Comment by ensignavenger
2 years ago
I will clearly state which payment methods are free and which ones the customer will pay a conveniance fee or recieve a discount if they use. I will clearly show the customer at checkout what their total is with their chosen payment and shipping (if applicable) options would be, and give them the opportunity to change their selection. It is about customer choice and convenience. You are welcome to shop somewhere else that bundles these expenses into the price of the item and givea you no choice in avoiding them.
I can only speak for me, but if I have to do that much mental math to figure out the best options to pay or see a bunch of random (to me) fees and adjustments at checkout, I'm leaving and going somewhere else. It feels scammy even if your goals are noble.
If the sign said you pay 5% for AmEx, 4% for Visa and 0% for cash, you don't have to do any arithmetic to see which number is smaller.
What's the fee for counterfeit cash? Or illegally gained cash?
What's the fee for cash the requires quite a bit of change? What's the fee for cash that is composed of very small values (e.g. quarters and dimes for a tv)?
It's interesting that all of these complications are ignored entirely when pricing payment methods. Handling cash isn't free and carries risk.
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Or just make your prices have the credit card fees built in just like normal businesses. Your system is a ton of work for very little benefit to anyone and it’s probably lowering your revenue and it’s as annoying as places that charge for takeout containers — missing the point that takeout containers encourage people to buy more food.
It’s an unsophisticated approach to business. That’s why it’s common in mom and pop places — mom didn’t go to business school and pop is tripping over dollars to save a nickle — they see the “expense” but they can’t see the revenue that aren’t getting.
There is a reason most small restaurants fail — they don’t know how to be more profitable. So they start to add on these little fees when they begin to struggle and don’t realize that they’re making the problem worse. In other words, most people that start restaurants don’t know what they’re doing in the back office even if they’re great in the kitchen. Restaurants fail for many reasons, but not controlling costs is the biggest — however, they’re naïvely choosing to control the wrong costs.
One of my good friends owns a chain of 30 Tex-Mex restaurants in Texas. After several burglaries of the safe at several locations, they went cashless at some locations. The cashless locations, without exception, saw sales increase by over 12%. He quickly made all of his stores cashless and sales increased among all stores. My anecdote isn’t data — but there is plenty of data out there.
The credit card surcharge scheme is endemic among small business owners who actually haven’t done the math. Or, more accurately, they’re doing the wrong math.
Credit card users spend more than cash users. So you make up for the “savings” with lower sales volume. And credit card users that have to pay higher prices will go elsewhere. Or, if they pull out cash, they’ll spend less of it.
https://www.nature.com/articles/s41598-021-83488-3
> Your system is a ton of work for very little benefit to anyone
It has the obvious benefit of discouraging people from increasing your costs with rewards cards. Keep in mind that businesses often have net margins in the vicinity of 5% of revenue. Paying 3% of revenue or more to the credit card company is heinous.
And what work is there to do? The calculation is done by a computer. If your attitude is "just price in the cost" well then there you go, you can pay the true cost of the card you have without even looking at the alternatives. Whereas if you want to get the lowest price then you have to figure out which card has the lowest price. Removing your option to do this is not going to save you money, it's just going to cause you to pay the higher price at all times, which you still have the choice to do.
> they see the “expense” but they can’t see the revenue that aren’t getting.
Increasing sales by e.g. 15% while decreasing net profit by up to 60% is often not a fantastic business decision.
> Credit card users spend more than cash users.
Which is why you accept them but provide a discount for the people who don't use them and thereby don't expose you to their fees.
> And credit card users that have to pay higher prices will go elsewhere.
But they're not higher prices. Restaurant A charges however much to everyone. Restaurant B charges exactly the same amount to people who use credit cards and a few percent less to people who pay cash. The people who insist on using credit cards can go to either place and pay the same amount, anyone willing to pay cash can get a discount at Restaurant B.
Extra fees of any kind just really, really annoy people. This is true at restaurants but also plenty of other industries. In the majority of cases, the loss of business from patrons who avoid your establishment due to the extra fees outweighs the revenue generated by the fee. Of course, you are welcome to test out your theories, but you're unlikely to find many people who predict they will be successful.
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I'm curious if banning cash is profitable because when the business is at capacity, the no cash business filters out thriftier consumers, and not because an individual (who has both cash and credit) spends more when they are told cash is not accepted.
No payment methods are free...