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Thread: Surcharge on Credit Card transactions

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    searching for answers i_forget's Avatar
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    http://news.ca.msn.com/top-stories/a...rd-fee-is-here

    This is the first that I heard of this, and it is off of MSN...but it raises an interesting concept for me.
    It appears to be American, so it will only effect those who shop over the border for now, and only at retailers that choose to do it.

    So, if you were shopping, and you slapped down the plastic, if there was a surcharge on your purchase, what would you do?
    Would you pay it.....or would you pass on it?

    I know that for me, there is NO WAY IN HECK that I would pay a surcharge.
    The interest rates on credit cards are high enough, and VISA and MasterCard are not hurting in their wallets, the cost of products is high enough, and retailers should already have these fees built into their prices because it is a cost of doing business. I will not pay more for things I need.

    The difference between actual cost of a product and what the retailer charges is a huge difference. I will not pay more.
    This thread is currently associated with: Shoppers Drug Mart
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    Mastermind Natalka's Avatar
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    There's been talk of it happening here as well - the fees are pretty high for the retailers, especially with pricey purchases.
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    Canadian Genius xox2010's Avatar
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    The problem is that people who use credit to pay for everyday purchases actually hurt the consumers who don't. The retailers have to add the cost of those CC's into the cost of their items.. not sure how much the fees are now, but they're pretty high.

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    If the stores passed on the savings by not raising prices on items (and reducing them by the current built in cost for CC transactions) I would not have an issue with it, the CC charges need to be paid, why should someone willing to pay cash pay your portion?
    But I doubt they will pass it on so...
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    I wouldn't pay extra to use my credit card. I use my credit card for everyday purchases, because of the rewards I get from it. If I had to pay a fee every time I used it, that would take a bite out of (or negate altogether) any benefit I get, so there wouldn't be any point.

    Here in NS, there was recently a story about NS Power now accepting credit card payments, but that there would be a fee. I thought it wasn't legal to do that at this time, but I didn't look at it very closely.
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    searching for answers i_forget's Avatar
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    I don't think that retailers should even have to pay a fee to Visa or MasterCard or any other company.

    We, as consumers, pay plenty to them already in monthly interest charges, charges for going over our limits, annual fees and so on. The fact that these companies charge the retailers is just them double dipping. I just did a quick search, and they make about $9 billion annually.

    Corporate greed.
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    Mastermind Natalka's Avatar
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    This was just discussed on a radio talk show this afternoon - how a lot of it has to do with people using credit cards for really small purchases (e.g. coffee), that it just becomes a pain.
    Our local convenience store has stopped taking credit cards altogether.

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    Quote Originally Posted by Natalka View Post
    This was just discussed on a radio talk show this afternoon - how a lot of it has to do with people using credit cards for really small purchases (e.g. coffee), that it just becomes a pain.
    Our local convenience store has stopped taking credit cards altogether.
    I pay a lot for my Avion Visa so I put most of my purchases on it...I never maintain a balance. I probably would pay with a different method if a merchant imposed a surcharge. Hopefully, they have the proper signage to inform the customer of the charge. I would be ticked off if the charge was hidden.

    I think most places factor the cost of credit cards as the "cost of doing business"...they want to keep competitive and believe it or not, a lot of people are more likely to put impulse purchases on plastic.

    Some credit card companies charge businesses a larger percentage...I think it's American Express that has the higher fees, which explains why a lot of businesses don't take that one (including Loblaws).
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    I live in a fairly rural area and there are a lot of business' around here that offer a discount if you use cash, cheque or debit for your purchases. My husband it a contractor and one of the local lumber yards he uses gives you a 4% discount if you use any method of payment besides credit card. I think that this is probably there way of circumventing any anger over the credit card surcharge because really that is what this is, just hidden under the guise of a discount if you don't use a credit card.
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    Quote Originally Posted by Natalka View Post
    This was just discussed on a radio talk show this afternoon - how a lot of it has to do with people using credit cards for really small purchases (e.g. coffee), that it just becomes a pain.
    Our local convenience store has stopped taking credit cards altogether.
    I know of places that say you need to have a minimum of $5 purchase to use your credit card, but I guess that's technically illegal They can't enforce it.


