<p>People used to travel with traveller’s checks instead of cash or plastic. More work than using plastic, but far less risk than with cash.</p>
<p>Plastic surcharges etc etc are all a moot point anyway as more people move towards using their cell phone as a wallet.</p>
<p>What’s the cost of taking plastic vs. cash?</p>
<p>It certainly feels (for my store, small, one register) as though there is no significant cost to the cash – yeah we have to count it every night to settle but it takes no longer to do a cash transaction than a credit card transaction. I am not worried about the security issues, and as a business owner I do the banking so there’s not a cost of sending an employee to the bank for deposits. That’s the small business owner outlook.</p>
<p>On the other hand … I have to pay for a terminal to process the cards. I own the <em>bleeping</em> thing and it’s about $300-500 every few years when the industry decides we need a new one because of new technologies to combat fraud and hacking. I could lease it for $30-50/month. And there is the huge debit from my account at the end of the processing period to cover the processing fees for MC Visa and Discover. For us, it amounts to sales for a half day to a full day’s sales. (Not the profit from those sales … the entire amount through the register for a large portion of one day).</p>
<p>Now – it’s a cost of doing business in today’s world and it’s built in to my pricing structure and people DO spend more when they can pay with plastic and fewer and fewer people carry any cash at all – but as a community we are paying a lot of money for the convenience of going cashless.</p>
<p>PS. that pay with the phone thing? THAT is not going to be free … it’s still going to carry the processing charges.</p>
<p>^ Isn’t it the credit card companies that are rolling out e-wallet technology?</p>
<p>I don’t see how using your phone instead of a piece of plastic is going to make the fees the CC companies collect go away.</p>
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Then does the state let you pay your taxes by CC as well as tuition/fees/housing to a state U on the CC (and potentially get cash back from the CC)? In my state the government itself (ex: county assessor) charges a surcharge for using CCs.</p>
<p>The universities my kids have gone to, 2 state Us and 1 private, also charge a surcharge for using a CC (at least for the tuition part from what I recall - billing was different between tuition and housing).</p>
<p>Our state charges a convenience fee if you use a credit card to pay anything to them EXCEPT business registration, which is only $2.50 & no extra charge for using a credit card. I believe they also charge you if you use the credit card to pay taxes, but we generally get a refund, so not positive.</p>
<p>Our kids are attending private U. CCs are accepted with no additional charge added, so I charge & pay off in full each month (break payment into monthly amounts for an additional fee of $40/semester or so). When they lived in University housing, you could also add that to their University account & pay that with CC as well. Other apartments do NOT allow you to charge rent or other expenses.</p>
<p>Our state U uses a third party for credit card processing, and the third party adds 3% or so to the amount as a processing fee. Does this count as a “surcharge”? Maybe, maybe not.</p>
<p>In any case I would imagine that the unlawfulness of adding a surcharge doesn’t apply to the state gov’t or public institutions like the state university.</p>
<p>I’m amazed any college, public or private, would willingly give up 2-3% of their money just to provide the convenience of paying with a CC.</p>
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<p>Well, let’s take Starbucks as an example. Their smartphone app allows you to pay by flashing your phone at a reader. You get a loyalty reward, and every 10?15?20?something like that purchases you receive a free drink. The user pre-loads money into their Starbucks account via a credit card. The app can be configured to automatically top-up if the balance drops below a set amount.</p>
<p>The user likes it because it’s faster than plastic, looks cool, and you get loyalty rewards/points, plus you are still getting points on your CC account. Starbucks likes it because it’s faster than plastic, needs no CC hardware, users are already invested in buying the drink because they’ve already paid their Starbucks “bill” in advance, and they can use the float while the money sits in your Starbucks account. They can either use that float to help fund the CC merchant fees, or they could perhaps negotiate with the CC company for lower fees in exchange for the float sitting in CC coffers or some escrow account where any resulting interest is split. </p>
<p>Starbucks of course continues accepting plastic and cash. No need to offer a discounted cash price if they’re doing better on the app end. Eventually, there could be a separate line for cash/cc users vs app users. More people notice the app line is moving faster, more switch to the app. </p>
<p>Speculation towards the end, but just to show how you end up with a payment method displacing both cash and credit cards at the register.</p>
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The CC company is still getting their cut. You still have to have a credit card for this to work.</p>
<p>Companies have been searching for a solution to the micro-payment problem for years. The “gift card” approach has been around for years, it is just a little more convenient because of smart phones.</p>
<p>If you go to Starbucks every day, you might be interested in something like this, but what if you only go in once a week? Or once a month? And how many different places are you going to be interested in setting this up? It’s clunky.</p>
<p>The real solution is for the CC companies to adapt a more rational pricing structure for small charges. But I don’t think this will happen any time soon though, there is too much fear in changing the business model.</p>
<p>I don’t think it will really be any faster, either. At many places now, for charges up to a certain amount you don’t have to sign any more. It takes about 3 seconds to swipe and get your card back.</p>
<p>For as much as retailers squawk about the 2-3% cut the CC companies charge, as well as the cost of the equipment, I think few complain about the significant advantages CCs provide by securely depositing the money into the retailers bank account with little fraud (occasional stolen cards, limited by requiring zip code).</p>
<p>Adding to this is the convenience that the customer can buy about as much as he likes without finding an ATM machine or being limited by daily withdrawal limits. </p>
<p>Sure, if the owner counts the cash, does his own bookkeeping, and takes deposits to the bank himself, it doesn’t cost him anything out of pocket. It does cost him time. Is it worth his time? Just depends.</p>
<p>I think that most retailers, while they complain loudly, are glad to accept cc processing fees. Otherwise they simply wouldn’t accept ccs.</p>
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<p>No concern about security against robbery or anything like that? Or any particular bank charges for currency and coin deposits?</p>
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<p>There’s also the simple time element it takes to make the deposit. Whether it means scanning checks on a phone or walking to the bank and depositing cash, it takes time.</p>
<p>notrichenough, I agree it would be clunky to have an app for each store. But it’s apparently popular with certain groups of consumers, especially younger consumers. They especially comment on how it’s faster than swiping a credit card. Me, I don’t go to Starbucks often enough for it to be worth my while. Same as with my workplace cafeteria, which takes cash or pre-loaded specific-to-the-workplace card. But I can see that brave new world approaching. 
