SV reX said:In reply to maschinenbau :
Get off my lawn.
Get off MY lawn! Literally, your old car is parked on my lawn 
SV reX said:In reply to maschinenbau :
Get off my lawn.
Get off MY lawn! Literally, your old car is parked on my lawn
Here is what you do: Every time you use the Debit card and have the fee tacked on, report it to the CFPB. Document everything.
Also, don't use your debit card. I don't even carry one with me anymore unless I know I might need to get cash from an ATM, but even there I try to get the cash beforehand and leave the debit card behind. Different situations call for different actions of course - if you're regularly making $5,000 transactions and they're charging you the 3%, then sure, maybe the Debit card is the right choice... But I'd be monitoring the account daily if that were the case. In general, the fraud risks are just too high with a debit card for regular use FOR MY USE CASES AND RISK PROFILE - could be very different for anyone else.
It has been a bit since I read through all of the protections, but IIRC, with a Debit card, you the consumer would be liable for up to $50 if reported within 2 business days, $500 if reported between 2 business days and 60 calendar days, and all of it if you don't report it within 60 calendar days.
With a credit card, you have $50 liability if it is reported within 60 calendar days, and most issuers have $0 liability to the consumer.
maschinenbau said:SV reX said:In reply to maschinenbau :
Get off my lawn.
Get off MY lawn! Literally, your old car is parked on my lawn
Haha. You have a point!!
mfennell said: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.
I had it happen twice on overseas trips, because I didn't understand the power of using the CC for rewards and such.
I went in to my bank, signed an affadivit that I was in the Caribbean on vacation so it's unlikely I made purchases in England. Had my money back in a few days.
z31maniac said:mfennell said: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.
I had it happen twice on overseas trips, because I didn't understand the power of using the CC for rewards and such.
I went in to my bank, signed an affadivit that I was in the Caribbean on vacation so it's unlikely I made purchases in England. Had my money back in a few days.
This is a bank policy. If you're using the debit card regularly, it would be prudent to ask your bank about their debit card fraud policy. Most should be covering it, if only for the reputation risk, but it definitely is not a guarantee. At that point your recourse would be to take it up directly with the merchant who presumably did not verify that the person on the card was the person using it - nowadays I wonder how much this is worth, my signature on my credit card looks nothing like the signature I'm able to scribble on those pads - but it is still a protection for you. And again, I'd start with the CFPB.
Z31, good point about the credit card points. That would cover a not-insignificant portion of the fee.
Boom. Sounds like you guys are starting to make sense.
Get your points credit card.
Use it for everything.
Pay it off every month.
Free purchase protection.
Free extended warranty.
Free foreign transactions.
Heck - my Amex Platinum has a $695 yearly fee. Between all the statement credits and whatnot I end up a net $1500 or so ahead per year and I am just a schlemiel not putting business expenses or my Amazon purchases on it. Got the Amazon Visa for that.
There is no reason to use Debit card for transactions. Even a high risk, low limit credit card with a crazy interest rate would be better, because at least you are building the history of payments if your credit was trashed for some reason.
There is definitely some truth to the different processing fees. Some places don't take Amex because their fees are higher.
We don't charge a fee to the customer, we accept credit card fees as a part of doing business.
As my first boss said "Never make it difficult for someone to give you money".
The tipping thing? I've started tipping a lot less since the price of everything skyrocketed and everyone expects a tip for just doing their damn job. Servers? Absolutely tip unless the service is bad. 5-Guys burger? Hell no.
93gsxturbo said:Boom. Sounds like you guys are starting to make sense.
Get your points credit card.
Use it for everything.
Pay it off every month.
Free purchase protection.
Free extended warranty.
Free foreign transactions.
Heck - my Amex Platinum has a $695 yearly fee. Between all the statement credits and whatnot I end up a net $1500 or so ahead per year and I am just a schlemiel not putting business expenses or my Amazon purchases on it. Got the Amazon Visa for that.
There is no reason to use Debit card for transactions. Even a high risk, low limit credit card with a crazy interest rate would be better, because at least you are building the history of payments if your credit was trashed for some reason.
There is definitely some truth to the different processing fees. Some places don't take Amex because their fees are higher.
Holy cow, $700 annual credit fee? My Chase Sapphire is $150/yr. Just looked that last 12 months 73,000 rewards points.
@gsxturbo - My cap one card does all that with no annual fee and 1.25% back on everything.
re: debit cards. My understanding is that the protections are pretty good, but there's a lot of horror stories about people having money tied up with vendors disputing charges. My mother in law attended a conference and was paired with a woman she didn't know that left the hotel without paying. She got dinged for both of them and had to fight to get it back, and it took a good while. I won't use a debit card, I have an old fashioned ATM card and some cash back credit cards.
