Credit Card Minimums

[Victor_Hong]

@C. Bowman

I heard on the news this morning when the financial reform bill was passed the agreement between merchants and Cc companies that had been in place where a merchant could not charge a minimum for a Cc purchase is now gone.
It has always irritated me when a customer comes in with an American Exp and wants to charge a $4.00 cigar and how much the processing fee is.

“The law has been passed that Visa and Mastercard can no longer enforce their previous rules which did not allow the merchants to have a minimum purchase.

In addition, they are no longer able to tell merchants they cannot pass the costs on to the consumer.”

http://www.cardratings.com/creditcardblog/2010/06/financial-reform-bill-offerings.html

Yes, it was the credit-card minimums which led people to buy unaffordable homes and then default on excessive debt. Problem solved.

[PeterJ]

@J a y H a c k

@GregUrsino

I’m confused. If the cc company charges some minimum flat fee your argument makes sense. If it’s a % then who cares? Is it usually A or B? I realize it is not always either A or B. But usually…Is it usually A? Or is it usually B?

1. It is usually A+B, and the fixed fee can be a huge percentage when the dollar amount is small.

Just to put this is perspective, in my experience the transaction fee (for a smallish shop) is usually 25-30¢ per transaction. The % is a %, so it’s constant. For Carrie’s $4 cigar, she could be paying 7.5% of the retail, or 15% (?) of her cost, just to do the transaction. Obviously most retailers have to accept credit cards to do business, and I always looked at it as an overall overage cost, but many try to limit the impact of the fees if they have a significant amount of low-priced items in stock. Like anything else, it’s a business decision.

[Brian_Tuite]

@GregUrsino

I’m confused. If the cc company charges some minimum flat fee your argument makes sense. If it’s a % then who cares? Is it usually A or B? I realize it is not always either A or B. But usually…Is it usually A? Or is it usually B?

Actually it’s both. Through my cc processor I pay a % of each transaction and an additional 20¢/card swipe. This is on Visa M/C, Discover is different as that “Cash Back” they give you each year comes out of my pocket. Same with other rewards cards. AMEX charges me a monthly fee just to accept their card and then a transaction % higher than V/MC/Disc plus the swipe fee. Oh, declined card swipes cost me 20¢ ea. regardless of card type.

If a card say’s DEBIT or CHECK CARD on it I run it as a debit card and don’t have to pay the transaction %. I don’t charge a fee to run debit cards like some retailers do so my customers would just as soon use their card as debit as they would credit. Best thing about debit is there is no issue of disputed charges because only the card holder knows his/her PIN #.

[Brian_Tuite]

@C. Bowman

I heard on the news this morning when the financial reform bill was passed the agreement between merchants and Cc companies that had been in place where a merchant could not charge a minimum for a Cc purchase is now gone.
It has always irritated me when a customer comes in with an American Exp and wants to charge a $4.00 cigar and how much the processing fee is.

“The law has been passed that Visa and Mastercard can no longer enforce their previous rules which did not allow the merchants to have a minimum purchase.

In addition, they are no longer able to tell merchants they cannot pass the costs on to the consumer.”

I have always passed the cost along to the customer. It’s been built into my profit margin on every product I sell. That’s what affords me to offer a discount for cash. Isn’t this how everyone else does it?

[Roberto_Rogness]

“I have no horse in this race. If you can’t carry $4 in you pocket to buy a cigar and have to use plastic, then don’t smoke the cigar.”

THANK YOU!!!

Re the trend, NPR had a story this morning on “The Return of Cash” citing how all the little fees consumer get hit with are making cash a more attractibe option for smaller transactions.

[Brian_G_r_a_f_s_t_r_o_m]

Weird thing: some places charge me extra to run my debit card as a debit card, but don’t charge extra to run it as a credit card.

As far as some retailers offering discounts to those paying in cash: I’ve never encountered such practice, so that’s news to me.

As a consumer who uses plastic all the time, I obviously don’t like this news, but I will be able to adapt – it will probably result in less purchases at retailers, as I won’t feel like going to my bank each time before I go shopping. Furthermore, sometimes I won’t want to be limited to the amount of money I withdrew at the bank before I went shopping (yeah yeah, I know the value/integrity of a budget, but sometimes I just don’t care!). I also don’t like having cash in my wallet because I spend it with less care than I exercise with my debit and credit cards – I don’t want to go to the bank, withdraw money, go shopping and have money left-over in my wallet to piddle away. Soooo, what this will likely mean for me is that instead of spending a few more dollars to meet/exceed the minimum, I’ll just forgo spending any money at all, which will be good for me in the end.

[Linda_Baehr]

@Brian G r a f s t r o m

As far as some retailers offering discounts to those paying in cash: I’ve never encountered such practice, so that’s news to me.

The only place I have seen this is at gas stations- some advertise their cash price, and also a high CC price- usually ~0.10 higher (and advertised in tiny numbers on the sign). I have heard it will be more common now.

[Brent_C_l_a_y_t_o_n]

Brian,

Historically, making a deal to pay cash for a greater discount was a sort of wink-wink understanding between the buyer & retailer that by not ringing through (reporting) the sale you could ‘save’ on the sales tax. It seemed to be more in vogue at the small-time stores that weren’t computerized where sales figures could be more opaque. I was quite surprised both in the city and up here how many times this approach was taken by customers to try and get an extra discount. A few even spelled it out for me, which certainly was a shock. That rarely happened to me in MA.

Our wholesalers have to report our buying numbers to the tax man now anyway, so this sort of books-cooking is obviously on their radar.

