Why do we tolerate a 3% "credit card" fee?

[Guest FIST]

That fee dosn't bother me. I can avoid it by paying cash. I get peeved at senior citizens', law enforcement, etc. discounts. I also dislike stores that charge one price, but another price if you have this card, and this price if you're a super duper gold plus member.

Most folks receiving the "discount" have earned them. Besides, the discounts aren't that large. One store here in town actually offers a 15% discount for membership on a large AR rifle website and only a 10% for military.

[mcurrier]

From Visa's own web site...

http://usa.visa.com/...eckoutfees.html

Retailers Can Offer a Discount for Cash and Check Purchases

Retailers can encourage their customers to use other forms of payment, such as cash and checks, and can discount for PIN debit and cash and checks provided that the offer is made to all respective buyers.

So that seems to be the loophole. It's all the same math, just in how you choose to spin it.

That must have been instituted only in the past 3-4 years. I know that it was a violation of merchant agreement before then with threat of losing processing privileges. I guess I don't need to worry about it any more anyhow.

[gjohnsoniv]

I skimmed through this so I apologize if someone already said this. Being in retail myself, credit card companies charge a percentage of the sale, debit cards only cost x amount per swipe be it .05 cents or .25 cents, cash has no charge. So that three percent is to make up for an already slim profit margin in the firearm business. The reason they only do that for the guns someone asked is just because of the cost of the item. A holster could cost say $20 where a new rifle could run $2000. Just for fun assuming the cc company charges 10% of each sale that's .20 cents on the holster whereas on a rifle that's $200. That rifle probably cost the retailer $1,400 so that's only a $600 margin with what would be minus the $200. This is a horrible example but it's just the first thing that came to mind.

[LagerHead]

The gun industry is far from the only industry that does this. Have you ever actually looked at all the B.S. fees you get charged when you buy a car? $150 paperwork fee? Really? Dealer prep fee? I didn't ASK for you to prep the car. And the list goes on just for that one sector.

The only difference is the gun industry is not trying to hide that built in cost and they are not passing it on to others who do pay cash. I honestly see no problem with it since they're up front about it.

[Oh Shoot]

I've never seen so many people complain about an option to pay a lower price.

Wish I could knock 3% off every time I went to grocery store or the gas station.

Reminds me of the folks who used to rant when the supermarket discount cards came out. Some refused to use them as some sort of protest, and pay more. I could only manage a dumbfounded stare.

- OS

Edited May 11, 2012 by OhShoot

[gjohnsoniv]

I've never seen so many people complain about an option to pay a lower price.

Wish I could knock 3% off every time I went to grocery store or the gas station.

- OS

Especially the gas station...

[Guest Lester Weevils]

I think sellers who offer a cash discount are being entirely rational. What seems entirely irrational to me is that most people "put up with" the banks ripping 3 percent on just about every transaction. At 3 percent on such a huge velocity of money, it is doubly difficult to understand why banks charge such huge interest rates on credit card "float" amounts that are not paid-off monthly. Can't hardly find a credit card that charges lower-than-usury interest rates to credit card holders.

Banks have to charge giant interest to avoid losses from fraud and default because they will gladly issue a card to yer dog or pet chicken. But that is no excuse for usury on folks who always pay their bills. Three percent on the sale and then eighteen percent on the fella who lets the account float? Twenty-one percent total is up there in the ballpark of loans from check cashing services or the mafia.

IMO sellers who tack on 3 percent for credit card purchases are understandably "pushing back" against a seriously unjust system.

Merchants tell me that the charge is about the same for debit card purchases that come straight out of one's own checking account. So if you "pay cash" with a debit card rather than cash or check, the merchant gets dinged just as bad as from a credit card sale. Actually, think nowadays it costs a merchant quite a bit even to accept check payments. Merchants typically put up with the overhead because it is a hassle dealing with check verification and bad checks. The 3 percent ding is a little bit of "insurance" against getting ripped off for the entire sales amount.

At one time I got my checks "nearly free" but have to pay out the nose for them nowadays from the printer. Another rip. Maybe people don't use checks as much and economy of scale for check printers is falling. Or maybe they just charge those prices just because they can, and want to add a little bit of "push" for people to enter the cashless economy where the banks get a 3 percent tax on every transaction.

I've been rebelling a little bit against it. The debit card is real convenient to use, but am using more and more cash for day to day operations.