I'm part of a stock club (mostly for the beer) and Visa is the stock I track. Visa and MC are essentially a duopoly that amount to a massive and mostly hidden tax on retail. Warren Buffet likes Visa because "it has an economic moat around it". The company damn near prints money.
https://www.lendingtree.com/credit-cards/articles/na-vs-eu-interchangefees/
jwagner (Forum Supporter) said:@gsxturbo - My cap one card does all that with no annual fee and 1.25% back on everything.
Nah fam. Check out the Amex Platinum benefits and get back to me. If you travel (and I do) its worth its weight in...well...platinum. If you don't travel, its probably not for you.
Amex Plat has a bunch of cool stuff. Delta lounge access (which may be going away, but thats another story). Centurion Lounge access, 240/year statement credit on streaming services (if you are already buying Hulu or XM thats it right there. Walmart+ membership (maybe $100? I dont use it but you might) minimum gold tier with Hilton, Marriott, National. President's circle with Hertz (get them sweeet rentals for the price of a Camry) 200 dollar Uber credit...200 dollar airline credit for checked bags, beers, wifi, what-have-you...free CLEAR...free Global Entry.... Stuff I would spend money on anyway. Then add up the points and you are really raking it in...Again..if you travel.
93gsxturbo said:Boom. Sounds like you guys are starting to make sense.
Get your points credit card.
Use it for everything.
Pay it off every month.
Free purchase protection.
Free extended warranty.
Free foreign transactions.
Heck - my Amex Platinum has a $695 yearly fee. Between all the statement credits and whatnot I end up a net $1500 or so ahead per year and I am just a schlemiel not putting business expenses or my Amazon purchases on it. Got the Amazon Visa for that.
There is no reason to use Debit card for transactions. Even a high risk, low limit credit card with a crazy interest rate would be better, because at least you are building the history of payments if your credit was trashed for some reason.
There is definitely some truth to the different processing fees. Some places don't take Amex because their fees are higher.
We do this but we don't use Amex, just Mastercard.
Absolutely worth is for the protection the card gives you. If anything happens to the money or you don't get what you paid for, the credit card company has better lawyers than you will.
93gsxturbo said:jwagner (Forum Supporter) said:@gsxturbo - My cap one card does all that with no annual fee and 1.25% back on everything.
Nah fam. Check out the Amex Platinum benefits and get back to me. If you travel (and I do) its worth its weight in...well...platinum. If you don't travel, its probably not for you.
Yep, it does have a bunch of premium benefits - some add'l over my MC. I travel a lot - about six months in the last year. But I'm mostly a main cabin/local hotel traveler so the MC I have seems to make more sense. I just don't see AMEX as an option in most of the restaurants and hotels I'm staying at in Europe and SE Asia, though I might be wrong since I don't ask. I used to be a four-day-a week corporate traveler with lots of status, but now that I'm paying out of pocket I'm mostly looking for a compromise of comfortable/cheap.
SV reX said:I'll admit... I don't know all the facts. So don't quote me (but feel free to correct me) Note: italic items below have been edited for accuracy
It has now become commonplace for merchants to add "processing fees" to card purchases. I think this represents a an unfair claim, and may sometimes cross the line into being illegal.
As I understand it:
- It is illegal for merchants to charge additional processing fees on debit cards. They can do it on credit cards. (Many merchants don't make the distinction).
- Merchants don't get charged fees on debit cards. If they collect the fee on all cards, they are collecting money to reimburse a "fee" they were never charged.
- It doesn't matter if the debit card is run as a credit purchase. They still are not supposed to charge any processing fees.
- Actual credit card processing fees can range from 1.4% to 3.5%, and it CAN be affected by the MERCHANT'S credit worthiness, volume, risk level, and credit coding. The consumer has no effect.
- Many merchants charge 3% or more, regardless of the fees they actually pay.
- Merchants are required by law to print these processing fees on the receipt, but most do not.Related to this are tips. In businesses where tipping is standard, the automated suggested tip calculations are jumped up pretty high. Most places now present options of 18%, 20%, or 22% (when the standard has always been 15%). These tips should be charged on the amount of the goods or services, but those amounts are calculated on top of the total INCLUDING applicable taxes. Why are we tipping on the taxes above and beyond the service being provided?
My state taxes are 4%, but the total tax at the register is 9.75% including state and local taxes. This could theoretically mean a purchase first gets taxed 9.75%, then a 20% tip is added (including tip on the tax), then a 3% processing fee is added (including fee on both the tax and the tip)
Add them together, and that's a whopping 35.65%. That's awful.
Meanwhile, the merchants are trying to buy product, and their purchases are being subjected to similar fees on the back end before the price even hits my register, which just contributes to the inflationary explosion.