[Brian_Tuite]

@Brent Clayton

Brian,

Historically, making a deal to pay cash for a greater discount was a sort of wink-wink understanding between the buyer & retailer that by not ringing through (reporting) the sale you could ‘save’ on the sales tax. It seemed to be more in vogue at the small-time stores that weren’t computerized where sales figures could be more opaque. I was quite surprised both in the city and up here how many times this approach was taken by customers to try and get an extra discount. A few even spelled it out for me, which certainly was a shock. That rarely happened to me in MA.

Our wholesalers have to report our buying numbers to the tax man now anyway, so this sort of books-cooking is obviously on their radar.

Under-report sales to avoid tax obligations? Banish the thought.
Usually the only people who expect me to not charge sales tax are my Latino customers (no offense intended). Many of them are undocumented and taxes are something they never had to deal with so they expect to weasel out of sales tax as well. I carry 30 day accoounts for the majority of my customers. When one asks about a discount I simply say “Show me the money”.

[Roberto_Rogness]

"I also don’t like having cash in my wallet because I spend it with less care than I exercise with my debit and credit cards – "

I (and I would suspect many to most other people) behave in just the opposite manner. I try to do nearly everything in cash and put what I need in my wallet so I can tell when I need to stop spending.

[Linda_Baehr]

@Roberto Rogness

"I also don’t like having cash in my wallet because I spend it with less care than I exercise with my debit and credit cards – "

I (and I would suspect many to most other people) behave in just the opposite manner. I try to do nearly everything in cash and put what I need in my wallet so I can tell when I need to stop spending.

Me too. It helps me spend WAY less than if using plastic/debit. You are more aware of where your money goes, and when it gets low you feel the pinch more. If you have to go to the bank to make a withdrawal, it makes you think twice about a purchase.

[Marc_Hanes]

I myself try to pay everything in cash because, yes, it is more visceral/real to one during the transaction. To wit, the very orchestrated effort to get normal citizens to become debt slaves because there was never a strong “pinch” to the flesh with each purchase when it was credit. This is the avowed American way, top-down.

When I pay debit it is usually a convenience issue. [I no longer own any credit cards.] My car mechanic gave me a cash discount two weeks ago without me even asking. We both knew the “value add” of a cash transaction, both legit and not so.

In a society than depends on 70% of consumer spending for economic health, paying by cash is anathema. I am steadily moving out of this paradigm and, hopefully, I am not alone. Only spend what you literally have in the moment. 'Nuff said.

[C_Bowman]

@Roberto Rogness

"I also don’t like having cash in my wallet because I spend it with less care than I exercise with my debit and credit cards – "

I (and I would suspect many to most other people) behave in just the opposite manner. I try to do nearly everything in cash and put what I need in my wallet so I can tell when I need to stop spending.

This is confusing, you don’t like having cash in your wallet but try to do nearly everything in cash ???

As far your earlier comment about not having cash to pay for a $4.00 cigar, many (as has been mentioned by others) people don’t carry any cash with them. I’m not going to turn customers away because they don’t have cash in their pocket.
Our society has created a situation for people to shop til they drop with no money. It’s not a right or wrong comment but it’s the way things are.

[Roberto_Rogness]

No, Carrie, what I was trying to say is that I put cash in my wallet in the morning based on my projected budget for that day (but NEVER less than $100, this is LA there could be an earthquake or a blackout at any moment) and then try to do everything in cash.

I DO think it is a right or wrong thing: aside from the fact that a huge percentage of people just seem to get in over their heads in short order using plastic for everything (and are getting dinged right and left for small charges that add up to real money) the idea that my location and purchases would be tracked 24/7 is very unappealing as well.

[C_Bowman]

Yes sir! I understand & agree.
It’s amazing people (in general) don’t even have enough to use a payphone in an emergency. I guess most of the kids would say “What the hell is a payphone?” Electronic age has taken so much of that thinking away.
criss-sake, I’m sounding ancient. I better go back to my

[Gordon_Fitz]

Let’s not get to philsolophical. I try to pay tasting fees with cash, and buy wine with credit cards. Some times if I have also paid for lunch with cash, paid extra tasting fees because I opted not to buy bottles, I might become cash short. I might not choose to drive an extra 15 miles or more to town and back to do a tasting at a winery 1.5 miles away. They get plastic regardless of what I do!

[Ed_Bernasky]

@Linda Baehr

@Brian G r a f s t r o m

As far as some retailers offering discounts to those paying in cash: I’ve never encountered such practice, so that’s news to me.

The only place I have seen this is at gas stations- some advertise their cash price, and also a high CC price- usually ~0.10 higher (and advertised in tiny numbers on the sign). I have heard it will be more common now.

I bought a couple nice shotguns recently and asked for a cash discount. They gave me a discount, some shells, carrying cases, and some cleaner for free.

[Roberto_Rogness]

When I was in the restaurant biz and A) had to wear suits and nice ties and B) made a lot of tips, I would go to independent menswear stores, bring $1500 worth of stuff up to the counter (and this was in the late 80’s) and then carefully place TWELVE $100 bills on the counter and ask the manager or owner “Are we good?”. NEVER got turned down. Once a clerk started to give me pushback and I thought the owner was gonna throttle him in front of me.

I don’t think the result would have been the same with plastic.

[C_Bowman]

Roberto & Ed,

Discounts & incentives work in many places and best bet is if they are independently owned but try it in a restaurant ! Imagine being at FL, you get the bill and it shows $1100.00, you lay down $900 and ask “are we good”
they show you to the kitchen to wash dishes.

[Roberto_Rogness]

Carrie, in your example you’ve already eaten the food. In mine I am giving the guy a choice: big sale for lower margin or no sale at full margin.