burden@cheers.DEC (Dave Burden --- 381-2559) (08/13/84)
<munch munch munch.........> A bunch of us were discussing credit cards and how they change your spending habits. In the conversation someone brought up the point that stores are charged a fee for every credit card transaction, around 3% of the purchase I think. Here's the question: if you go into a store and decide to buy a washer or something and you pull out your charge card like you're going to use it, then ask the salesperson if you paid in cash could they take the 3% off the price? Is it legal for the store to do this? Gas stations have different prices for credit and cash sales. But isn't there some federal act that prevents charging different people different prices for the same object (or service)? Also would the answer be different in various states? I'm not a subscriber to this net so please send responses directly to me. Thank you. Dave Burden decvax!decwrl!rhea!cheers!burden 603-881-2559 DEC Nashua, NH "He was a cruel man, but fair"
dee@cca.UUCP (Donald Eastlake) (08/15/84)
It is my understanding that the merchant agreements that you generally
have to sign to be able to accept credit cards prohibit your charging
any extra fee for the credit card. However, there is nothing to stop
you from giving a discount for cash, as many gas stations do. This means
that people paying with credit cards or checks are in effect paying for
the extra service they receive. (Check guarantee services charge an
amount comparible with credit card fees.)
--
+ Donald E. Eastlake, III
ARPA: dee@CCA-UNIX usenet: {decvax,linus}!cca!deejohn@hp-pcd.UUCP (john) (08/16/84)
A merchant can charge you less if you pay cash instead of Plastic. Many will do it because their profit is the same either way. Most fair trade laws give the merchant the right to sell at any price they feel like. Thats why a "suggested retail price" is just that, a suggestion. Forcing a merchant to sell something at a set price is called "price fixing" and is one of those things that you don't want ot get caught doing. For some reason the American culture has never picked up on creative bargaining the way other cultures have. John Eaton !hplabs!hp-pcd!john
wales@ucla-cs.UUCP (08/22/84)
Regarding the laws that say you can't impose a surcharge for using a
credit card, but you can give a discount for cash, I question whether
there really is a workable difference between these two situations.
Case in point: A sci-fi bookstore here in West L.A. ("A Change of
Hobbit") has posted a sign at the cash register saying approximately
the following:
You are welcome to use MasterCard or VISA, but please note
that our actual prices are 4% above the marked prices. We
give a 4% discount for payment by cash or check.
(I think it was 4% -- might have been 5% or 6% -- but the principle is
the same in any case.)
In actual practice, of course, the store uses the prices marked on the
books to compute the amount of sale -- then tacks on an extra 4% if you
pay with plastic.
As far as I'm concerned, this is nought but a thinly veiled 4% surcharge
for using a credit card -- yet, since nothing says a merchant has to
charge the manufacturer's suggested retail price on a book, it seems to
be perfectly legal!
Two questions regarding this practice:
(1) If the above travesty is legal, then it seems to me that there is no
point in distinguishing between "surcharge for credit" and "discount
for cash". Either both should be legal, or both should be illegal
-- allowing one but not the other seems unworkable unless you are
prepared to "go all the way" and impose price controls.
(2) If the above is a violation of current laws, what regulatory agency
should I contact in order to get the merchant in question to change
his policy to conform to the law?
--
Rich Wales
UCLA Computer Science Department
3531 Boelter Hall // Los Angeles, CA 90024 // (213) 825-5683
ARPA: wales@UCLA-LOCUS.ARPA
UUCP: ...!{cepu,ihnp4,trwspp,ucbvax}!ucla-cs!waleswales@ucla-cs.UUCP (08/23/84)
I decided to follow up on the merchant whom I reported as having a credit-card surcharge policy, thinly disguised as a cash discount policy. I talked to my bank and gave them the "reference number" of a credit-card transaction I had about a year ago with the merchant (I got this mile-long number from my monthly credit-card statement). Appar- ently, the first few digits of this reference number identify the bank through which the merchant negotiated the credit slip. I then called the toll-free customer-service number of the merchant's bank (who sup- posedly could apply appropriate leverage if the policy in question was out of line). What I was told was that the law which forbade surcharges on credit- card purchases expired a few months ago and was not renewed. Hence, if a merchant wants to impose a surcharge on credit purchases, he can apparently do so totally "above board" now. Seemingly, the only reason merchants have not done this in masses and droves is that they are afraid of driving their customers away. I remember now that there was some talk about this issue a few months ago, but somehow I guess I thought that the old law had been restored. (The credit-card companies, for one, were lobbying powerfully in favor of extending the law -- they didn't want to lose business because of merchant surcharge policies leading people to eschew credit.) Does anyone know the current status of anti-surcharge legislation in the U.S. Congress? And my original question still stands, after a fashion: Does it make sense to ban surcharges for credit, while at the same time allowing discounts for cash? If all a store has to do to be legal is post a sign saying that its "real" prices are X percent above the markings on the shelves or the merchandise -- but that you can get an X-percent discount for paying with cash -- then something is (or was) clearly wrong with the law.
