Comment by miroljub
2 years ago
It's the legislation that disallows vendors to have different pricing based on the payment system that disaligns the incentives.
If I have a card that gives back 2% to me, back causes 5% fees to the vendor, both of us would be better off if I used a card with 1% fee, and the vendor gives me 2% discount. Unfortunately, not allowed.
It’s been mostly legal to charge credit card surcharge fees since 2013. https://www.lexology.com/library/detail.aspx?g=5c6e1264-42a8...
The real reason that most merchants don’t charge surcharges is that they don’t want to lose the sale, calculating the actual interchange is wildly complex and in general they prefer cards to cash.
There are definitely a good number of small businesses around me (cafes, and similar places) that offer a cash discount. They don't have a sign offering it, but when I pull out cash, they revise the price down.
More and more small places around here are explicitly offering the discount either with a “3% less if you pay cash” but more commonly now a “listed prices are cash or debit, credit pays more”.
It’s a noticeable fee for them.
It is against VISA ToS. Small businesses can risk it but large businesses would get sued and VISA would refuse to do business with them
Nope, not against VISA ToS. Post you're replying to indicates it's no longer "illegal" but it was never actually illegal to charge a surcharge, it was just disallowed by ToS. This is no longer the case as of 2013 and retailers are now free to charge a surcharge if they so choose.
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Is it legislation or the contract with the credit card? My understanding is the contract to take ie VISA has terms that you cannot apply a discount for customers using other payment methods (ie cash or someone else's card). There are a few places that don't have those terms (mostly government where often a card does cost more to use).
What people forget about these fees is a credit card is cheaper to take for the merchant. The credit card is never counterfeit money. The clerk never takes money from the credit cards, nor does the manager counting it (I wasn't in retail long but I saw both). You never have a robber come in to take your credit card money. Even when all goes well, you don't pay the clerk and manager by the hour to count all the cash twice. You do have some risk of taking a stolen credit card, but overall it is cheaper for the merchant to take credit cards and that savings should be what pays for the card costs (I have no idea how to count the different costs to see if that is true)
The real advantage for merchants is to take debit (assuming the payment is high enough). Much of the benefits of credit without the hassle of cash.
The real real advantage is for small businesses to bait customers with a cash discount and then not report cash earnings to the IRS come April.