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It costs merchants significantly less to process debit card transactions thanks to federal laws passed a few years ago limiting the amount that banks can charge to process debit transactions. When that happened, banks stopped all rewards programs for debit card purchases. I believe the year was 2010, as I was forced to cash in my rewards points from my debit card. It suits me just fine as I don't use my debit card unless necessary because there is no fraud protection because it is really no different than handing the merchant cash.
I always pay with a credit card to take advantage of their rewards. I have been playing the game using several cards since 1989 and they have treated me well. Just make sure that the card has no fees and pay the charges in full each month and you can reap the rewards.
Frankly paying cash is not the way I do business. The merchant prices products anticipating having to pay a merchant card fee and rewards points. If I walk into a store and pay cash I will end up paying 2 to 3% more than a customer paying with a rewards credit card.
I buy everything on my credit card. I get 1% back on normal purchases and 2% back on gas and groceries. If I spend 100 dollars at the Kroger Grocery store I get 2 dollars cash back. If I paid cash? = Nothing.
I pay it off every month. I can use the cards website to track my spending. I have 100 dollars cash stuck in my wallet that has been there for over two years now- can't remember the last time I used cash for a purchase.
Everything I buy and all bills (except electric and HOA) are on my credit cards. Sometimes I even get quintuple points. The cash back or gift cards are too much to give up. I always pay in full every month.
No business other than a Mom and Pop will ever charge more for credit card purchases. In some states it is illegal. The ones that think AMEX are too high usually don't take it to begin with.
I use a card almost always, but I pay in full. It's about the cash back, not lacking the cash to buy. I also don't think most merchants are going to risk chasing off customers. Down here, I've seen the opposite, stores that are rewarding shoppers who use cash, vs punishing those who use credit. Over a recent end of season block party and citywide sale, a few stores had signs that said "Everything in store: 40% off for cash customers, 20% off for credit card customers". You better believe I used cash in those stores!
I personally don't like being paid in cash at my business. I'm usually alone, I start with X amount of cash, and can run out of small bills in a very short time when someone slaps down a $100 right out the gate or everyone is buying $5 worth stuff with the $20's they just got from the ATM. I've had to put up signs saying "exact change or CC only" on several occasions.
I don't want to carry around a bunch of money or a checkbook either. People who say nobody should use CC's have usually got in trouble with them...but that's a personal flaw and not my problem.
They may also be using them to build their credit score.
Using them doesn't particularly do anything to build your credit score.
I'm fine with charging the extra fee. It should be passed along to the consumer, most of whom don't realize how much of a retail stores margins are being eaten up by transaction fees.
Well we're are screwed either way....if you use your card as a debit, it's cheaper, but less secure, you should never input your PIN number. If you use it as a credit then you pay more.
In 2-3 years, credit cards are going to a 'chip and pin' method.
I'm sure that some of you already have the new cards that are not embossed, which means if a store's CC processing is down, the old "chunk-chunk" machine (There's a technical name for it, but everyone seems to know what I'm talking about when I call it that.. Maybe 'impression' machine?) is worthless.
Supposedly, by 2015 in the US (This is already in effect in Europe) CC processing at the point of sale will read an RF chip in the card, and you'll enter a PIN number to complete the purchase.
I believe this is supposed to lead to the phasing out of the mag stripe on credit cards.
As for fees.. They vary from processor to processor and really add up. Walmart actually does all their processing in-house, but they're about the only one big enough to do that. I think 'average' on CC trans are about 1.5% plus a dime per transaction or so. Whereas debit cards are generally a flat 15 cents or so per transaction.
There's also a difference between whether a card is swiped or keyed. If you take your card to a merchant and they have to key it in, because your card won't read from the mag stripe, it comes close to doubling the fee. The biggest place I've seen an issue on this is places like bars, which do a 'pre-auth' and hold your card number in the POS, in case you get so drunk you walk out without paying. They'll pre-auth the card for $20 or so, to make sure it's good, it has money available on it, and then finalize it when you're finished. Those transactions, even though the card is swiped on the initial pre-auth, since PCI compliance does not allow the storing of track 2 data, only the card number and expiration, when they're finally processed through, if they don't swipe the card again, it's a keyed transaction.
As for the higher charge to use a CC.. Some states allow it, some don't. The feds say it's OK. Gas stations around here compete with each other on that. One of the advertising points of Hickory Tavern (A small chain that is now owned by 7-11) is that they never charge you a higher rate for using your CC. The stations that DO charge a higher rate, it's only on CC purchases. If you use debit, it's same as cash, and it's generally 10 cents per gallon difference.
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I don't want to carry around a bunch of money or a checkbook either.
I actually saw someone writing a check at Walmart the other day.. First time i've seen that in years. I opened a checking account with USAA after Wells Fargo ticked me off.. Maybe 3 years ago.. I have used 5 checks in that time. 3 of them were paying my health insurance when I was self-employed because they wouldn't take plastic.
...It suits me just fine as I don't use my debit card unless necessary because there is no fraud protection because it is really no different than handing the merchant cash.
My debit card has fraud protection, my liability is limited to $50.
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Originally Posted by Ceece
I personally don't like being paid in cash at my business. I'm usually alone, I start with X amount of cash, and can run out of small bills in a very short time when someone slaps down a $100 right out the gate or everyone is buying $5 worth stuff with the $20's they just got from the ATM. I've had to put up signs saying "exact change or CC only" on several occasions.
I don't want to carry around a bunch of money or a checkbook either. People who say nobody should use CC's have usually got in trouble with them...but that's a personal flaw and not my problem.
I like people paying me in cash, I've been retreating to the 'underground economy' for years. My wife just did a paper on the underground economy for her Business Law class. The UE is growing, though in the area I live it has been pretty much a given all along. Taxation keeps increasing and I need to keep as much of my money as I can, it's becoming a matter of survival.
My debit card has fraud protection, my liability is limited to $50.
I like people paying me in cash, I've been retreating to the 'underground economy' for years. My wife just did a paper on the underground economy for her Business Law class. The UE is growing, though in the area I live it has been pretty much a given all along. Taxation keeps increasing and I need to keep as much of my money as I can, it's becoming a matter of survival.
If I personally was keeping the money and could set a price and have someone give that to me I'd be all about the cash too.
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