It may soon cost more to pay w/CC....

[kadee79]

After a decade of legal battles, the three major credit card companies are backing away from longstanding policies that prevented merchants from charging customers extra for paying with plastic.

Developments in two cases in the last week have the potential to change pricing practices everywhere from big box retailers to corner coffee shops — but whether they actually do remains to be seen.

On Thursday, a group of small and midsize businesses reached a settlement agreement with American Express in a class-action lawsuit. Under the agreement, which a judge must approve, Amex will allow surcharges to its cardholders as long as the same amount is levied on other credit and charge card users. It agreed to drop a measure that required debit card surcharges at the same level, according to a lawyer representing the company.

The deal comes less than a week after a judge approved a settlement that included a similar change of rules in a huge class-action lawsuit against Visa and MasterCard, billed as the largest private antitrust settlement in American history.

finance.yahoo.com/news/easing-rules-charges-amex-013055665.html

Several of our local gas stations are already doing this....and we saw others doing it when we traveled on Mon. & Tue. this week.

[Apple]

I just ran into this at a gas station (Safeway) in my town.  The guy ran my card and then, right before he started pumping, asked me if it was a credit card.  Told me that they charge something like 10 more cents a gallon on credit cards (but not debit cards).  Said they'd been doing that for a few months now, I had no idea since I don't buy gas there that often.  Glad he warned me!

When I go to "the big city", the gas station I use there won't take credit cards, and charge a fee to use a debit card, so I just make sure I have cash on hand.

[wvugurl26]

The Safeway one I use does it too. I'm not using my debit card at a gas pump and I always get gas before they have an attendant to take cash. It's right across the street from the Sam's Club that won't take cash. Easy decision for me. I only go to Safeway if I've racked up major gas rewards.

[Blonde Granny]

Years ago gas stations charged a few cents extra for using credit cards. The signs clearly stated for the prices said cash or credit.

Interesting though, who in their right mind would want to accept a check for $75 when someone purchases gas, and not many are going to be carrying that much cash. I'm not sure this is going to spread like wildfire, and if it does, we'll keep buying our gas at Walmart and Sams Club using our WMT Discover card.

[chiver78]

Dec 21, 2013 8:07:59 GMT -5 Blonde Granny said:

Years ago gas stations charged a few cents extra for using credit cards. The signs clearly stated for the prices said cash or credit.

I was about to say the same. back when cards weren't so widely used and you had that gadget for taking imprints, there was definitely two different prices for gas.

I don't like carrying cash, but I would totally start doing so if this becomes the case again. I can go over a week on one tank, and that one tank runs ~$40. that's not too much of a PITA, I think. we'll see.

[Sum Dum Gai]

Online retailers won't charge credit fees. Large ones probably won't either. Small ones might.

The signage requirements to do so are fairly obnoxious though. At least in California. It has to be posted at all entrances and checkout areas.

[justme]

I get 3-5% back on gas purchases, so it'd have to be raised more than $0.18 a gallon for me to worry too much. Though it would prompt me to go to the gas stations that don't charge different.

Otherwise I'd go back to using checks. I'm not so sure the stores would prefer that. I still wouldn't want to carry around cash. It would probably also prompt me to buy A LOT more online where they wouldn't charge more.

[NoNamePerson]

The service station I use has one price for Credit and another for Cash. It's usually only 2 or 3 cents difference per gallon.

ETA: Service station is the only place I have seen differences for cc and cash. No stores or such.

[Apple]

None of our local gas stations will accept checks anymore, so I'd have to just go cash.  Not a big deal, just means I have to stop at an ATM or get cash back when I go shopping.  I just like using my credit card for the points, but even with that, it's not worth a fee.

[Sum Dum Gai]

I'm considering it for the toy store. Last month I did $16,133 in sales. $12,282 of that was on cards. I lose 1.5-3% of that to merchant processing fees. Costs me $184-368 a month to give my customers the convenience of using plastic. Annually that's a decent chunk of change. I'll probably wait and see what the large retailers do. I'm guessing they won't do CC fees, but the shareholders might see it as a basically free way to boost profits and want it to happen.

[justme]

In your position Dark, I might phrase it, work it as a cash discount instead of extra fee on purchases. It is much more palatable to miss out on savings because you don't have cash vs. paying extra because you don't have cash. EI've definitely been places where I found it was cash only and ended up leaving and either decided I didn't need to item anymore or bought it elsewhere.

