Bitcoin Forum

This.


Source: http://gizmodo.com/5979917/stores-can-now-charge-you-extra-for-using-a-credit-card

Credit Card costs are becoming too high for merchants, and Im really happy something like this is passing as itll push Bitcoin further, Ill explain why.

For as long as I've been involved in Bitcoin, a question that I always get is "Well, why would people want to use Bitcoin, it dosent cost me anything to use a credit card"

Yes, but now it does.

I'd always respond to that with a few answers, a common one being "Sure, but merchants will offer steep discounts for you paying in Bitcoin because they dont have to worry about fraud, chargebacks, high % merchant fees, and cash flow to name a few"

However, now my argument is totally different.

What will happen is people will see merchants charging 4% to use a credit card, but offer 5% discount if paid with Bitcoin..thats almost 10% difference!

......It's starting my friends  ;D

-Charlie

Agree fully!

For a long time the cost of credit cards has been hidden to the public. It's paid by the merchant, and only indirectly borne by the customer in higher prices that they're never aware of. More and more, you'll start seeing merchants adding the explicit fee on top of the shelf price, now that they can legally do so.

It'll take a while for this to take effect, but I'd imagine in 2-3 years people will be used to paying X% more when they use their cards. Just one more macro driver of Bitcoin adoption.

the only reason i pay with VISA is to get my 1% bonus dollars....  :'(

thank fully this appears to be in US only, so I'll keep taking advantage of the bonus dollars for a little while longer

I feel this has a weird relation back to Bitcoin since this fee is applied to credit cards and not debit cards, meaning it is only affecting people that are spending money they don't have.  Something that you can't do (yet?) with Bitcoin.

You have the money.  It's a loan.  You have to pay it back, of course, but you have it, too.  :)

There is a law here that prices cannot be cheaper for cash purchases (and at the same time, cannot be more for cc purchases)... it's funny that it was brought in by VISA/Mastercard.  So we're safe from that crazy law here, but who knows, we always pick up the dumbest of USA laws it seems.

So let me tally this up right, and correct me if I'm wrong...

1)  Retailers/Merchants complained about credit card fees being too high so they got Dodd-Frank, limiting the fees they get charged on transactions, plus the ability to say no to credit cards on small purchases and provide incentives to pay in cash etc.

now a short while later....

2) Retailers/Merchants complain about credit card fees being too high and being "strong armed" into not being able to directly make the consumer pay (above the already increased shelf prices)....

sounds to me that the credit card companies are not 100% of the problem......  but yes this will be good for bitcoin/cryptocurrency adoption in any case!

Shouldn't the title be "Stores are now allowed to let you pay your credit card fees" or something like this?

IMO, I found it OK that the CC Companies let a store only use CCs if they agree to not let their customers charge extra for using them.

What I didn't find OK is that they weren't allowed to give customers paying cash any special Bonuses (f.e. 1% off when you pay cash), while CC Users get Bonuses all the time, Bonuses paid by the stores.

Now Stores are allowed to give Bonuses for paining cash and that's fair.

Yes, I wonder how many stores really will pass the fees on. Many stores may not want to discourage customers from buying things they can only afford by charging it to a card. And in any high markup business it might just not be worth giving your customers a negative surprise at checkout.

Otoh, in some cases people using CC will be less price sensitive and being able to charge them a bit 'more' could be good for stores.

I don't use a CC, but in general if I am charged more than the tag I get a little peeved. Even when I expect it (sales tax) it still seems wrong. I don't care how common it might get, if you offer me something for X and then tell me "Wait, my brother/friend/boss/cat needs a bit too." that's annoying.

I don't think many. But I can imagine it goes a little this way:

Most store may choose not to raise the fee, at least not immediately.

Actually, the whole thing is just so odd. At what time before that charging one payment method a higher price is illegal?

Isn't you can charge a price you like?

It's only a matter of time once this gets started where it is no longer a surprise and instead normal business.  Merchants apparently want to have their cake and eat it too as I highly doubt we will see a mass 1 to 4% general price reduction in goods (because these fees were already factored into your shelf price) and services but we will see the 1 to 4% surcharge for using your credit card I bet, it will start small-ish (however wal-mart seems to be on the pro-charge consumers side of the fence so it may spread pretty rapidly...) but once merchants really realize that they can get a 2 to 8% improvement on their bottom line with this non-sense they will soon all migrate and it'll become the norm that people are just used to being the way things are.

The auto repair guy I go to gives me a discount for paying with cash instead of credit cards. Around Detroit, gas stations typically charge 10 cents more per gallon if you pay with a credit card (they have been doing this a couple years now). I don't know how they have been getting away with it before this, but they have all been doing it.