I've started to push back on merchants and ask why they are charging the processing fees on debit card purchases. Every one I have asked says they don't make a distinction, and don't seem to know there are laws against it.
I don't think the problem is actually the merchants fault, or the bureaucrats. It's ignorance on the part of the consumers. We need to educate ourselves a bit more.
Im sure I've gotten some of this wrong. Feel free to set me straight. My point isn't to argue the basic math, it's to begin a conversation about how the process is messed up. Hopefully if we can gain a little awareness, we can begin to make some changes.
Much of this depends on your state/municipality, and there's also a lot of nuance here. I'm speaking directly as a business owner, so take that for what it's worth.
If I process a card (whether it is debit or credit), my processor (Stripe) takes a 2.9% cut. That's just the cost of doing business: They charge me just to take payment. Your credit card rewards don't come from nowhere.
For years I separated out cash/check and card payment options for customers under the thesis that if you as a customer are not paying more for using a credit card, you're just paying it hidden in the cost of the goods. I tried to make it as inexpensive as possible for customers to purchase my services, but still received a lot of kickback for charging processing fees (I charged 3%; my state allows a maximum of 4% and does not require that this be disclosed). Ultimately I caved last year and just rolled the cost of credit card processing into all of my services and no longer offer discounts. I still don't have to disclose anything, because there's nothing to disclose: Walmart isn't going to tell you, for instance, that your lettuce would be $.43 as opposed to $.45 if you had paid with cash. It's just now part of the price.
I believe that some of your understandings are erroneous. There are certainly not universal laws against charging for card transactions, not on a federal level. While I absolutely understand your point and perspective, it's also not fair to paint all vendors and merchants with the same brush. It's also worth understanding that many merchants still get charged the same amount for processing a debit card as they do a credit card, so there is not a distinction to them.
I build custom structures. The average transaction cost is roughly $8,000. There's no way that I can afford to just give away $240 per transaction because a client wanted some airline miles or whatever: I don't have the margins to justify that kind of gift, particularly when a check/cash customer would not have that imposed. On the other hand, I run a service-based business and my state does not collect taxes on services, so it's not as if you're paying state tax for that aspect.
Tips, on the other hand, are a bullshirt legacy thing that need to go away. You'll get no opposition from me there.
At my wife's store we simply don't take card or digital purchases for anything under $5. We accept all forms of payment too. Just keeping it simple.
Disclosure, she has an English degree and I have an art degree. We are still learning the retail game after four years. She hired a CFO consultant to learn more.
Recently ordered a part from FT86motorsports and noticed that they don't take credit cards anymore, only e-transfers (online zero-fee bank transfer commonly used in Canada, more common with small businesses though).
In reply to GameboyRMH :
I recently ordered from TM parts north and it was the same thing. No credit cards, e-transfer.
GameboyRMH said:Recently ordered a part from FT86motorsports and noticed that they don't take credit cards anymore, only e-transfers (online zero-fee bank transfer commonly used in Canada, more common with small businesses though).
Interac E-transfer is not zero-fee. They charge you $1 each time.
In reply to ShawnG :
I've never paid for an e-transfer. It's waived or refunded as part of my account package, which is currently a no fee senior's account.
The problem with making it illegal to charge processing fees is that it just increases costs for everything, and it has a hugely undue burden on small businesses. When competing against online retailers, for instance, small B&M stores may only have margins of a few percent. Add in the cost of processing credit cards and that margin goes to unreasonably low amounts and means that the business has to raise its prices, which means that it may not be competitive. Basically you're just driving traffic to the arms of the megacorps, which has the effect of reducing market diversity, depressing wages, funding large lobby groups, and creating market deserts.
Telling merchants that they can't pass along processing fees is also effectively the same as telling them they can't give discounts for cash or debit payments.
There's a lot of rage at merchants and small businesses somehow, but one thing I've not seen is rage at the processing companies. They're sitting there collecting billions of dollars for doing nothing other than maintaining very large spreadsheets and occasionally engaging in arbitration. Why are their fees not capped? Where is the outrage at the money changers who gave rise to this whole thing?
https://ilsr.org/rule/capping-credit-card-swipe-fees/
In the U.S., interchange fees average about 2 percent — often closer to 3 percent — of a transaction. That adds up. In 2022, merchants paid over $160 billion in swipe fees to banks and card networks, including Visa and Mastercard — an increase of more than 46% since 2020.
These fees bear little relationship to the actual cost of processing a transaction. In 2019, the Federal Reserve reported that the average per-transaction cost to card issuers is just 3.6 cents, a tiny fraction of the $2 to $3 swipe fee that a business is typically charged on a $100 sale. Technology is only driving these costs lower: card processing costs, according to the Federal Reserve, have fallen 54 percent since 2009. Meanwhile, interchange fees have soared and now are higher in the U.S. than in any other country.