[gjohnsoniv]

Debit is only one set charge but credit is a percent of the scale.

[Guest Lester Weevils]

Debit is only one set charge but credit is a percent of the scale.

Thanks gjohnsoniv. I'll take your word on it. Had asked a couple of local small store owners who told me the debit is a percent charge that cost about the same as credit card, but maybe they were ignorant of the details themselves. Wonder if it matters whether a debit card has a bank name on it rather than "mastercard" or "visa" numbers on it? My bank has been issuing debit cards the last few years emblazoned "mastercard" and merchants can either ring up a sale as credit or debit on the card, but in both cases it comes out of my checking account just like writing a check. Maybe the merchants who are not set up for debit with the customer keying in the id code, instead signing a CC receipt, get stung for the credit card rate? It is surprising how many local merchants still don't have a debit card key pad at their point of sale.

[gjohnsoniv]

That's what I was told at least, debit is a flat fee, credit is a percent. It might vary some places but that's what it is at the store. Yes the stores that don't have the pin pan get both fees.

Edited May 11, 2012 by gjohnsoniv

[runco]

My real complaint is why is the gun retail industry appears to be the only industry doing this? I really do not see the 3% cash discount anywhere else. As a consumer, I have a choice and I do go out of my way to avoid retailers that charge the extra fee even if I pay cash. Its just the principal. Small retail business is in the business of retail. Bury the cc fee into the cost of goods sold category and move on. Don't single me out becuase I choose a safe way to pay for something. Consumers have the purchasing power, its just a matter if we exercise it or not.

[luvmyberetta]

All credit card fees are passed on to the buyers (of any item) as part of the price itself. You're fooling yourself if you think otherwise. The reality is that people who pay cash (quite the minority these days) are just paying the 3% built in to the price anyway, they just don't know it. Sellers who offer a cash discount are just being honest about it.

I don't understand why people are actually shocked that stores would try to make money. If you don't like the price, you have a few options...haggle over the price...use cash or check instead of a card...or say "no thank you" & shop somewhere else. I've never used a credit card for a gun purchase and don't even have a single cent of credit card debt. The way I see it, if I can't afford to buy it, I do without it until I can.

[robbiev]

Here's why some places do it:

New firearms have a small percentage markup, compared to almost every other retail item for sale in any retail business. A new firearm may have an 11 or 12 percent markup (sometimes more, but sometimes less). The credit card company get 2-3 percent of that (and actually Amex in many cases gets 3.25 or 3.3 percent). That's a pretty big chunk of the profit, as opposed to other retail items, where markup can be 30 or 40 percent (or in some cases, much more than that). Some small businesses pass that savings on to the customer when they pay cash.

I don't really see that as blatently ripping off the customer.

[robbiev]

Debit is only one set charge but credit is a percent of the scale.

Actually, that depends on the credit card merchant (or maybe it depends on how many dollars in transactions the merchant processes). We changed vendors not long ago because the one we were using charges 1 or 1.1 percent (can't remember exactly) plus a 20 cent transaction fee for a debit card transaction.

Edited May 11, 2012 by robbiev

[TripleDigitRide]

I've noticed more and more gas stations pricing gas the same way; a discounted price for cash purchases.

[DaveTN]

I made my best deal on a new Silverado. After the numbers were crunched I handed them my GM MasterCard and reduced the amount to the tune of $4K. I repeated that with $3K on a Monte Carlo and $3K on a Suburban. This was before they reduced the amount you could use.

I pay for everything with a credit card and don't carry a balance. I have the money to pay cash for everything I buy, but I can’t walk away from free cash like that.

I use a Sears MasterCard now and just got a $500 gift card in the mail.

Cash is not King anymore. I carry an awful lot of buying power, but don’t need to carry cash.

I made an offer on a new gun to a local dealer at one of the gun shows. He accepted it and told the gal to take care of the paper work. She added 3% to my bill for using a credit card. I almost walked away, but I figured I would just let it go and not buy from them anymore.

I didn’t pay a credit card fee at G&L, HG, FGS or on-line at CDNN. I do at Buds, but they are up front with it.

[Oh Shoot]

....I pay for everything with a credit card and don't carry a balance. I have the money to pay cash for everything I buy, but I can’t walk away from free cash like that....

Yup, I don't think of my plastic as credit cards, but rather as cash back cards. I've bought a lot of ammo over last few years with kickback from ATT Universal Card, and it's probably not even the best one any more for all I know.