This is definitely a scenario where bitcoin makes a lot of sense.  Now that I can pay less with cash, I'll definitely be more tempted to do so despite the annoyance of dealing with bills & change.  Hopefully that annoyance of sacrificing convenience for cheapness will spawn a greater demand for bitcoin.  Bitcoin isn't necessarily free either, but its a lot less than 4%.  I'm willing to pay a fraction of a percentage for convenience, but 4% is high enough to tempt me to using cash over credit card for sure.  I guess I'm slightly thankful I live in a state that has a law against charging a difference even though I would vote against the law due to principle if I had a vote.

There was no law in most states.  The credit card companies made you sign a contract stating you will not charge more for cards.  If you don't agree you can't take cards.  This law says that part of the contract is not legal anymore and the merchant can charge for cards and CAN NOT be terminated for this. 

My wife's store used to give a 5% discount for cash.

We looked up our CC agreements and it said we could not charge extra for using cards.

American Express charges the most, if we could have charged more for Amex we would have.

People were usually willing to pull out cash when we told them about the discount.

This is essentially a claim that almost no customer cares about a 2-8% change in price. Since for the most part people actually do care a business that simply does not raise prices will have booming business at the expense of all others. It is slightly counter-intuitive since businesses are the ones writing the actual price tags, but really sellers don't set the prices of things.

Many people use credit cards because of cash back every month, and pay their balances off. They're essentially just getting back some of the bs fees. Debit cards can also be run as credit cards and are charged the same visa/mc fees. My credit union pays 3% interest on up to $10k as long as you use your debit card 10 or 12 times a month without using the pin. If you use the pin, it's a debit tx and they don't make money.

it sounds a lot better when you say it the other way. i.e. stores can now offer a discount for using cash!

The liquor store I go to has given a 5% discount with the use of cash/debit for over 15 years.  Retail stores could always give a deduction in the past for cash prices while jacking up the price for card swipers.

In fact this new agreement will most likely have little impact.

Few, however, believe many consumers will be affected by merchants’ new prerogative. Settlement or no, surcharging remains illegal by statute in 10 states—California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas—representing about 40 percent of U.S. retail sales. Large retailers that operate in the 10 restricted states are not likely to surcharge in their stores in other states, according to reports. Also, for merchants that accept American Express, which does not permit surcharging, the terms of the agreement prohibit them to surcharge on Visa or MasterCard cards.

“The bottom line,” an National Retail Federation spokesperson said in a published report, “is that very few retailers would be able to surcharge under the settlement, and that the vast majority don’t want to surcharge even if they could.”

http://cardnotpresent.com/news/cnp-news-jan13/Surcharging_is_Here%E2%80%94Or_Is_It__-_Jan__28,_2013/

You are right. However, many people (including me) use CC simply because of the 0.5-1% bonus given by CC company, while they actually have enough cash in their hands. If they need to pay more than 1% extra for transaction fee, they will simply use cash or debit card.

For online international transaction, however, cash and debit card don't work. Bitcoin would become a good choice.

Adding a CC surcharge to the 9.5%-10% sales tax in California is sure to cause some noise. Well, maybe not. People are sheep.

It doesn't make sense adding a "surcharge". It makes sense decreasing the prices of items bought with cash. Plus, if merchants are really free to set the discount as much as they want, I'd say that many would also include this sale tax percentage as a discount for cash purchases.  ::)

It doesn't apply to all US states does it ? Effectively this is going to put down the usage of credit cards, who the heck wants to pay an extra 4% on the gasoline. So people are probably going to use debit cards more. Also, the big chains will just swalow this cost, while mom and pop stores will probably push the extra cost onto customers.

this wont affect things much. retailers know if someone sees a product price tag for $20 and goes up to the counter to pay, passes them their credit card and the cashier says "that'll be £20.30" the customer will first take another look at the price tag to make sure they didn't misread it, before starting an argument with the cashier.

all you will see change, is what the sales receipts will say
product cost      $19.71
____________________
card fee             $0.29
____________________
total                 $20.00

that way the retailer would only pay sales tax on $19.71 as oppose to the full $20. (thats how some retailers work in the UK)

What I'm irked about is how could there possibly be state laws preventing adding a surcharge - the laws were probably enacted due to some perception of providing consumer protection against misleading advertised prices or such. What it does, however, is hide and legitimize the secret taxing of commerce by banks. Why should I subsidize other's use of a fee-requiring payment method in higher prices when I pay cash?

There are ten states that have such laws: http://usa.visa.com/personal/using_visa/checkout_fees/index.html#10states

Are these really the result of a lobbying campaign for laws friendly to credit card companies? I was curious, so I investigated a bit further. The California law is titled the "Song-Beverly Credit Card Act of 1971." (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1747-1748.95)

“No retailer…may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means…”
Statute: Cal. Civ. Code § 1748.1(a) (West)

The law basically has no teeth to it - if a customer is upset about being charged a fee, they can send a certified mail letter and demand the fee back. If the store doesn't reply, they can sue:


The same title is actually pro-consumer in that it prohibits any credit card merchant services contract that prevents the store from offering a cash discount:


The thing is people will, like this law addresses, likely get upset if they think the store is scamming them by charging a higher price than advertised. Also, the perception is that businesses likely won't reduce the price of everything in their store by 1.5% if they enact such a fee. However, people must know that their use of a credit card makes all goods more expensive for everybody, and only serves to enrichen the bankers with an unpublished tariff on doing business coaxed with ad campaigns that credit cards should be used "everywhere you want to be".