Ok, quick comment on the original question.
Rule - all transactions have some sort of cost to a business
Credit cards can be structured many ways, but usually have 1-3% of purchase price as the fee. Companies that "buy in bulk" ie use more transactions or more $$ can shop around and get discounts. Your local hardware store pays more to run a credit card than Amazon does.
Debit cards are similar, but generally the transaction fee is less. There is less risk to the bank when they are transferring a customers money and not theirs, and they are generally giving less kickback to the customer. Again, bulk discounts apply.
Checks, also in this boat. Yes you may think they are free if you are a low volume check cash-er. But try cashing 15,000 checks a month into your business bank account and you will learn about check cashing fees. I'd you read closely, I bet your free personal checking account even has a limit of checks each month they will cash before fees kick in.
"Free" PayPal/venmo/e-transfer is similar to checks that is is usually limited to a number per month included before fees start piling up.
Cash even, has a transaction cost, because of the time it takes to make change and the additional overhead of counting drawers and preventing employee theft and closing each night and paying the bank truck to come pick up your money.
When a company tries to charge me for any of the above, I get it, but I also think it is weak. Price your products transparently. Don't hit me up with "upcharges" at the end because you can't get a handle on your own overhead. What's next? A payroll fee? A cost of goods sold fee? An intellectual property development and protection fee? Superbowl advertising fee? C'mon man. Figure out your overhead and name your price. Anything less is lazy business practice.
In reply to Robbie (Forum Supporter) :
A genuine question: Why would you not prefer it if you were offered a discount to pay with cash or check?
In reply to Robbie (Forum Supporter) :
The card fees don't enter into it or are a minor part of it.
You are being encouraged to pay in cash. For reasons.
brandonsmash said:The problem with making it illegal to charge processing fees is that it just increases costs for everything, and it has a hugely undue burden on small businesses. When competing against online retailers, for instance, small B&M stores may only have margins of a few percent. Add in the cost of processing credit cards and that margin goes to unreasonably low amounts and means that the business has to raise its prices, which means that it may not be competitive. Basically you're just driving traffic to the arms of the megacorps, which has the effect of reducing market diversity, depressing wages, funding large lobby groups, and creating market deserts.
Telling merchants that they can't pass along processing fees is also effectively the same as telling them they can't give discounts for cash or debit payments.
There's a lot of rage at merchants and small businesses somehow, but one thing I've not seen is rage at the processing companies. They're sitting there collecting billions of dollars for doing nothing other than maintaining very large spreadsheets and occasionally engaging in arbitration. Why are their fees not capped? Where is the outrage at the money changers who gave rise to this whole thing?
https://ilsr.org/rule/capping-credit-card-swipe-fees/
In the U.S., interchange fees average about 2 percent — often closer to 3 percent — of a transaction. That adds up. In 2022, merchants paid over $160 billion in swipe fees to banks and card networks, including Visa and Mastercard — an increase of more than 46% since 2020.
These fees bear little relationship to the actual cost of processing a transaction. In 2019, the Federal Reserve reported that the average per-transaction cost to card issuers is just 3.6 cents, a tiny fraction of the $2 to $3 swipe fee that a business is typically charged on a $100 sale. Technology is only driving these costs lower: card processing costs, according to the Federal Reserve, have fallen 54 percent since 2009. Meanwhile, interchange fees have soared and now are higher in the U.S. than in any other country.
I think your perceived difference in the burden between small business and mega-corps as it relates to processing fees is 100% fabricated, and 100% false. I can't imagine a law ever being passed anywhere that would allow small businesses to pass on processing fees without allowing online big businesses to do the same.
Small businesses DO have a difficult time competing with online mega-corps, but it has nothing to do with processing fees. It has to do with their false perspective that online mega-corps are their competitors, or that they should ever compete with them at all. As Robbie noted, that's just a business doing a poor job of managing their overhead.
Small local businesses don't sell what large online mega-corps sell, and they lose when they try to.
I am an enormous supporter of small business.
The fact remains... for over 50 years businesses survived fine without adding processing fees to transactions , and in the last few years they suddenly feel the need to do it. Nothing has changed that justifies it (and transaction fees used to be higher than they are now).
I have a coin operated business as a side hustle and US Bank recently bought out the bank I happily did business with for years.
A few months ago they started charging me $30 per month to take my coins...%$#@&
At least they're better than BoA who started refusing to take my coins in tamper resistant, sealed bags and then began short counted my $500 bags by $20 to $40.
I contacted the Feds about BoA's theft but I was too small of fish for them to care.
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