Bloomberg Businessweek May 10, 2021 pp16-17 |Business|”More Merchants Are Courting Cash” “Surcharges for credit card purchases become common as businesses try to avoid swipe fees” “The Bottom Line Payment processors are devising surcharging programs for small businesses, which means purchases made by credit cards cost up to 4% more.”
Image paymentdepot.com Range of total charges to merchants.
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Summary provided by 2244
“Processing fees on card transactions as a share of purchase volume in 2019” American Express 2.3%, Visa/Mastercard credit 2.3%, Discover 2.2%, Private label credit 1.2%, Visa/Mastercard debit 0.7% and PIN debit 0.7%.
How Amercians pay in 2021. Image paymentdepot.com
Small merchants feel the pain and some are willing to show you the money by “discounting” cash payments or surcharging credit card payments for goods and services by as much as 4%. One merchant commented “’I’d add up the monthly bill [from credit card companies], and it would come to $600. It would be about 3% of my sales.” So, in a time fueled by a push by credit card and digital currency companies and germophobes worried about contact-spread of COVID and other infectious disease, small merchants want to reward cash-paying customers directly. “Credit cards that reward customers with cash back or travel points have higher transaction fees that other cards…”. Jerry Walsh, owner of Mayday Hardware (Brooklyn), comments “If I’m the one paying for the reward, shouldn’t I get the credit for that?” Credit card companies pushed back historically but as of 2013 anti-trust suits were settled that truly facilitated cash discounts. Having noted federal rules, there may be state by state laws that complicate implementation.
Another fee taking middleman in credit card payment stream, “most payment processors in the U.S. offer a program that automatically calculates surcharges or discounts and properly displays them on receipts…”. But industry groups “insist that big merchants will never risk alienating their customers by making them pay their transaction costs.” An American Express study in 2020 claims “that three-fourths of consumers would refuse to pay a surcharge-they’d pay cash, shop elsewhere, or leave empty-handed.” Small shop owners comment on their experience, saying there was resistance initially to surcharges, and some conversion to cash but ultimately there’s an acceptance of credit card fees as “a way of doing business.”
For a merchant it is a complicated path leading to the average transaction cost of accepting credit cards etc. Image paymentdepot.com