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Charging Extra for Credit Card Use - Is It a Wise Move?

In the county where I live, some smaller businesses are charging extra if you use your credit card. It is probably because it rankles the mind of such businesses that on each credit card purchase the bank is cleaning up. And I understand that. Of course the customer would, too.

Yet, on a more primitive level, do you not imagine the customer hates being, in effect, told to use cash or he will be punished? Real or otherwise? And do you really imagine the small business owner will cut the price of goods and services? Oh, in theory this should not happen... but knowing human nature?

Finally, you do know, don't you, people have gotten out of the habit of using cash and will tend to go to another business not charging more for credit card use, even though they are inclined to shop where they always do?

What do you think?

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VinceSummers wrote on January 16, 2018, 7:41 AM

In reality, the person paying cash has heretofore in effect covered the charge by the bank for credit to the credit card user, since he is in a sense paying more for the goods and services than the credit customer is. For every $1.00 item, the credit customer may actually be paying $0.97 to the business and $0.03 to the bank, whereas the cash customer is paying $1.00 to the business... 3% more to the store than Mr. Credit Card User.

Last Edited: January 16, 2018, 12:45 PM

MegL wrote on January 16, 2018, 10:08 AM

In the UK, based on EU laws that have just come in, firms are now no longer allowed to charge more to credit card customers than they do to cash or debit card customers. Some firms have just put up their prices over all, to ALL customers, cash as well as credit card.

VinceSummers wrote on January 16, 2018, 12:47 PM

Although I do not say one methodology is right and the other is wrong, the single thing that stands out in my mind is banks are getting a cut, no matter how you look at it. Somehow, that just doesn't seem right.

melody23 wrote on January 16, 2018, 1:00 PM

We have just had these fees banned over here. As a businesswoman I don't ever pass these fees on to my customers, I pay 1 penny for every pound I take via card but that's only because I have a small turnover, bigger companies actually pay more based on their turnover so I can understand why they charge but I never would, but then I also don't charge for gift wrapping or lots of other things I probably should charge for so I'm perhaps not the best example. I would rather lose a few pence and keep the customer happy

VinceSummers wrote on January 16, 2018, 2:49 PM

An excellent response! Would that all business owners were like you!

lookatdesktop wrote on January 16, 2018, 2:55 PM

I never thought about it, but now that you mentioned it, maybe it is best for the business owner if I pay cash mostly? Or are the prices lowered based on the number of credit cared users who purchase the goods sold in a particular store that offers credit purchases that must be at least 5 to 10 dollars minimum for credit or debit card purchases? Or is there something I have missed from your post?

Last Edited: January 16, 2018, 2:59 PM

VinceSummers wrote on January 16, 2018, 3:02 PM

As I understand it, Anthony, it is not legal to require a minimum purchase with a credit card. It is true some stores require a minimum. Cash always makes sense, unless you need an official receipt.

MegL wrote on January 16, 2018, 5:49 PM

Businesses gain a lot from you using a card. An immediate payment into their account, if you use a debit card, no cash handling and better security, less likelihood of being mugged. There are cards being trialled in the UK, with NO minimum purchase. A couple of small villages have gone totally cashless, with children getting pocket money cards (no overdraft). I would not like it.

lookatdesktop wrote on January 16, 2018, 11:00 PM

That kind of thing doesn't seem very wise.

lookatdesktop wrote on January 16, 2018, 11:02 PM

The place that demands a minimum payment on a credit or debit card is owned by people from over seas, and likely middle easterners. But that doesn't necessarily have anything to do with their minimum credit / debit card purchase policy.

MegL wrote on January 17, 2018, 3:24 AM

The minimum payment is because the bank charges them for each transaction. I have a business account that does not charge for card transactions from customers but charges if I try to deposit cash!