Paper or Plastic? Payment Preference May Be Pricey

Credit card, by Flickr user "401(K) 2012", licensed via Creative Commons.Retailers and credit card issuers settled last week on terms that will allow vendors to apply surcharges to customers who choose to pay by credit. The additional charge, if implemented, will be used to compensate for small fees the vendor assumes for processing the transaction. This charge can typically range from 1.5 to 3 percent of a purchase when using plastic. And while most merchants are not expected to take advantage of the ruling, don’t expect the ones who do to exercise the same power that several Long Island gas stations have demonstrated.

Previously, if a merchant wanted to charge a credit card, it was forced to pay the credit card company a proportion of the charge.  Since customers didn’t used to use credit cards very often, merchants considered it a premium service and did not mind the fact that they couldn’t pass this fee along to the customers.  Nowadays, though, credit cards are much more common than cash to pay for everyday things like groceries, and merchants were spending a lot of money just to sell their products.  Eventually, retailers felt they’d had enough of this forced fee, and sued the credit card companies for the right to charge their customers extra, claiming the rules discouraged competition.  This antitrust settlement means that a grocery store can apply a fee to a purchase that essentially passes the burden along to the customer.

Of course, people are bound to be upset if suddenly their 100-dollar groceries start costing 103 dollars.  Merchants don’t want to start angering and thereby losing their customers, so it isn’t expected that a kind of sea change will happen overnight.  But there are some benefits to this new system.  If a grocery store doesn’t have to worry about giving up 3% of its revenue to credit card companies, it can reduce the price of many of its items.  That benefits all consumers, especially the ones who already don’t use credit cards, and allows merchants further flexibility to compete.  Eventually, it may become the norm again to pay via cash in order to avoid credit card fees at the grocery.  And credit card companies won’t like it at all.  If they can’t convince anyone to use their product, what measly profits from credit charge fees they do make will be a far cry from their current situation.

The antitrust settlement also requires several major banks, Visa, and MasterCard to issue upwards of $7 billion to more than 7 million retailers that accept credit cards. The processing fees will also be reduced for the first eight months after the agreement.  Ten states already had restrictions on retailer surcharges and will not be affected by this settlement: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

 

11 comments on “Paper or Plastic? Payment Preference May Be Pricey

  1. High Protein Low Carb Diet on said:

    Awesome! Its in fact remarkable post, I have got much clear idea concerning from this article.

    High Protein Low Carb Diet

  2. Prescription Swimming Goggles on said:

    Excellent post. I used to be checking constantly this blog and I am inspired!
    Extremely helpful information particularly the remaining section 🙂 I take care of such info a lot.

    I used to be seeking this certain information for a very lengthy time.
    Thank you and good luck.

  3. Gretchen on said:

    Right here is the perfect blog for anyone who hopes to understand this topic.
    You know a whole lot its almost hard to argue with
    you (not that I actually will need to…HaHa). You certainly put a brand new spin on a topic
    that’s been written about for decades. Wonderful stuff, just excellent!
    Gretchen

  4. Buy White Kidney Bean Extract on said:

    Good web site you have here.. It’s hard to find excellent writing like yours nowadays. I really appreciate people like you! Take care!!

  5. ECig Review on said:

    This is very interesting, You’re a very skilled blogger. I’ve joined your feed and look forward to seeking more of your wonderful post.
    Also, I have shared your site in my social networks!

  6. Electronic Cigarettes on said:

    Since the admin of this website is working,
    no doubt very shortly it will be famous, due to its feature contents.

  7. Remembering Where To Acquire Electronic Cigarettes From on said:

    Can I just say what a relief to uncover a person that genuinely knows what they’re discussing online. You definitely realize how to bring an issue to light and make it important. More people should check this out and understand this side of the story. I can’t believe you aren’t more popular because you definitely possess the gift.

  8. White Kidney Bean Extract on said:

    Hey there! Someone in my Myspace group shared this site with us so I came to take a look.
    I’m definitely enjoying the information. I’m bookmarking and will
    be tweeting this to my followers! Superb blog and terrific style and design.

  9. Raspberry Ketone Diets on said:

    whoah this blog is excellent i really like reading your
    posts. Keep up the good work! You realize, lots of persons are hunting round for this
    info, you can aid them greatly.

  10. Elite Esig Review on said:

    fantastic issues altogether, you simply received a new reader.
    What might you recommend about your publish that you simply made a few days in the
    past? Any certain?

  11. Pretty! This has been an incredibly wonderful article.

    Thanks for providing these details.