[Sum Dum Gai]

The cash discount thing only works if I raise my prices. Pretend that I only sold one item, and I sell it for $15.99. I sell a thousand of them a month, or just under 16k in revenue. Most people pay with plastic, say 12k worth of sales, which costs me $300 a month in processing fees.

I offer a 2% discount for cash, to try and stop that. Most people, again about 12k in sales worth still pay with the card, which still costs me $300 a month, and I lose 2% on the other 4k in sales. Instead of getting rid of my card processing fees I tacked the same loss onto my cash sales.

That's why the CC companies fought credit fees being passed onto the consumer but didn't fight cash discounts being offered. They realized that a cash discount wouldn't change consumer behavior. Charging an extra 2% to card purchases might though.

Or, I have to raise all my prices by 2%, so my one item now costs $16.31 instead of $15.99, but I offer a 2% discount for cash bringing it back to $15.99. I get the same margin on cash sales, or I get my margin plus my processing fee on CC sales.

[marvholly]

As far as I remember, gas stations have had cash and cc pricing since the 70’s – Kids were little & now 35/38. Here it is about 0.10/gal and I get more w/my rewards cc.

If/when this spreads to other stores I will just start writing checks again. Cashiers will NOT like – have to get mgr approval. Stores will NOT like – more employee time to process all the paper + MUCH more chance of errors. Other customers will NOT like – MUCH more time in line/may walk out=stores NOT like.

[kadee79]

Dec 23, 2013 7:04:57 GMT -5 marvholly said:

As far as I remember, gas stations have had cash and cc pricing since the 70’s – Kids were little & now 35/38. Here it is about 0.10/gal and I get more w/my rewards cc.

If/when this spreads to other stores I will just start writing checks again. Cashiers will NOT like – have to get mgr approval. Stores will NOT like – more employee time to process all the paper + MUCH more chance of errors. Other customers will NOT like – MUCH more time in line/may walk out=stores NOT like.

I still write checks. I don't have a debit card and I rarely use a CC for in person purchases. If I don't have the money in the bank....I don't NEED the item!

Many gas stations gave up the 2 prices for many years in most areas.  We have just noticed it starting to come back more & more in our travels. It has been in my immediate area at one station only for about a year now. Others are just starting to follow.

Since we get such good rewards on one card, we will likely still use it for gas.

[justme]

Sum Dum Gai, I understand the math, and realize the way it would work is to raise your prices slightly - maybe even more than 2% to make it a "nicer" number like $16.50 or $16.99 - but psychologically the choosing to miss out on a discount sits better with people than adding on an extra fee.  Just something to think about because even my YM self thinks differently about it even though I know most likely they just upped the regular price.

[Sum Dum Gai]

but psychologically the choosing to miss out on a discount sits better with people than adding on an extra fee.

Which is why it won't change consumer behavior.  If my goal as a business owner is to increase my cash sales I'm better off with the fee.  I have to balance that against the sales it will cost me though.  The question is whether credit card fees will cause people to use cash or shop somewhere else instead.  If most other retailers added the fees as well, then it takes the costing sales thing out of the equation.

[Peace77]

Higher prices for credit card payments at gas stations have already pushed us to use cash.

If other stores follow suit, we will likely be paying cash at those stores too.  The only exception is if a rewards card is offering 5% back and/or the reward is greater than the credit card fee (price difference).

[ZaireinHD]

Hmmm.....eye brow raising! 

I thought the charge is more when using credit cards; because the business is charged a fee and the business will pass that charge into the price? I see signs or notices at local gas stations that read something like $0.05 of cash purchase of gas.
(well according to my memory)

[Peace77]

You're correct.  However, the CC companies .(MC, Visa, & Amex)  have merchants sign an agreement that they will not charge higher prices to CC customers.  Don't know how gas stations get around that.

[kadee79]

Dec 25, 2013 7:17:06 GMT -5 Peace77 said:

You're correct.  However, the CC companies .(MC, Visa, & Amex)  have merchants sign an agreement that they will not charge higher prices to CC customers.  Don't know how gas stations get around that.

I'm not sure the CC companies are more powerful than the oil/gas companies....could be one telling the other how it is going to be done in THEIR business! Oil/gas have LOTS of lobbyist and bought politicians....to go to bat for them.

