UPDATE: A few years ago (sometime after the original posting of this article), Credit Card companies agreed to allow vendors charge fees for the use of their credit card. It is now legit for a business to charge for the use of a credit card.
UPDATE 2: It seems in 2023, there's a separate lawsuit against Visa and Mastercard by merchants who claim they are charged excessive fees due to antitrust violations. Although this is a separate issue from the one mentioned originally below in this article (back in 2007), it seems important to note it here. The settlement agreement (backup link) to end the 2023 lawsuit was apparently effective on August 1, 2023.
OUTDATED INFO: Have you ever run into a store with a sign posted that states they charge a fee for any purchases under a certain price if you pay with a credit card? Card Card companies have restrictions on when a fee can be charged. No fee is allowed for amounts greater than $1. If you come across a store that is charging a fee for any amount greater than $1, just leave and tell them why you are leaving. If you are a regular customer, perhaps gently remind them of this before you take off.
Then, report that place of business to your credit card companies. They will take it from there.
OUTDATED INFO: Have you ever run into a store with a sign posted that states they charge a fee for any purchases under a certain price if you pay with a credit card? Card Card companies have restrictions on when a fee can be charged. No fee is allowed for amounts greater than $1. If you come across a store that is charging a fee for any amount greater than $1, just leave and tell them why you are leaving. If you are a regular customer, perhaps gently remind them of this before you take off.
Then, report that place of business to your credit card companies. They will take it from there.
I work with a merchant coalition (click on my name) that deals with this issue tangentially, so let me offer another perspective.
ReplyDeleteI'm not sure where your $1 comes from, but as I understand it, minimum fees are against the rules, period. And yet for items even just above $1, the merchant actually loses money on those CC transactions. For example, see the testimony of Kathy Miller, a Vermont store owner in just this predicament, before the Senate judiciary committee last year: http://judiciary.senate.gov/testimony.cfm?id=1999&wit_id=5588
Why is it like this? It's called the interchange fee, which is a flat fee plus a percentage of the overall cost. It's bigger than all other fees combined, and because it's the issuing banks' biggest cash cow, they protect it any way they can.
The fee as originally intended isn't illegitimate, but in practice it's anti-competitive.
Interrorbanger, Thanks for your perspective. The $1 thing is to the best of my knowledge from what I've researched.
ReplyDeleteAlthough I do have simpathies for local store owners on this issue, I don't buy into the statements that they are loosing money overall. If they where losing money, they would just stop dealing with credit cards. They accept credit cards because overall, it makes them money be increasing the amount of business they have. Someone like me doesn't even carry cash that often anymore. I wouldn't even consider shopping at a place that only takes cash. Do I have tiny purchases often? No. But once in awhile I will, and I don't want to be ripped off when I do so. Sometimes people in industry forget who the customer is. Banks do need to reliquish their strangle hold on the vendor, but not at the expense of the end customer. I think the solution is as you hint, the fees need to be reduced. It's basically a corporation tax on America. I'll support efforts you have to reducing the fee, but will not support the idea of passing it directly along to individual customers, as this would only encourage the banks further.