Credit Card Games

[Rail Paul]

The financial reforms bill which has just made it through the reconciliation process will have some impact on credit card use.

 

Merchants may set a minimum level for credit card purchases, as long as ithat minimum is not more than $10. So, a merchant can prohibit that $0.89 transaction which costs him $1 to process

 

It will be unlawful for a merchant to offer a greater discount to Visa users than the discount offered to AmEx users. It will be lawful to offer a discount for cash payments compared to payments in credit cards. The law appears to be silent on whether a merchant can accept just a single credit card (like Visa at the Olympics).

 

It will be lawful to allow a discount for users of debit cards, compared to credit card payments. MC and V fought this one tooth and nail because the spread was the same, but the cost of debit card processing was much less.

 

Merchants will not be permitted to discriminate in offering discounts based on which bank issued your credit card. Some merchants offered a lower price if the credit card issuing bank was the same bank that processed the merchant's own banking.

[backstory]

It will be lawful to offer a discount for cash payments compared to payments in credit cards.

 

but gas stations have been doing that already. some gas stations here charge more for credit card purchases at the pump instead of cash inside. it could be a way to get you inside so you will buy a candy or cofee etc.

 

It will be lawful to allow a discount for users of debit cards, compared to credit card payments. MC and V fought this one tooth and nail because the spread was the same, but the cost of debit card processing was much less.

 

i don't have a problem with this. so you pay a bit more for the convenience.

[rancho_gordo]

It will be lawful to allow a discount for users of debit cards, compared to credit card payments. MC and V fought this one tooth and nail because the spread was the same, but the cost of debit card processing was much less.

 

i don't have a problem with this. so you pay a bit more for the convenience.

 

If it costs us (the store) much less to accept a debit card, why shouldn't we be able to pass the savings along?

It's such a nightmare. We pay different rates depending on debit, if it's a mileage card, etc. They get us at our end and then on the consumer end.

I wish......I could talk politics.

[Rail Paul]

It will be lawful to offer a discount for cash payments compared to payments in credit cards.

 

but gas stations have been doing that already. some gas stations here charge more for credit card purchases at the pump instead of cash inside. it could be a way to get you inside so you will buy a candy or cofee etc.

(snip)

 

Yes.

 

The gas stations constitute a special case for the credit card companies. Their discounts clearly violate their credit card agreements, yet the card companies won't take action. In NJ, at least, the fuel dealers have said they'll discontinue accepting Visa, etc if a card company yanks any dealer's ability to process card purchases. In NJ, the spread between cash price and credit/debit price is about a dime per gallon, although a few companies, like Exxon's owned stations, have reverted to same price for cash and credit purchases.

 

Their threat is big enough that V MC AmEx etc blinked

 

(We have a thread on the NJ forum about Matisse restaurant in Rutherford. They used a 15% discount for cash purchases to goose sales on Tu-Wed-Th. It was sufficiently successful in drawing new traffic that the deal is restricted to early bird deals now.)

[Rail Paul]

It will be lawful to allow a discount for users of debit cards, compared to credit card payments. MC and V fought this one tooth and nail because the spread was the same, but the cost of debit card processing was much less.

 

i don't have a problem with this. so you pay a bit more for the convenience.

If it costs us (the store) much less to accept a debit card, why shouldn't we be able to pass the savings along?

It's such a nightmare. We pay different rates depending on debit, if it's a mileage card, etc. They get us at our end and then on the consumer end.

I wish......I could talk politics.

 

The succinct answer is that a lot of specialty deals exist between the banks that issue cards, the mastercard and visa etc intermediaries who process card transactions, and volume dealers like Amazon, iTunes, etc. The system is constructed in such a way that everybody (except wealthy bean moguls) get to take a slice out of the consumer.

 

The "small banks" which is loosely everybody but the top 10 don't want to overturn this apple cart with messy competition, which they know will be won by Citi, Bank of America, Wells, etc and lost by every other bank in the US. It's easier to keep a fat spread.

 

The basic problem is the US has about 8,000 banks, which is about 7,500 more than it needs. But, there are 20 banks per congressional district, and these guys / girls are in every civic organization that exists. So, nobody wants reform that reduces the number of local loan issuers, credit card issuers, ATM maintainers (out of network fees for which wasn't covered in the law), etc.

[Sivan]

If it costs us (the store) much less to accept a debit card, why shouldn't we be able to pass the savings along?

 

I guess you should be able to, but wouldn't you be taking money from people who don't have money in their bank account and giving it to people who do.