Comment by AnthonyMouse
2 years ago
> 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.
The only real question here is if it's to your advantage to advertise a lower price and then tack on a credit card processing fee or advertise a higher price and then provide a discount for cash/bank transfers.
The first gives you a lower advertised price but then irks customers when they find out about the extra charge. The second gives you a higher advertised price, which could be worse depending on the nature of the business.
But the proposed alternative where you charge the same to everybody and incorporate it into the advertised price requires you to use the higher advertised price, which has no advantage over the second option regardless of whether or not the second option is better than the first.
Restaurants, which is what your post is about, rarely advertise specific prices. Part of that is because a restaurant bill is comprised of multiple components -- entree, appetizer, dessert, beverage, "extras". Another part is that menus typically have dozens of options, another is that prices change often, and another is that many restaurants are local businesses with limited or no advertising budget. And a huge one is that restaurants that do promote low prices are often considered low quality as well.
In other words your point is pretty much moot because nobody is choosing a restaurant based on, veal parmigiana costs $25 at Villa Roma and $24.50 at Sicily Palace. But they very much might remember that Sicily Palace charges a credit card fee and boycott it in favor of somewhere else.
I'd like to believe this is true but in my metropolitan area, it's quite common to see e.g. a covid recovery fee, inflation recovery fee, iniative 82 service fee, and autograt when you are checking out. It's extremely bad for price transparency but the practice seems very popular among merchants who are betting that customers will still show up as long as the menu prices appear low.
And do you go to these restaurants just as often as you did in the past? Or have you reduced your patronage?
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