.dailyfinance.com/2012/07/19/3-reasons-why-credit-card-surcharges-are-an-empty-threat/ http://www.dailyfinance.com/2012/07/19/3-reasons-why-credit-... [2] http://www.dailyfinance.com/2013/01/24/new-credit-card-checkout-fee-starts-sunday/ http://www.dailyfinance.com/2013/01/24/new-credit-card-check...

freshhawk 14y ago

That's a valid point surely but it's not a simpler explanation. The simple explanation is that you will have your ability to accept credit cards pulled if they find out you are charging more for CC purchases, although you are allowed to have a "cash discount" just as was stated. It's in every agreement. I'm a bit shocked that people are arguing about this actually, but I guess accepting credit cards and setting up card present accounts isn't exactly a universal experience. I'm not sure how/if this was recently changed in the US, my knowledge is 5+ years out of date now and I'm not in the US either.