[ZaireinHD]

Dec 25, 2013 7:17:06 GMT -5 Peace77 said:

You're correct.  However, the CC companies .(MC, Visa, & Amex)  have merchants sign an agreement that they will not charge higher prices to CC customers.  Don't know how gas stations get around that.

got it - Thanks

[NoNamePerson]

articles.courant.com/2013-08-24/business/hc-bottom-line-cash-vs-crediit-gas-20130824_1_credit-card-gas-stations-cash-discount



August 24, 2013|Kevin Hunt - The Bottom Line, The Bottom Line


In a state that prohibits surcharges on any credit-card payment, suspicious consumers question how gas stations are allowed to charge higher per-gallon prices on payments by credit instead of cash.

"Do the gas stations claim it's a discount for paying cash as opposed to a surcharge for using a credit card?" asks Lou Laccavole of Wethersfield.


It's more than just a claim. It's the law. Gas stations, indeed, cannot add a surcharge to credit-card purchases but they can discount gas purchased with cash. That it looks like a surcharge doesn't make cash vs. credit any less confusing.

"When 80 percent of the population has been using a debit or credit card a long time," says Chris Herb, president of the Connecticut Energy Marketers Association, which represents the state's gas stations, "they're thinking, 'Why can't I can that lower price?' The fact of the matter is debit and credit cards cost more to process."

The unfair-pricing perception, however, remains five years after the cash-credit pricing became legal. Good luck finding the law: The Bottom Line needed three bloodhounds, two private detectives and the state Department of Consumer Protection to track it down.

It's under "Trading Stamps, Mail Orders, Franchises, Credit Programs and Subscriptions," Chapter 739. Under Section 42-133ff: "Nothing . . . shall prohibit any seller from offering a discount to a buyer to induce such buyer to pay by cash, check, or similar means rather than by credit card."

The prices, cash and credit, must be posted clearly and not confuse consumers, says the DCP.

"A few years back," says DCP spokeswoman Claudette Carveth, "the department received complaints that retailers were advertising their lower 'cash' price on street signs without clearly indicating that this was a discounted price for cash. Consumers believed that the price posted on the big street sign was for 'regular' gas and after paying by credit card, they were surprised to see the higher credit-card price per gallon. The difference between the two prices was as high as 20 cents per gallon."

New York and Massachusetts are among other states that also allow gas stations to offer discounts for cash. But why just gas stations? Why not retail stores, restaurants, movie theaters and health clubs? Most people associate cash "discounts" with illegal, under-the-table work.

"It's a problem" says Herb, "because consumers make complaints. . . . In a world without a cash discount, like we had before, the retailer had to compensate for the potential of a consumer using a credit or debit card. The retailer really had to take into account their exposure and either charge a blended price, assume the worst-case scenario or charge the highest price they would be charged if you would use the most expensive [payment] instrument, which is typically a credit card."

Anyone with a concern about a gas station's pricing policies should contact the DCP ([e-mail] or 1-800-842-2649).

"With 1,400 gas stations in Connecticut," says Herb, "you can always drive a little bit farther if you don't like what you see."

[Sum Dum Gai]

There's nothing in my merchant agreement that says I can't pass processing fees on to consumers. The credit card companies didn't need the language in the agreements because they got it outlawed through lobbying efforts.

[alabamagal]

But you also have to understand the cost of business to taking cash.

- Chance of employee theft when you have more than the business owner running the store.  DH had 4 employees (of ~50 over 20 years) that stole.  Most would take $5 a day and the drawer would not balance.  One stole ~$2000 over a week as a store manager while we were on vacation.  She just never rang in cash purchases.  most employees are honest, but a certain percentage are not.

- Cost to count your drawer every day, or every employee drawer.  This would be the cost for an employee to count and balance drawer.  At DH business, was 15 minutes per day (say $3 per day for ~300 business days or $900 a year).  With the credit card machine, you just push a button and it settles and prints out a total.

- Cost to go to the bank and get change, or go to the bank and make deposits, say another $900 a year.

- With checks, you have the chance of bounced checks and fees that you may never collect (DH had 2 in 20 years, total maybe $100).

- For checks you have to tank the time to fill out deposit slip or run them through check maching, maybe 15 minutes per day or $900 a year

- Bank may charge a deposit for per check, or per deposit or for cash deposit.

[Sum Dum Gai]

You still have to count out the drawer with credit card transactions.  You want to make sure the signed CC receipts match the processed total.  It's faster to count cash than add up all the CC receipts.