Merchant Credit Card Fees

mattgould's picture

May be a bit off topic, but what's the deal with so many merchants requiring $5/$10 minimums to use credit cards. And charging an additional $.50c or $1 to use credit cards. I understand the merchant is receiving fees from the card companies, but wouldn't it be better to just reflect the fees in product pricing (those who use cash would say hell no, but don't the majority of consumers use credit/debit cards now?).

I remember hearing that this practice is illegal, but it seems that the large majority of merchants now implement such a policy.

Zaquex's picture

Roundabout

It's not a fee for those who use credit cards, but moreover a discount to those who use cash. "It's not a trick, it's an illusion." Unfortunately, stores probably find it easier to tag on a fee rather than have to deal with a discount. Isn't a discount to one group a tax to the other?

Here is more information about the specifics:

 

5.9.2 Charges to Cardholders

A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction. A Merchant may provide a discount to its customers for cash payments. A Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used, or as the Corporation has expressly permitted in writing. For purposes of this Rule:

1. A surcharge is any fee charged in connection with a Transaction that is not charged if another payment method is used.

2. The Merchant discount fee is any fee a Merchant pays to an Acquirer so that the Acquirer will acquire the Transactions of the Merchant.

10A.3 Charges to Cardholders

Rule 5.9.2 does not apply in the European Economic Area.

If a Merchant applies a surcharge for payment by Card, the amount or method of calculation of the surcharge must be clearly indicated to the Cardholder at the POI location and must bear a reasonable relationship to the Merchant's cost of accepting Cards.

mattgould's picture

Nice. Where'd you find this

Nice. Where'd you find this info?

These sentences seem to conflict:

"A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction."

"If a Merchant applies a surcharge for payment by Card, the amount or method of calculation of the surcharge must be clearly indicated to the Cardholder at the POI location and must bear a reasonable relationship to the Merchant's cost of accepting Cards."

Zaquex's picture

Source

9.12 Prohibited Practices under page 49 in this pdf. Visa's rules have similar wording.

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