New Credit Card Charges?

[Toni Northrop]

I know there is a percentage on each credit card transaction, does anyone know about what it runs?

[Jim O'Bryan]

I know there is a percentage on each credit card transaction, does anyone know about what it runs?

Toni

I have heard of everything from 1.6% to 7% for use of a card without swiping it, to the
the seller. One reason that places like ebay do so well. Avoid minimum charges, and
low rate.

I was at a title bureau today, and there was a sign that said a 3% on anyone using a credit
card to pay for title, or other purchases, and they sighted and Ohio ordinance.


FWIW


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[David Lay]

I was at a title bureau today, and there was a sign that said a 3% on anyone using a credit card to pay for title, or other purchases, and they sighted and Ohio ordinance.

Ordinance or not, I wonder how they can get away with that, since I'm sure they agree to the same Merchant Agreement as any other business.

[Will Brown]

I recently talked to a merchant about this. He said the card processing companies charge a certain percentage (and for some small or new businesses it is a surprisingly high percentage), but they have a minimum charge, so if he takes a credit card for a small purchase (his cut-off is $10), he actually pays far more than the normal percentage that he is charged.

So his attitude is that he will ignore the contractual provision barring having a minimum for use of the cards, as a convenience to his customers. But if someone reports him, he will just stop accepting the credit cards, and thus increase his profits.

The idea that credit card fees can be built into the pricing is naive. If one merchant sells an item for $15, but doesn't take credit cards, while another sells the same item for $16 and takes credit cards, few people will pay the higher price for the same item.

[Jeremy Hoag]

The idea that credit card fees can be built into the pricing is naive. If one merchant sells an item for $15, but doesn't take credit cards, while another sells the same item for $16 and takes credit cards, few people will pay the higher price for the same item.

On any purchase above the minimums, we're talking about a 2-5% difference, which strikes habitual card users as far more convenient than a trip to their bank or an ATM fee. I don't fault those businesses who have a minimum for credit card purchases, and will gladly spend more money on their products for the convenience of using my card, but I also frequent businesses that do most of their credit transactions around the $5-6 mark and still manage to profit.

The fact is, for most businesses it's not a matter of competing with someone else who doesn't have credit card fees, so everyone is building processing fees into their pricing. Those businesses that don't accept cards have a pricing advantage, but they're turning away an ever-larger customer base who rely on cards as their primary currency.

I do wish merchants the best of luck in negotiating better terms and/or seeking legal protections in their dealings with card processors. At present, card companies are in such an advantageous position over individual business owners that they have no reason to negotiate. I don't see that changing unless small business organizes some kind of entrepreneurs' union that can negotiate with the clout of Costco, Applebees or Target.

[Jim O'Bryan]

Reported on MSNBC this morning all credit cards raising rates across the board before
law makers put in limits.

FWIW


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