    Credit card surcharges are banned by law in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
    Visa and MasterCard have rules that require retailers to handle credit cards the same way in all of their stores across the country. That means a chain with stores in any of the 10 states where a surcharge is banned would not be able to have a surcharge at any of its stores.
    I think a surcharge would just end up hurting the companies. If you read the quote, it basically excludes all big chain companies and so people would be more inclined to head over to Walmart to buy the same item that they would have perhaps bought at a smaller local shop because they don't have to pay a surcharge.

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    I've never heard of a $5 minimum for credit card purchases, although I have seen it for debit. I also don't like to pay a surcharge when I'm using my debit, I don't shop at those retailers if I have a choice.

    I've given them plenty of my money in interest over the years, but they don't make any money off us anymore, we don't pay interest because we don't carry a balance, ever. We do pay a fairly good-sized annual fee, but we get more than that back in free GCs, insurance on car rentals, etc.

    If the fees are higher for AMEX I'm surprised it's the only one that Costco takes. In fact that's the only reason I have an AMEX, they don't take Visa!

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    Quote Originally Posted by Zonny View Post
    If the fees are higher for AMEX I'm surprised it's the only one that Costco takes. In fact that's the only reason I have an AMEX, they don't take Visa!
    Zonny,
    Don't forget about Costco's massive buying power and influence over suppliers and all the people who do business with them. You can bet they have a special arrangement with American Express that works in their favour. I remember years ago, Superstore stopped taking Visa because they thought the fees were too high. Well, they must have worked something out because they take both Visa and MC now.
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    Quote Originally Posted by Zonny View Post
    I've given them plenty of my money in interest over the years, but they don't make any money off us anymore, we don't pay interest because we don't carry a balance,
    But the credit card company still makes money if you use your card and pay off your balance. It comes from the fees they collect from the store. That's one of the reasons why they came up with the strategy of offering incentives to use cards. It's not to hook the consumer so much as getting more revenue from vendors.

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    If a store needs to think about charging a surcharge for accepting credit cards, I don't think they should be in business. Like Zonny says, I don't give my patronage to business that charge me a fee for using my debit card (although I understand the $5 minimum) and it should be the same for using credit cards. I'd be surprised a store owner wouldn't think of all the business they'd lose if people went somewhere else because they'd rather not pay the fee. It's a deterrent and not good business sense.

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    Bean bun going offline Ciel's Avatar
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    Issues from surchargIssues from surcharges:
    1) Small stores are going to be like the convenience store that Natalka mentioned-some are going to leave the electronic payment systems because the monthly terminal fee plus non-refundable % commission on each cc payment eats cash that cannot be applied to other operating cost1) Small stores are going to be like the convenience store that Natalka mentioned-some are going to leave the electronic payment systems because the monthly terminal fee plus non-refundable % commission on each cc payment eats cash that cannot be applied to other operating costs.
    2) This is going to be like Toronto's mandatory 5 cents per plastic bag (so many stores went to more crinkly and easily gashed bags, whether corn-based biodegradeable or not) bylaw-not popular nor really helpful.
    3) Stores are going to have figure out how to recover the surcharge or maybe just decide on which one credit card is most beneficial to sales/customers to keep using and which one (ones) to drop3) Stores are going to have figure out how to recover the surcharge or maybe just decide on which one credit card is most beneficial to sales/customers to keep using and which one (ones) to drop.
    4) I don't know how credit card users are going to view the surcharge but cc company shareholders must be viewing "profit" stream with this new proposal.
    Last edited by Ciel; Mon, Jan 28th, 2013 at 10:42 PM.
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