Coming Soon: Pay to Pay!

Last week, the two payment processors and major banks agreed to pay at least $6 billion to settle a suit that alleged they conspired to fix the fees that retailers must pay them whenever customers pay with credit cards. These “interchange” or “swipe” fees are typically a portion of the amount that customers charge to their cards, thus reducing the amount that retailers ultimately pocket.

As part of the settlement, stores such as Kroger and Rite Aid for the first time will also be able to charge customers a fee for paying with a credit card.

The idea is to discourage customers from paying with credit cards, and instead pay with cash, so that retailers wouldn’t have to fork over any fees to the card-issuing banks.

This happened on Friday. And then American Banker asked a bunch of industry experts and analysts what the settlement means. A lot of them said a lot of things! But one of them said something that spoke to ME AND MY PERSONAL EXPERIENCE AND LIFE (e tu, maybe?).

Overall, surcharging is a bad idea for merchants. Surcharging can cause consumers to think twice about their purchase at the checkout counter, but there’s more to it than that. … Forcing consumers to use a given payment type makes them consider how much money is on-hand in cash, in a [checking] account, and available to pay for the purchase, a mindset that can reduce the amount of goods and services consumers will buy and lower the average ticket price of sales for merchants.

—That’s Madeline Aufseeser, senior analyst at Aite Group (great website), explaining that it’s bad for everyone, except, if you read between the lines, maybe for people who might have spent an amount of money with a credit card without thinking, but once forced to think about that same purchase in terms of dollars, will decide: Not worth it.

I asked myself, what do I think of this? And: I will happily (“happily,” okay, not happily—resignedly?) pay a surcharge to use my card instead of using cash. I never have cash, so the choice is really: Go to the ATM across the street and pay a fee to get cash, or stay here, don’t move and pay to swipe? I’ll stay, thanks. I would do this right now, FYI. Cash-only is terrible and also the worst. And bad, too.

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32 Comments / Post A Comment

I think it’ll also make me more mindful of where I shop–I can’t imagine frequenting a store that makes me pay more for using a card. Maybe that’s unfair to the store, when I should be sticking it to the bank?

MuffyStJohn (#280)

@backstagebethy Yeah I am basically about 0% likely to pay a fee to use my card at any of these places.

I kind of want to see business get bit HARD in the ass for this.

dotcommie (#662)

@MuffyStJohn why? businesses aren’t the ones originating the fees, it’s the banks. i’d rather help out my local business by paying cash.

MuffyStJohn (#280)

@dotcommie Because I don’t carry cash. Very few people do. And I don’t care if it’s businesses or banks getting the money (and the banks can suck it too) – it’s a policy that is unfriendly to customers, and there are always enough alternatives that there’s no reason to deal with it.

dotcommie (#662)

@MuffyStJohn *shrug* i carry cash for budgeting purposes and a lot of people here have mentioned that strategy, so i doubt “very few” people do. i’m looking forward to the day that businesses start offering discounts to cash payers so i don’t have to subsidize people using a credit card to buy a coffee…

ThatWench (#269)

@dotcommie Okay, but here’s the part of the equation I don’t get: what about the extra time it takes to process people who pay with cash? As an everything-on-the-plastic person, I really do resent the extra 10 seconds it takes to wait for the transaction in front of me to process due to cash digging-out, transferring, and change-returning. And I know there are some businesses that really don’t like that time, either, especially when that 10 seconds is how long it takes for an entire credit card transaction, with time leftover.

I know this once again illustrates the gap in business models between the small family-run deli and the chipotle next door (which is why only the former has credit card minimums), but I feel like it would still be a consideration for a, say, Walgreens?

Megano! (#124)

Cash only is totally the worst! I’m not sure how it works in Canada, but we also use debit cards here all the time, and sometimes we have to pay a fee if it’s under $5. Which sure, fine, I will happily pay 50 cents or whatever. But I have had some people who don’t have the surcharge, which is really annoying now that I live in Toronto, becuase there are almost NO BANK MACHINES FOR MY BANK ANYWHERE CLOSE.

@Megano! where I work, a lot of the food places charge a fee no matter the price. Fuckers.

Megano! (#124)

@redheaded&crazy Whaaat?

I have two responses to businesses that charge a fee for debit/credit use (usually fast food places). I mostly carry cash around but sometimes I forget to take it out and then it’s food time and I’m hungry.
Response 1 (logical): fuck you jerks I’m going to take my money somewhere else!
Response 2 (illogical): wellll if I’m going to be paying a fee I better buy something pricier than I normally would so that at least the fee makes up a smaller percentage of the total!

moreteawesley (#545)

@redheaded&crazy My response is the first one. If I go in somewhere and find out that I can’t pay with a card at all or unless it’s over $30 or whatever, and I don’t have cash? I will leave. Sorry dudes. Even if you have an ATM in the store, because the machine will charge me AND my bank will charge me, and: no.

honey cowl (#1,510)

@moreteawesley You clearly need a bank that refunds all your ATM fees! Mine does. Charles Schwab. Check it out. They’re the best.

moreteawesley (#545)

@Lauren I will! I have Wells Fargo and I hate them, but nothing has seemed much better to me. Bleh, banks.

mishaps (#65)

On the other hand, so much for the “any leeway on the price if I pay cash for that?” gambit with repair persons and others I have dealt with in repairs and renovations to my home.

aetataureate (#1,310)

@mishaps Hey, don’t get too far down that road. Businesses will surely still like the non-reporting possibilities of cash.

mishaps (#65)

@aetataureate I feel so much better now. Bless you.

