Credit and debit card fees, and sales taxes

In reply to DeadSkunk (Warren) :

That makes sense. 
 

I don't do that. 

SV reX said:

In reply to DeadSkunk (Warren) :
I don't do that. 

I never have either, but the poor sods that do are getting nailed for a wicked percentage. I worked with a couple of people who came to me for financial advice years ago. In both cases they had 5 digit balances and were paying the monthly minimum and had no clue what it was really costing them. One of them did what i suggested and got out from under the debt, the other continued his usual habits.

SV reX said:

Toyman! said:

 

Why should I pay for your convenience?

The historical answer to that question is "Because you want the business".

For over 50 years merchants absorbed this cost (and passed it on to all customers) because it was a known fact that their sales increased significantly more than the cost of the fees when they could offer their product to people who were not carrying cash. 
 

This is a reversal of what has happened for 50 years, and those "fees" have already been absorbed once into the sales price. 
 

In truth, it's not for my convenience. It's for your bottom line. Would you seriously want to try to run your business as a cash only business?
 

But I understand how that conversation has been turned around. 

Merchants have never absorbed those costs. They just figure it into the cost of doing business and pass it on to the customer. They always have. 

I'm not in business to give money away so I pass those costs on just like every other business.

TANSTAAFL

SV reX said:

In reply to Toyman! :

You are correct that volume is an enormous part of the credit card processing fee, but credit worthiness is also part of it.  So is your personal credit worthiness (whether you like it or not).

There are many factors. 

No, it is perportional to the dollar amount processed at the end of business. My rate varies from 1.25 to 3 percent depending on the closeout dollar amount at the end of the day and the number of transactions.

In reply to Toyman! :

Incorrect, sir. 
 

Merchant credit history impact

Look into how MCCs are calculated.   (They vary according to the business risk profile)

...but it doesn't matter. 
 

The point is that adding a fee at the checkout is not appropriate in many cases, and illegal in some. 
 

And CC cards are different than Debit. 

In reply to Toyman! :

I didn't say it was a free lunch, and I didn't say merchants paid.  I said they absorbed the costs and passed them on. Absorbed into their business operations. Like the mortgage, or the light bill, or the truck payment, or the marketing plan.  It's called overhead. 

There have never been fees like this added directly at the register to penalize people who use cards until recently.  Businesses did fine without doing that.  Was it ultimately paid for by the consumers?  Of course.
 

This is just an added profit charge.  Businesses do it because they can.

You wouldn't dare run your business without accepting credit cards, any more than you would run it without a work truck.  You'd lose too much business. 
 

In reply to SV reX :

Rates are easily looked up without giving any information to the card companies much less giving them a credit report. Most have their rates posted on their website. If they are arbitrarily jacking your rates around, I would suggest changing companies. 

I change merchant services companies every time they get a little unfriendly with the rates or slow to make deposits. I think I'm on my 5th in 18 years.

In reply to SV reX :

You should be happy they are telling you about it and offering you the chance to use cash and avoid the charge. 

The alternative is they do what i do and charge everyone that cost because they don't know how the customers are going to pay their bills. 

In reply to Toyman! :

That's illegal in some places. Maybe all. Depending on how you handle it.

In reply to SV reX :

The turn them in or stop doing business with them. Those are your choices. 

In reply to Toyman! :

I'm pretty sure that's the point of this thread. To learn. 
 

Is there a problem with that?

There's also a 3rd option. To speak with the owner/ managers of the businesses. 

SV reX said:

...but it doesn't matter. 
 

The point is that adding a fee at the checkout is not appropriate in many cases, and illegal in some. 
 

And CC cards are different than Debit. 

Isn't the fee issue related to how the card is processed?

My understanding was a debit card with the VISA or MC logo is a "debit" card when you input your PIN, but "credit card" when processed without using the PIN. 

I wouldn't be surprised if I'm wrong, but that was always how I interpreted it and some of the local gas stations treated it that way when making purchases. Using the PIN to complete the transaction resulted in the cash discount being applied to the purchase. 

In reply to No Time :

I thought that too, but the reading I have done doesn't seem to indicate that. Debit cards can't have fees like this added, whether or not they are used as credit cards. 
 