Give me a Trader Joe’s app and I will be all over it.</p>
<p>While we’re discussing laws to allow surcharges for CC use, could we also pass a bill that imposes a $100 fine on people in checkout lines who don’t start writing the check until the cashier announces the total? And an additional $50 fine per person waiting in line behind them if, after writing the check into the register, they then carefully perform the subtraction? :mad: ;)</p>
<p>^^ Haha - I almost posted the same thing about the check writers. I included a reference to the gender of the usual check writers who do this (almost exclusively female for some reason - men usually use cash if they’re not using a CC) but thought that might not be well received here.</p>
<p>People still write checks at the grocery store? I can’t remember the last time I saw that. Probably at least 10-15 years.</p>
<p>^ It wasn’t until the mid-90’s or so (IIRC) that most grocery stores started letting you pay with debit and credit cards. After that I imagine most people found using checks to be inconvenient.</p>
<p>In response to some of the points made here:</p>
<p>Included in the cost/inconvenience of credit card transactions, in addition to the hefty percentage taken by the credit card processor, are maintaining a dedicated phone line for the credit card machine; buying paper supplies for the machine; storing the merchant’s copy of receipts; and the time involved in periodically hunting down a receipt and respondimg to a chargeback inquiry from the credit card company because someone forgot they made or purchase, or their spouse never told them about it. Checks are no longer as issue one way or the other–they are used very infrequently, pretty much only by thieves it seems; after being burned too many times we just stopped taking them altogether. Counting/securing cash and making bank deposits costs only time, and not much of it. We’re not big enough to require an armored car–I wish!</p>
<p>Of course we can’t refuse to accept credit cards because people depend on them. And yes, they enable customers to make more purchases than if they had to use cash, but the convenience goes both ways, and, given the fact that we offer our customers a high level of service as well as free parking, gift wrapping and delivery, it’s not a lot to ask that credit card costs be shared.</p>
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<p>I really don’t get the business sense behind this comment. It would seem that business costs such as free parking, gift wrapping, and delivery would be factored in to the cost of the product. And I would expect that the cost of processing the credit card transaction would be factored in as well.</p>
<p>After all, you don’t have to offer free parking, gift wrapping, and delivery. You could charge. But you probably find that your customers are less likely to spend money if you don’t. I don’t see why this doesn’t apply to credit cards.</p>
<p>I see a lot of value in lower credit card processing costs. And I don’t know that there is significant value for the business to pay for the cost of reward programs, primarily consisting of cash back rebates and airline miles. But lower processing fees is the answer, not charging extra for using plastic.</p>
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I haven’t seen those machines at a retail store in a while - they’re usually just a little terminal device that connects to their register and the customer signs on a touch screen - no paper involved. My retail purchases are heavily biased to Home Depot/Lowes and auto parts stores however.</p>
<p>The “fancier” machines are more costly–we choose not to go that upscale. You find a variety of machines these days. I only see the touch screen type at supermarkets and big box retailers–we’re a very little box!</p>
<p>@engineer4life: We’re in a highly competitive business. There’s a limit to how much we can “factor in” costs. But in any event, you might consider why cash customers should bear the cost of credit card processing, which is what happens when you “factor in” all or part of these substantial charges. I just don’t see why it’s so unacceptable for a consumer to bear some of the cost of an expensive payment method that he chooses to use. I get it, plastic is convenient. But we pay for convenience all the time.</p>
<p>BTW, if you ever wonder why some businesses won’t accept your Amex card, it’s because Amex charges merchants a higher fee, so high that many small businesses can’t tolerate it.</p>
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<p>I simply have a serious adversion to businesses that make their products look cheaper by charging line item fees at the end of the transaction, and the price you end up paying is a lot more than the sticker price on the shelf.</p>
<p>For example, RyanAir charges so many fees that your $10 ticket turns in $90 by the time you complete your trip. You pay a fee to pay for your ticket, to print your ticket (at home), to use the lavatory (possibly), to use a pillow or blanket, to use a wheelchair (blocked by regulators), to check a bag, to carry on a bag, etc, etc. Extreme example, but they are successful.</p>
<p>In the US, UPS started charging a “fuel surcharge” because of the price of gas. Then hotels started charging “energy surcharge”. Jiffy Lube charges “environmental surcharge” even though none of the money goes to the US government. Cell phone providers charge fees to defray regulatory costs, even though the money simply goes into their coffers. It’s simply a way that to charge $80 for the service they advertise for $69.99. </p>
<p>2% surcharge for plastic simply hits me the same way. A way of reducing the prices on the shelf, make comparison shopping more difficult, and con consumers into paying more than they intended.</p>
<p>I traveled to Europe once, and the price of meals at the restaurant included taxes, tip, and payment processing fees all listed in the menu. So you 1500 meal cost exactly 1500 (Icelandic dollars). </p>
<p>Can you imagine restaurants…add 9.7% for taxes, 20% for tip, 3% for charge card processing? Yuck.</p>