Woah, you still pay ATM fees? We need a come-to-Billfold moment where we discuss checking/savings accounts that refund all ATM fees, making every ATM fee-free.

theotherginger (#1,304)

@SomeoneIsWrongOnTheInternet what? those exist? have they made their way to Canada? (I have a no-fee account, but not a we-reimburse-you account)

@robyn.andrews I can’t speak on the matter of Canada. I have a Schwab high yield acct, and other banks like First Niagara (a regional bank here) keep sending me offers to open accounts that will refund ATM fees anywhere. Many credit unions offer the same.

jfruh (#161)

Since I use my debit card for the significant majority of my purchases, I’m always flummoxed about what the best choice of action is when I have to chose “credit” or “debit.” Generally the choice affects me only in how convenient I find signing things vs. putting my PIN into a keypad. Though my credit union does give me some small amount (5 cents, I think?) of cash back when I use it as credit, so clearly that’s what’s good for them. But is there some ethical aspect I’m missing? A way to help out the stores where I shop, maybe?

dotcommie (#662)

@jfruh Debit is a lot cheaper for businesses than credit, so I choose the debit option when it’s a store I want to help out. I do choose credit at big box stores because I try to minimize the number of places I give out my PIN (for data security reasons).

dotcommie (#662)

Businesses aren’t charging fees for cards to be mean to you, they’re charging fees for cards because THEY’RE getting charged fees. Be mad at the payment processors, not your local businesses.

I always try to pay cash when shopping at a business I like and support because I know how much swipe fees eat away at their profits. If it’s Walgreens? Whatever.

Iglooramous (#1,397)

I am a most indignant consumer when charged fees to buy things. I usually walk away from the counter empty handed except for my moral righteousness. And walking away from Rite Aid with your moral righteousness is very different than walking away from Rite Aid with the shaving cream you’ve needed for the last two weeks.

navigateher (#555)

This is a classic case of “let’s invent a fee / make stuff cost more, because that equals more money!”. I find it hard to believe that the banks don’t actually understand that the fees could very well have exactly the opposite effect. Who do they think will actually profit from this?

City_Dater (#565)

@navigateher

The banks themselves profit, in the short term, which (as we have seen repeatedly) is the way of Big Anything now: don’t consider consequences, just get all the possible profit before the next hammer falls.

thenotestaken (#542)

My (Canadian) bank charges me fees for using my debit card for more than 10 transactions a month (this includes both store purchases and anytime I use an ATM, even the bank’s own), and this is with a 4$ monthly fee as well. So cash is wayyy more handy for me, though I don’t like this as I find I spend easier with cash than when I have to actually take out my card. Also, I need to find a new bank.

@thenotestaken PC financial! no fees, unlimited monthly withdrawals/debit use. The catch is no bank tellers, which can make it difficult to, for example, deposit cash, and can take longer for funds from cheques to become available.

I switched from BMO. One other downside: having unlimited debit transactions is dangerous!

Fig. 1 (#632)

@redheaded&crazy Caveat: my friend has a PC Financial card, because it’s the cheapest. However, he’s had very poor service, his card doesn’t always work, and getting ahold of anyone for service is terrible. So, you save money, but not peace of mind (or at least in his case.)

I use cash or credit for most things, debit for groceries (joint acct.) I get points on credit, and I pay it off every month. Cash can sometimes net you a better deal, and less paper trail if you’re concerned with those things. Also it’s quicker. Two weekends ago ALL the debit/credit machines went down at ALL of the Loblaw’s stores in town. Massive clusterfuck, and underscored the need to at least have a bit of cash on hand at all times. It was a little scary in fact, as a tiny taste of the apocalypse. (I guess nobody likes to acknowledge how tenuous the idea of currency is.)

thenotestaken (#542)

@redheaded&crazy Just checked it out, but “PC Financial personal banking products are not available in Quebec” WHY IS THIS PROVINCE SO FRUSTRATING. I’m also kiiind of tied to RBC (ha, outed them) because they have a US branch as well which makes it free for me to transfer money between the US and Canada, which is handy for this American expat. Also they have ATMs EVERYWHERE.

Cash all the time isn’t too bad for me though, since I write the rent check for my apartment every month and my roommates pay me in cash. I deposit most of it, but keep enough out that I have cash for the next while that didn’t require a transaction to obtain.

cryptolect (#1,135)

@thenotestaken Funny… here the banks charge you if you use your debit card *fewer* than 5 times a month. Damned if you do, etc etc etc.

What impact does this have on card minimums (which I believe are currently against payment processor policy?) I often eat breakfast at a little cafe with a $5 minimum, and fortunately my usual sausage egg and cheese bagel + small coffee is $5.07. But then sometimes I decide I’m really thirsty and I actually want a $1.49 water and I have no cash, and the nice Korean lady will run my card anyway, but then I feel bad… wait where was I going with this?

dotcommie (#662)

@stuffisthings i believe everything will stay the same, it’s just that businesses don’t have to break the rulez now when they have card minimums

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