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re: 3% Credit Card Fee
Posted on 2/3/24 at 1:26 pm to lostinbr
Posted on 2/3/24 at 1:26 pm to lostinbr
quote:
I get what you’re saying in principle, but I think that’s a somewhat antiquated way to look at credit cards nowadays.
We will continue to disagree. Merchants can build in the cost of credit and uncollectible accounts into their prices. Any cost accountant can do this for you.
You're argument is that it's convenient for the customer so they should pay for the convenience. Well, it's convenient for the merchant also, yet they are passing the fee along as a surcharge, and getting additional sales from credit. The 3% on those sales is the price to outsource credit, collection, and the loss on uncollectible sales. Why should a the consumer pay for the merchant's credit function and bad debts?
If there is an issue with the fee, the merchants should put pressure back on the processor, not screw the customer.
Posted on 2/3/24 at 1:59 pm to ATL_Tigerfan
most places aren't paying 3% except on amex or discover visa and mastercard are 1.5% and can be lower the more volume you do
Posted on 2/3/24 at 2:12 pm to lshuge
My company lost 100 million dollars last year from not charging cc fees. It was third largest expense in company.
Posted on 2/3/24 at 2:17 pm to Breesus
quote:
Breesus
Top notch post.
Posted on 2/3/24 at 2:24 pm to slackster
quote:
Imagine charging 3% more to access a substantial amount of potential customers. Businesses around the world found a way to make ends meet and then some for decades without the fees, but now they’re required to survive? It’s a lazy cash grab under the woe is me umbrella.
This is what gets me, has the processing fees increased with inflation? I get why prices have gone up due to increased goods and labor costs but has processing fees (genuinely asking)? Why is the model to build processing fees into the price of things no longer working after it did for decades?
In the end most places seem to be missing that pricing is and always has been psychological. Build the processing cost into every product and incentivize cash payments with a discount instead of offering a slimmed down price with a "penalizing" credit card fee. People probably wouldn't register a $.30 increase on a $10 item but they will never return to a business for charging a $.30 credit card fee.
Posted on 2/3/24 at 2:27 pm to ATL_Tigerfan
quote:
You're argument is that it's convenient for the customer so they should pay for the convenience.
My argument is that the ability to offer credit (in the traditional buy now, pay later sense) has very little to do with most merchants’ decisions to accept credit cards as a payment method. It’s not a choice between offering managing their own credit system and outsourcing. It’s a choice between accepting credit cards or not offering credit at all. It’s not the 1940’s when a family might have had a running tab at their local grocery store.
Meanwhile on the consumer side, the reasons people pay with credit cards at gas stations and restaurants often have very little to do with deferring payment. I would argue that for a very large portion of overall transactions, people use credit cards because A) they’re more convenient, B) they’re more secure in the event of a breach/identity theft/etc., and C) they get rewards on every purchase.
quote:
Merchants can build in the cost of credit and uncollectible accounts into their prices. Any cost accountant can do this for you.
Of course they can, which brings me to my next point..
quote:
The 3% on those sales is the price to outsource credit, collection, and the loss on uncollectible sales. Why should a the consumer pay for the merchant's credit function and bad debts?
Are you under the impression that the consumer isn’t paying for it without a surcharge?
Let’s think about that. You pointed out that the merchant can easily build the cost of collections into prices if they run their own credit service. I agree. And they are doing the exact same thing with credit card transaction fees. My argument is that the credit costs should be worked out between the cardholder and the bank, rather than being subsidized by cash and debit customers.
I understand that there are always going to be some costs at the merchant level due to the need to access the networks and process payment, but it’s pretty easy to compare AMEX fees to Visa/MC (much less debit transactions) and see that there’s more to the story.
Reasonable people can disagree, though.
Posted on 2/3/24 at 3:26 pm to lshuge
Love it when they don’t tell you about a fee until after you made the purchase
Posted on 2/5/24 at 2:28 pm to slackster
quote:
Imagine charging 3% more to access a substantial amount of potential customers. Businesses around the world found a way to make ends meet and then some for decades without the fees, but now they’re required to survive? It’s a lazy cash grab under the woe is me umbrella.
I'm in the management side of the business. Visa and MC take the lions share thru interchange.
And guess what, an increase was placed in January.
Every website, got agency, car dealer, etc etc etc charges a service fee for card usage. Why us ut a big deal if restaurant and retail do the same?
Posted on 2/5/24 at 2:39 pm to El Segundo Guy
quote:
And trust me, I'll take 2 minutes in your businesses' line to fill out my checkbook. Joke's on you.
nah, jokes on you, we don't take checks. Cash or card with 3%
Posted on 2/5/24 at 2:47 pm to tigersmanager
quote:
visa and mastercard are 1.5% and can be lower the more volume you do
Visa and MC are definitely not 1.5%. Maybe you meant 2.5% which is more in line.
Posted on 2/5/24 at 2:48 pm to lshuge
I use plastic for almost everything. It has always seemed to be BS for ALL customers to subsidize those using plastic. Almost all gas stations are offering a cash discount now in our area. Accepting credit cards is not cheap in business with margins that are already tight.
Posted on 2/5/24 at 2:50 pm to Finch
quote:
A lot of businesses are doing it, especially restaurants, with margins getting tighter. So either they are going to hide it and have a price increase, while others choose to charge the client and be upfront about it.
This made no sense. Completely backwards logic.
Posted on 2/5/24 at 2:51 pm to phil good
quote:
F you. I'm not paying for your rewards points.
You ain't wrong. I use plastic for everything and chase cash back deals regularly but it is BS for cash customers to subsidize my cash back deal. If it went away completely to be honest I wouldn't notice it, I would still use them for everything. If I have $100 cash on me a week I am going to lose it at some point. I can't stand having change and small bills...so I would continue to use plastic.
Posted on 2/5/24 at 2:52 pm to slackster
quote:
Imagine charging 3% more to access a substantial amount of potential customers. Businesses around the world found a way to make ends meet and then some for decades without the fees, but now they’re required to survive? It’s a lazy cash grab under the woe is me umbrella.
when i was selling forklifts, we offered a cash price and had to dance around the credit card price. Our boss was very paranoid about the wording, i think there was a legal issue at one point. We couldnt expressly say that we had to adjust the price to cover the fee
The problem is that the margins are new lifts are pretty small. 7-15% for average run of the mill warehouse forklift. So we couldn't just blindly put 3% into every deal to cover the 5 or 6 people a year who wanted to use a credit card on a new lift
little easier to eat 3% for high margin stuff like parts and service
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