In support of surcharge and convenience fees on cashless payments (29-04-18)

Surcharge / convenience fees on cashless payments.

Of course cashless payments like nets, credit cards, master, visa have their convenience like you can keep track of your expenses in your statement or even online or emailed to you. You can gain points. Pay later, etc. But this comes at a price to the merchant

Merchants are expected to absorb the fees as part of their operating expenses and not to charge fees like surcharge or convenience fees for cashless payments when processing cashless payments requires a transaction fee. Also takes time to clear. Also there might be risk like charge backs.

This action is absolutely deplorable. Does the plastic bag company says to a retail store. You cannot charge using plastic bags because it is your cost of operation. I am pretty sure you don’t find that. How about does a tissue maker company says to a restaurant you may not charge for the tissue to your customer. How should they be telling you how to run a part of your business. They should just totally butt out.

One of their solutions: to have two price tags. One for cash one for cashless. Its plainly a pain to deploy this and a whole lot of work. If i ran a retail and had 5 thousand items and I had to input a cash and cashless or maybe even cash, nets and credit card. How many prices would i need to key. Not to mention the accounting system have to work with such a pricing system. Its just much easier I have a fee or percentage which I just key in aka surcharge / convenience fee.

Another solution: to include the price of credit card fees into the price. Frankly, I don’t believe in penalising cash users to subsidise for cashless payment users.

Conclusion:

Its up to the business how to run it. Frankly the if the surcharge is negligible merchants may absorb it. The point that so many merchants are still charging for surcharges / convenience fees mean that it isn’t. The point that they are fighting lawsuits mean that they care and feel so deeply about doing so. The point they are separating out fees means they have think deeply about how much it affects the customers that’s why they are absorbing small fees(for things like nets) and charging different rates for different payment gateways(visa, master, american express, amex). Its not that merchants don’t think about customers and how much additional fees for payment affects their customers or if they charge for them they might go somewhere else. I just think laws that ban credit card surcharges are just going to end up either making credit card/cashless payments irrelevant or increase prices across the board for everyone. Like they say there is no free lunch.

Cases:

https://www.channelnewsasia.com/news/singapore/comfortdelgro-taxis-to-accept-visa-payments-from-2016-8242576

“Comfort Delgro was fighting against visa to implement a 10% surcharge which they totally pulled out visa in July 2013. And reinstated it in Jan 1, 2016. Which they did not take off the 10% surcharge.” What I see here is that traditionally the taxis take the money then come month end they pay the taxi company for the rental of the taxi and petrol. But when comfort delgro was paid using the credit card or cashless it became the other way around, where it had to pay the transaction fee. Waited for it to clear. Either contra with the bill or pay the taxi driver. Extra work means extra money.

Ninth Circuit Holds That a Prohibition on Credit Card Surcharges Abridges Merchants’ Freedom of Speech in Violation of First Amendment

“Plaintiffs explained that they were prohibited under Section 1784.1 from posting a single sticker price for an item and then charging the consumer a credit card fee to recover their costs. According to the plaintiffs, they would prefer to charge this surcharge for using credit cards rather than offer a discount for cash purchases because their customers would better understand that credit card fees are responsible for a portion of the price.”

https://www.theguardian.com/money/2018/jan/13/credit-card-surcharge-debit-ban

“EU is trying out banning credit card surcharge. Again. I cannot see why it is government business to regulate private business how they run their business. Customers aren’t stupid. If they feel they are overcharged they will move to somewhere else. If everyone is overcharging. That just means that is the market price. What I see out of the article is most business are either taking out credit card payments or increasing price across the board aka penalizing the cash customers”

www.dailymail.co.uk/news/article-5225109/Retailers-plan-sneak-credit-card-charge-ban.html

“Unscrupulous retailers ‘plan new service charges to sneak around a ban on rip-off credit card fees’

  • New rules in January are to prohibit the addition of extra charges on credit card 
  • It is claimed retailers are planning to introduce charges to get around the ban
  • Just Eat are scrapping a 50 card surcharge and adding a service charge of 50p for every customer, including those using cash

The new rules were brought in to protect consumers, because so many shops, holiday firms and even councils and other public bodies have been making customers using credit cards pay fees amounting to up to three per cent extra.”

It’s a cost of business. You don’t get to call it unscrupulous if everyone is doing it. Retailers, holiday firms and even councils and other public bodies. Sounds a lot more than just retailers. And they are not trying to rip you off. You simply don’t expect anyone to absorb the cost doing business. How they price their things is their decision. You now just forced them to charge everyone instead of those who use credit cards aka penalizing the cash users.