Two of us sat down at a restaurant in Sonoma a week ago and noticed at the bottom of the menu: all checks not paid with cash, will have a 3% non-cash adjustment applied to checks
I’ve had enough of this lately as I’m seeing it more and more, so I looked into it online (which can be dangerous) and found on The California Attorney General’s Website Credit Card Surcharges | State of California - Department of Justice - Office of the Attorney General (Rob Bonta) Civil Code section 1748.1 that prohibits merchants from adding a surcharge (extra fee) when customers pay by credit card instead of cash.
Further reading says that the law does allow merchants to give customers discounts for paying cash, check, or debit card, as long as that discount is offered to all customers.
In this case, my interpretation of this restaurant charging me an extra 3% because I did not use cash breaks this law, as they did not offer any discount.
Anyone else running into this?
Any attorneys out there that can lend some interpretations to this?
Interesting CA law. In Nyc, it has become pretty common at the farmers markets for the prices to be slightly higher when paying by credit card as opposed to cash. Which makes sense to me, because the seller gets less money when someone pays by credit card as opposed to cash.
Gas stations use the reverse (legal) way all the time.
Count me as another who finds it annoying. I kind of get it for a mom and pop farmers market, but any brick and mortar store is overboard. Our local beverage store just started doing it and I’ve been avoiding it when I can, I suppose I should tell them next time I stop in though.
Funny/ironic timing of this post/rant. Our local Italian sandwich shop in FL started doing this same thing “discount for paying cash” and I noticed it recently at another local place of business.
Previously, a lot of places had “credit card minimums”. Or our electricians/plumber would accept credit cards for smaller amounts but anything over $1000 was cash/check.
There’s a few interesting trends at play here:
Consumer apathy towards “add-on” fees, taxes, etc. Hotels, flights, restaurants in CA, NYC, Chicago, etc… Even though core prices for products and services have also risen, we’ve become numb to itemized add-on costs that were previously hidden in a “bundled” price.
Higher costs + shrinking margins & net profit, pushing businesses to make previously “hidden” costs more transparent.
Cash vs Digital first society and businesses: On one hand, some places of businesses are offering cash discounts. OTOH, plenty of businesses are digital (credit, PayPal, etc) only.
This one place charges a $0.30 credit card fee. I get that this covers the static transaction fee, but how much can this actually change their bottom line? Maybe they find it just encourages people to think about it and choose debit or cash rather than just mindlessly swiping their credit card.
3-4% to cover credit card processing fees is a standard thing now but not ‘everywhere.’
Also Credit card minimums at some places are now $15-20 which sucks when I’m going to my favorite Chinese lunch spot.
Restaurants should really just increase prices a bit as it is a little annoying to tack on the fee. I don’t mind it as much at bodegas and such.
IIRC the CA law sprung out of the mandatory 15-20% ‘service fees’ that were popping up in Covid times and seem to have lingered there, as it was confusing if that was to represent a proper level of staff tipping or if that was something the restaurant collected aside from tipping.
In NYC most places seem to have a ‘mandatory service fee’ ie tip of 15-20% on parties of 8 or more.
as someone who has negotiated cc fees for restaurants, blended fees should land around 2.5% (give or take, assuming you have a decent mix of amex and other prem cards). if you’re paying more, you need to call someone. charging more than what you’re actually paying now seems illegal in NY at least.
Well, aren’t we regularly told that wine prices in restaurants are so high because “margins on food and service are so low that the restaurant depends on alcohol sales to stay in business.”
So shouldn’t we expect to see a 3% surcharge on the checks of patrons who don’t drink alcohol?
I’m confused. Surcharge for credit card is prohibited but discount for cash is ok? Admittedly I read Pure Mathemstics not Applied but this seems contradictory. Perhaps the issue is treatment of debit cards.
I’m surprised that banks charge less for handling cash than for electronic transactions.
Presumably the cost of delinquencies is covered in CC interest rates.
So the real issue then is the cost of loyalty programs and whether they offer demonstrable value to vendors. If they do then vendors should pay, if not then cardholders or the bank, or better yet scrap them.
Some restos and stores in Buenos Aires started applying a 10%! surcharge for using credit cards this year. I agree with the person who said the better route is for them to just build in an extra point or two to the price. It just feels crappy getting dinged an extra 10% or even 3%. I stopped going to those places. It feels better to me at the places that offer a 10% discount when paying cash.
this is another trend; cashless businesses. also illegal in new york.
accepting cash is pretty dumb and unsafe. but you have a bankless problem in this country, so there’s a social aspect at play.
debit cards are processed on the same rails as cc, but because it’s … debit and not credit, the fee structure is much less. typically a few pennies compared to the several % of cc fees. so if an establishment is charging you a cc “convenience” fee for using a debit card, that’s really uncool.
Digging into this a bit further to muddy the waters:
In California: There are two issues. The first is what my OP was about, which is a law passed in California in 1985 which is Civil Code section 1748.1 which prohibits merchants from adding a “surcharge” (an extra fee) when customers pay by credit card instead of cash.
The second issue in California is Senate Bill 478 https://oag.ca.gov/system/files/attachments/press-docs/SB%20478%20FAQ%20(B).pdf which will attempt to ban “junk fees” on purchases made across California which include “surcharges” applied by Ticket agencies, Hotels and Restaurants (for example) that put “surcharges” on invoices/checks which are often mistaken as tips or taxes, used to cover additional expenses, including employee health care or credit card processing fees.
So, as @ybarselah says above - it’s a shitshow here in California until this gets figured out.
I used to sell to a NYC cash-only restaurant. They wanted to pay their invoices in cash. No way was I going to stuff over 1k in my pocket and stroll the streets of NY.
total non-sequitor, but it’s top-of-mind because i drove through the old neighborhood a few weeks ago for the first time in 20+ years.
My first ever job was as a stock boy at a men’s clothing store called Fleet’s in Northeast Philadelphia (every boy in the tri-state area got their Bar Mitzvah suit there - unless they were really rich and went to Boyds). One of my jobs was taking a sack of cash to the bank up the block whenever they wanted to make a deposit. It was that old school bag that has a zipper and key lock, but we never locked it. Here’s me; 15 years old, walking on the streets with an open sack of a massive wad of cash. No one thought this was dumb. Good times.