It's a consumer protection issue. The people who use debit cards the most are the ones who are least able to pay, or get credit. Adding 3% to the purchase (then charging 28% or more in interest) is considered a burden. 

In reply to No Time :

I have never been able to figure out why a debit card can be used like a credit card at all, especially without a PIN. 

Canada here, so your mileage may vary.

About a year ago, it became legal (in my merchant agreement) to add a fee for credit card transactions.  It made a lot of hoopla for a few days, until people not in the media pointed out that all businesses base their costs on a 2-4% cost to process the money, and now, it is just obvious.  I've run into exactly nobody that does that, cause the douche move interpretation is large.

Debit cards cost me $.04 per transaction, no matter the quantity.  It costs me $1.00 to deposit a cheque.

Credit card fees are all over the map, and the customers situation is a large part of that.  A personal, nonpoints, basic credit card, inserted with chip is under 1%. A corporate card can range up to 3%, I presume because they pay them monthly, or the risk is higher.  Every month, I bet I have 12 or 15 different rates.  What exactly they are based on is hard to know without caring a lot more than I do... 

In reply to Streetwiseguy :

Interesting...

Do you pass those fees on both CC and debit the same?  Are you required to give notices, or itemize the fees on receipts?

I have no issue with fees. I have issue with CC fees being charged for debit transactions if they are not supposed to be. 

In reply to Streetwiseguy :

$1 to deposit a check? That seems a little extreme. Checking costs me $0.00 as long as I maintain a balance over $15k, which I do. If I exceed 50 items per month at a teller or write over 100 checks per month, there is a charge but I never use the teller since all of my deposits are ATM or app-based and I only write about 25 checks a month.

Credit cards are based on the amount processed and number of transactions and range between 1.25% and 3.5%. That gets passed on to the customers even if it's not itemized on the bill. I don't think I've ever knowingly had a customer use a debit card so I have no clue what those cost to process. Most businesses don't pay by credit card and I don't do residential work so the majority of my customers use checks, ACH, or EFTs to cut down on paper use, mailing costs, and processing fees. 

In reply to SV reX :

I don't differentiate.  If somebody pays with debit, I make a bit more money.  I do not charge any additional fee for credit card use, nor do I offer a discount for debit or cash.  My bank fees and merchant fees are generally somewhere around $7000 a year, and it's just built into my shop rates.

In reply to Toyman! :

Big difference in USA  to Canada for banking.  We've been using debit cards and automated tellers here since about 1975.  I think the six big Canadian banks here have such an astounding level of control over the market, they can do whatever the hell they want to, and one of those things is to pound you up the pooper for taking cheques.

I haven't used a debit card in years. I may be misinformed, but I feel there's a security risk with debit, and I'd rather get the points/miles with credit since I never carry a balance. If there's a cash discount I prefer to pay cash. We are planning a wedding right now, and have BLOWN SOME MINDS by insisting on mailing a check instead of paying the 3.5% CC fee, but we have saved hundreds by doing so.

I have slowly stopped tipping at walk-up counter-order style restaurants. Sometimes I still cave due to that awkward guilty feeling of searching through the menu to tip 10% or less but I man am tired of these awkward flip-over tip screen moments for what is essentially grocery cashier work. It actually detracts away from the dining experience.

What really grinds my gears is retailers and restaurants not accepting cash, period. It's legal berkeleying tender! 

I'm not even old and this stuff bothers me! I'm a millennial! 

maschinenbau said:

I haven't used a debit card in years. I may be misinformed, but I feel there's a security risk with debit, and I'd rather get the points/miles with credit since I never carry a balance. 

I don't use a debit card either.  If the info gets stolen, your money is GONE until the bank sees fit to return it.  A credit card becomes a disputed transaction with no money out of your pocket.

In reply to maschinenbau :

Get off my lawn. 

Toyman! said:

In reply to Streetwiseguy :

 Checking costs me $0.00 as long as I maintain a balance over $15k,

That seems a little extreme. I think I'd rather pay $1 a cheque

Local corner store in the next village charges, I think, 3% for credit card transactions. I normally use my credit card for everything, because points, but not there, and I don't consider him a douche for charging extra. I know he sells more beer than anything else, and the price is  set in stone, and  his margins are tight.