stanwyck@ihuxr.UUCP (Don Stanwyck) (08/24/84)
Even before the law expired that banned credit sur-charges, it was legal to offer cash discounts. It was simply that you could not *add* to the price for using credit. Many stores did in fact have ~5% discounts to cash buyers. This is in someways related to the very common business practice that is sometimes refered to as "2 in 10, net 30", where you may take a 2% discount if you pay the invoice within 10 days, or pay the net value of the invoice within 30 days. It comes down to who gets the use of the money, and when. Not all banks immediately post the credit sales to the merchants account. Some may (I am not sure) post only a percent. I have been with businesses where the bank withheld payment for 5 working days for credit slips, and others where the bank posted immediately. The former was an outlet that seemed to draw a (relatively) large number of bad charges. This is, of course, a common practice (delayed posting) for checks tendered. The merchant has a hold on the account until time for the check to have had a fair chance of clearing. -- ________ ( ) Don Stanwyck @( o o )@ 312-979-3062 ( || ) Cornet-367-3062 ( \__/ ) ihnp4!ihuxr!stanwyck (______) Bell Labs @ Naperville, IL
ag5@pucc-i (Henry C. Mensch) (08/28/84)
The only place where I have seen this phenomenon is in gas/service stations in various places around the country. It seems fair for the merchant to offer a cash discount since (a) he offers the customer a convenience by taking a bank card draft for payment (I don't believe that bank cards (VISA, Mastercard) constitute legal tender.) and (b) the merchant bank usually charges a "small" surcharge for the processing of bank card drafts. As a user of bank cards, I have never experienced the cash discount/credit markup in a store. Oh, well. . . Guess I was lucky . . . . ~? Cheers, Henry C. Mensch Purdue University Computing Center ..... ! pur-ee ! pucc-i ! ag5
shaprkg@sdcrdcf.UUCP (Bob Shapiro) (08/30/84)
In article <pucc-i.415> ag5@pucc-i (Henry C. Mensch) writes: >The only place where I have seen this phenomenon is in >gas/service stations in various places around the >country. It seems fair for the merchant to offer a cash >discount since (a) he offers the customer a convenience >by taking a bank card draft for payment (I don't believe >that bank cards (VISA, Mastercard) constitute legal tender.) >and (b) the merchant bank usually charges a "small" surcharge >for the processing of bank card drafts. > >As a user of bank cards, I have never experienced the >cash discount/credit markup in a store. > >Oh, well. . . Guess I was lucky . . . . I own a small business and I think I understand a little about the above problem. Yes it is true, the credit card people charge the merchant as a per cent of the transaction. Different credit card companies charge different per cents and volume and type of merchandise also comes into play. The reason a merchant accepts credit cards is that they are guaranteed not to bounce if the merchant handles the credit card correctly. i.e checks the signature, does reasonable check to ascertain that the credit card holder is in fact the owner of the credit card, determines that the card is not on the bad list, and receives an authorization from the credit card company if the credit card amount is above the floor limit set for his business. Compare this against a personal check and you see that the per cent going to the credit card company is payment for that guarantee. The obvious question then is how about cash? Well cash is not as great as one might think to a merchant. First of all the security problems are immense. It does little good to stick up a store and take its checks and credit card slips, but the cash is quite negotiable. Therefore, a business with a lot of cash must have special provisions for storing it safely and also making change. (Witness all of the taxis and gas stations which do not take anything bigger than a $20 bill.) One other nice feature about not using cash is that your employees are less tempted to dip their hands in the till, and there is no problem with making change quickly and accurately. On the other hand (I must sound like Fiddler on the Roof) the merchant has a float problem with credit cards as there is a delay between getting the slip signed from the customer and having the money credited to the business checking account but refunds turn out to be a reverse cash flow problem. Finally, and probably the most important reason for accepting credit cards in a business, is that there is a large number of credit card users out there who take umbrage with the fact that they are charged more than the cash people. They must use the credit card because of record-keeping, cash flow, or whatever and they will not look kindly on a merchant who appears to stick it to them by offering the cash customers a discount. World Air Lines used to charge more for credit card tickets than cash tickets but changed due to the pressure put on them. I know the cash customers think they are getting the shaft, but since it is an overt and open act to placate them, most merchants take the easy way out.
hawk@oliven.UUCP (08/31/84)
[how many of you think BofA stands for "Bunch of A**h*****?] >the merchant bank usually charges a "small" surcharge >for the processing of bank card drafts. small? Small? SMALL???!! A local merchant griped to me that the charges on Visa had just gone up, again--to 8% (that's right, eight percent, roughly one-twelvth of the purchase, larger than some folks's profit margins.) The icing on the cake is that he can't even say no to this outrage, because he'll lose customers. Ain' t BofA great? He said Mastercard only takes 4%. -- rick (Rick Hawkins @ Olivetti ATC) [hplabs|zehntel|fortune|ios|tolerant|allegra|tymix]!oliveb!oliven!hawk
robison@eosp1.UUCP (Tobias D. Robison) (09/07/84)
References: Regarding the store in Ca. that posts a sign saying that their actual prices are 4% above what's marked on each book, and a 4% discount is given for cash... FIRST: This must be illegal in some places, but you have to check state and local laws. In NYC, I'm sure that correct prices must be posted on each item, so the policy would be illegal. SECOND: This store's arithmentic won't work, and you might as well take advantage of them. FOR EXAMPLE: Say they mark $20 on a book. The actual price is 4% higher, and there is a 4% discount for cash. So: 1.04 * $20 * .96 = $19.968 = $19.97 Be sure they give you the 3 cents off marked price for paying cash. - Toby Robison (not Robinson!) allegra!eosp1!robison decvax!ittvax!eosp1!robison
djmolny@wnuxb.UUCP (Ron Heiby) (09/07/84)
In answer to the question about "what regulatory agency should I contact in order to get the merchant...", the answer is "none". You should write the proprietor a letter stating your views, cc the local newspaper and stop patronizing the establishment. If the store is violating its agreement with its credit card processing agencies, then they should cancel their relationship with the firm. It is none of the government's business whether or not an extra few percent is charged for books sold via a particular method of payment. Down with governmental intrusion into the private sector! Up with free markets and consumer boycotts! Have fun. Ron Heiby. ------- If these are not the views of my employer (and they may not be), I'll bet they won't admit it. Just don't go around assuming anything. RH.