I wasn't able to find much about the history of this law, since Google is flooded with results since it has been the subject of lots of lawsuits up to supreme court level about what it's prohibition on gathering customer information when taking credit cards (another pro-credit-card-company benefit) actually means for online commerce.

just read the last message about subsidizing and hiding tax..

retailers know people like round numbers and they find it easy to add up in their head how much to pay before getting to the cashiers desk its why u dont see weird price tags with 23c or 71c at the end.. its mostly 0c or 99c(read on for this explanation too)

because of that, if true product value was $19.71 the retailer would still charge you $20 even if there was no tax/ card surcharge. simply to do with nice round numbers.

the cunning retailer may ofcourse bring it down to $19.99 as their belief(due to consumer behavior studies) is that customers don't see it as $20 minus a penny(expensive) but as $19 "something". making customers subconsciously think is way more cheaper then $20 then it actually is. purely because they see the big $19 followed by the smaller print 99, which they think is ignorable. that is why you always see price tags wrote like below to make an extra near on dollar not even noticable.
$1999

the point being whether tax/surcharges are hidden or not you are still going be paying the retailer the same.

imagine a world where no surcharges are charged at the shop but instead at the end of the month the banks debited out 1.5% of your total spend from your account, thus solving your ... i don't want to pay hidden charges.... would you still be happy spending $20 in the shop then 30c at the end of the month..

what this new rule does do is highlight to customers how much the retailer pays credit card companies so that customers can see that credit card companies are hurting retail profits, and those with compassion would start using debit cards or cash. (that's their hope anyways)

the point again, you will still end up paying the same price.. just a different person would get to keep the 30c

I doubt it.

Today I took a private flight over Pucon, Chile to look at a volcano for a cost of 200,000 Chilean Pesos and the small businessman let me know there was a 5% fee if payment was via credit card. 10,000 pesos is about $21.33.

So there were only three three options, (1) no flight, (2) pay an extra $21.33 or (3) pay with cash.

It seems implied from his offer that it was not worth his time to do the flight if he did not get that $21.33.

I left him a note with: ElBitcoin.org and YouTube: What Is Bitcoin?

yea in the UK for years (before the millennium) the price you see included everything (tax and surcharge) in glossy magazine brochures and price tags on products. when you handed over your card the price you see was what got debited out.

but now the receipts (especially VAT receipts) split out card surcharge. yet you never get a discount by paying cash.

retailers: don't expect your loaves of bread and milk to suddenly reduce in price and allow you to choose to pay extra at the cashiers desk by using a card or not. retailers will just profit more on your cash.

high purchase goods: like flights, don't expect the price you see to include everything. even though the same flight you have been travelling on,year in year out is price tagged the same.  they wont discount the flight because you were using cash, compared to last years prices. they will now charge you extra for using a card. as an 'optional convenience charge'

Lawmakers are bought and paid for and/or rarely the brightest of the bunch. It's much easier to look at this as a huge mistake when you are a frequenter of these forums. But really, they could have just forced businesses to put on their mc/visa accepted here window signs that there is a fee for using them, and be required to have them up and visible if doing so. Sure people might not see it the first few times, but they will definitely learn.


Probably not, price stickiness and all. However, fiat has that tendency to inflate, so I think it would eventually start having an impact when/if more businesses start charging a fee.


Strongly agreed.

I use OKPay DEBIT CARD for shopping in Denmark and some merchants charged me extra 1,4% long before this news. Officially all POS transaction 0% (free). But in reality as I said some supermarkets charge extra fee. In addition to this en exta 4 to 5 % is lost on currency exchange!  >:(

Bullshit. You go up to the counter with an item that says $20.00 and the cashier says "That will be $21.20" and nobody bats an eye, because we are all used to paying sales tax. With a credit card fee, they just add it on top, so the price tag says $20.00, and when you get to the register the cashier says "That will be $22.00" and most people will not even notice, because who even pays attention to the math, the cash register is a computer, so it must be right, right?

The need to hide the fees dates back to when most people used checks and cash to pay for goods.  Now it seems everyone pays with CC or debit cards.  The reality is the fee is already baked into the prices.  However given the competitive nature of the market with the big box stores and the inflationary nature of currency with all the rouge printing,  stores are looking for an easy buck.  The government may be sending the message that they want people to stop using credit cards and move back to cash.

I think a better option would to allow BTC transactions for on the spot transactions like food, gas and meals.