- OS

[dlm37015]

When I accepted credit cards in my business (for 25 years up until last year), the credit card merchant agreement with Visa/Mastercard and all of the rest prohibited merchants from charging customers a fee for using credit cards. I'm not sure how these merchants are getting around it without violating their merchant agreement with the credit card processing companies. I also noticed and inquired with Visa about 4 years ago when Nashville/Metro started charging a 3% fee at places like Metro Water if you used a credit card to pay your bill at their offices. Again, merchant agreements state that that is a violation. When I called Metro for their explanation, they said that they were "exempt". Not sure how they became "exempt", I know I never was.

bingo this is it all people that take cards have to sign this agrement cc cost me about 2.75 percent after all is said and done .i dont pay it and have call visa in the clerks office in cheatham county theydidnt charge me if a dealer charges you more for a card it has to have a sign telling you that all prices show a cash discount. the biggest abuser of this is pilot oil

[gregintenn]

bingo this is it all people that take cards have to sign this agrement cc cost me about 2.75 percent after all is said and done .i dont pay it and have call visa in the clerks office in cheatham county theydidnt charge me if a dealer charges you more for a card it has to have a sign telling you that all prices show a cash discount. the biggest abuser of this is pilot oil

That would be our Governer's company, right?

[gjohnsoniv]

That would be our Governer's company, right?

Indeed, or rather his family's company but what's the difference? They were also the worst about price gouging a year or two ago. Edited May 12, 2012 by gjohnsoniv

[BigK]

Despite the excellent explanations and first hand accounts, some still will insist that they won't do business with a company that charges a cc fee. It seems like you still don't get it. If the vendor accepts plastic and doesn't offer a cash discount, WE ARE ALL PAYING THE FEE. It's hidden in the price. Just because it isn't in your face, doesn't mean it isn't there.

Edited May 12, 2012 by BigK

[k9wh91984]

I think if I use my debit card which is a Visa with my pin that should count as cash and not as a credit card thus no few. I know if I buy a gun at a gun shop to go to the ATM first then go look around which can be a pain. If I buy from buds I get charged. I don't like it either. If I carried cash every day I wish I could get 3% off everything though. I think most retailers just put the 3% in the items price and you never know the difference, just how it is.

[G27]

If retailers are offering you the convenience of paying via credit card, and it costs them more to do so, why should they not pass that expense on to you?

Don't like it? Pay cash.

[runco]

I am highly confident if consumers just avoid the retailers that charge the fee, in a free market society, will bring those businesses to their knees to change their business model. The consumer has all of the leverage, we just need to exercise it to impose market conditions. We truly have choices.

[ftncityfatboy]

Guys.....I quickly read through most of the comments concerning this topic, and much to my surprise I am amazed at how many of you don't understand the credit card concept. Since we are rapidly moving into the no cash society, as a business owner we must find and offer new ways to get business. One such way is the credit card. This system is a convenience since most people don't carry large sums of cash and others love to write bad checks. And trust me, the consumer laws are not built with the business owner in mind. But I digress....so in order to provide our services to the consumer, we offer credit cards. In the day, we wrote contracts and arranged bank financing at much higher interest rates. So, I have a company that charges me a fixed percent for credit card usage and that has to be built into the cost of goods sold (its general business 101). Along with those built in cost of goods prices are any shipping cost, tariffs, and sales tax (this depends on whether you collect sales tax or prepay it). So why is it so unheard of to offer someone a cash discount if they opt to pay you cash and you as a business owner can avoid the cc fees? You are simply saying thanks for not allowing my cc company to charge me a % of my product just to do business. In the construction industry, the profit margins are extremely low. IF we don't add the cc % onto our cost, then we reduce our margins and work for less. If we don't offer the cc services we reduce our market availability significantly. AND I will dispute earlier comments about "Cash is Not King Anymore"......cash is king, I will work for less knowing I don't have cc fees involved and don't have to wait on my money. So in closing, go to the grocery store, liquor store, restaurant, utility company, and ask for a cash discount. They will laugh at you cause those fees are built in. If you use cash there, they still make an additional 2.5% - 3.5% cause its built in regardless whether you use it or not. So stop whinning about the cash discount, gladly accept it and move on. Any college in the state offers business courses for those who don't understand this concept, take advantage of it....