Credit Card Fees being passed on to customers.

Trade

Well-known Member
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I've been noticing more and more businesses starting to pass the fees the credit card companies charge them on to their customers. Usually it's 3%. When that happens I go ahead and pay them in cash. Anyone else noticing this trend in your area?
 

Sometimes a small business will verbally offer a different price for paying with cash. I haven’t seen a sign by the cash register offering a 3% discount in years.

Sometimes they offer no tax and no paperwork. You know that they’re not going to declare that sale on their income tax form either. I use a card.
 
I thought discounts for cash have violated merchant contracts with CC issuers for a while now. So they'd just be passing along all or part of the costs a different way. Some have labeled CC service charges as "convenience fees."
 
Merchant Services Fees have always been part of pricing. One reason why car dealers do not accept credit cards after negotiations.
 
Yes, utility companies, taxes (especially property taxes & IRS) , ISP providers are all doing it. I have a 2% cash back card & have been paying for my ISP from my checking acct for sometime now along with anything to do with any county taxes. They both wanted 3.5% to use a card. It's was a losing deal if you don't catch the card fee. I was able to charge my down payment on the last two autos I bought though. Sure that will stop.

WinCo is our place for many items but you can't use a credit/debit card without fees. Fees are included in the price of most items bought online too. CostCo allows a VISA cashback card without fees. I need a card when paying some streaming providers (NetFlix, ROKU) & my wireless offers a discount if you have a card on file. Service stations have been doing it for years.
 
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Anyone else noticing this trend in your area?

Yes, and I hate it. Apparently (from googling it), it is because of a retailer class action lawsuit "Payment Card Interchange Fee and Merchant Discount Antitrust Litigation" but a few states have it illegal to pass on the fees.

The lawsuit was about the fees being too high and not enough competition existing for the few major credit card companies and banks. I don't see how allowing the fees to be passed to the customer is a remedy for that, it simply moves the problem to all of us, and, since the retailers are likely to prefer accepting the major credit cards that they complain charge too high of processing fees, the effect on me is to force me to pay directly from my bank account which I don't like.

Though some big retailers (Walmart etc) don't pass the fee on because they have separate better fee agreements with the major credit cards.
 
They're doing it here in rural Virginia. It's usually listed as a service charge, with no mention of credit cards. It's just a way of getting more money. I agree; If they think their service or product is worth it, just bump the price, and quit trying to hide what they do. I quit going to places that do that. And while I'm on it, I don't see the point of tipping someone for handing you food over the counter and taking your money. That's not a tipping situation.
 
I see some of the smaller businesses around here doing that also, I'll pay cash to avoid it. There really should be signage stating you (the customer) will be charged for credit card use, and at what percent. It wouldn't surprise me if eventually both the card user and the vendor get dinged.
 
Sometimes a small business will verbally offer a different price for paying with cash. I haven’t seen a sign by the cash register offering a 3% discount in years.

Sometimes they offer no tax and no paperwork. You know that they’re not going to declare that sale on their income tax form either. I use a card.
I agree!

Even if it costs a bit more using a card gives you stronger rights and clout if you need to dispute the charge or service.
 
I see some of the smaller businesses around here doing that also, I'll pay cash to avoid it. There really should be signage stating you (the customer) will be charged for credit card use, and at what percent. It wouldn't surprise me if eventually both the card user and the vendor get dinged.

I got the bill at a local restaurant a few days ago, and the price for my steak was 3.5% higher than the price on the menu. Discussed it with the cashier. She had no clue. I didn't escalate it to a manager, too much hassle.

Turns out, after looking at the bill some more, they called it a 'cash discount'. Net result was I ended up paying the price that was on the menu, but only because I paid cash.

No signs anywhere alerting you to this. Just get bushwacked when you get your bill.

The place has excellent food and low prices, so I will go back again. But they need to have better communication about the 3.5% credit card fee.
 
I came across that several months ago at a bustling restaurant whose prices were by no means low, with slow and indifferent service.

We paid cash (much to the cashier's visible irritation, I might add), haven't returned there and probably won't. It stuck in my craw - I felt very ripped off between that 3.5% bump and their "recommended tip levels."

Should add that by state law, California waitstaff receive full minimum wage from their employers ($17.28/hour) so I don't feel morally obligated to tip heavily for poor service.
 
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Just speculation on my part, but here's what I'm thinking. Credit card companies seem to have settled into the cash back incentive to consumers for using the card. It's the best incentive yet in my opinion. Either the vendors are now paying more for accepting cards so the card companies can take the added profit and pass it from the vendor to the consumer, OR vendors are simply grabbing that incentive for themselves at the time of purchase.

The outcome is that the cash back incentive becomes of no value to the card user. This may curtail card usage, but it's kind of a gamble. Will people start avoiding vendors, or just willingly give them more? Our whole economy is moving away from cash. I hardly ever use cash, but I can't predict how this will wash out.
 
I think that younger folks will accept it and us older folks will continue to bristle about it, along with other changes in the food business.

IMO all of these things should be baked into the menu prices.

In this area the relatively new and annoying charge is for take out containers and the ‘extra’ work involved in filling them.

It won’t be long before they start charging for parking. 😉🤭😂

If the food is phenomenal I can put up with almost anything.
 
The outcome is that the cash back incentive becomes of no value to the card user. This may curtail card usage, but it's kind of a gamble. Will people start avoiding vendors, or just willingly give them more? Our whole economy is moving away from cash. I hardly ever use cash, but I can't predict how this will wash out.
I can't imagine convenience stores adding CC premiums to their prices. They don't want to return to being the attractive "stop and robs."
 
Watch them lose their mind if you write a check.
Check writing would offer some entertainment in that regard, but it's expensive to write checks, and inconvenient. I've probably written one check this year. Possibly the service charge applies to checks too. Who really knows?
 
Yes, I've noticed and I avoid it too and another thing is some will avoid giving you a receipt if they think they'll get by with it. I use a cash back credit card for all purchases and carry very little cash so they'll get a check from me if I don't use my cc.
 

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