Charging a customer more for using a credit card (Philadelphia: sales, houses)

[phillytransplant13]

Does anyone happen to know if Pennsylvania allows merchants to charge a customer a "surcharge fee" for using a credit card? I thought it was illegal, but a quick Google search says otherwise (at least in PA). There's other layers of complexity: can you give a cash discount? Does Philadelphia have specific laws that are stricter than Pennsylvania? What about the card companies (Visa, AMEX, MC, etc.)? Do they have a say in what merchants can/can't charge?

Thanks

[chessimprov]

This could be a practice nationwide. Some places, if you don't spend a minimum, they will charge extra. They should let you know beforehand though. Contractors and sellers at conventions that don't warn you beforehand are the ones that bother me the most. Everything should be itemized out to be professional.

[1ondoner]

You may not realize it but credit card costs are part of pricing for ALL merchants.

It's usually factored into the price of the service or product. Just like rent, payroll, profits, etc. I've seen merchants offer cash discounts, minimum purchase requirements, etc. All this is meant to encourage the use of cash. On the other hand, cash handling is a big issue in business. For obvious reasons, it's better to accept credit card payments because you don't have to deal with cash issues and it makes accounting easier.

IMHO, businesses that prefer cash over card payments do so for tax evasion purposes. They are most likely, under reporting their sales as it is possible to keep separate books for cash transactions.

Originally Posted by phillytransplant13

Does anyone happen to know if Pennsylvania allows merchants to charge a customer a "surcharge fee" for using a credit card? I thought it was illegal, but a quick Google search says otherwise (at least in PA). There's other layers of complexity: can you give a cash discount? Does Philadelphia have specific laws that are stricter than Pennsylvania? What about the card companies (Visa, AMEX, MC, etc.)? Do they have a say in what merchants can/can't charge?

Thanks

[2e1m5a]

Originally Posted by 1ondoner

You may not realize it but credit card costs are part of pricing for ALL merchants.

It's usually factored into the price of the service or product. Just like rent, payroll, profits, etc. I've seen merchants offer cash discounts, minimum purchase requirements, etc. All this is meant to encourage the use of cash. On the other hand, cash handling is a big issue in business. For obvious reasons, it's better to accept credit card payments because you don't have to deal with cash issues and it makes accounting easier.

IMHO, businesses that prefer cash over card payments do so for tax evasion purposes. They are most likely, under reporting their sales as it is possible to keep separate books for cash transactions.

Or, they'd rather not deal with credit card transaction fees, and receiving payment at a later date. Cash is always preferable and not just to "evade taxes".


I've never really seen businesses (except gas stations) charge more for using a credit card though, but there are minimum purchase requirements at just about anywhere.

[phillytransplant13]

Thanks, but the question is really moreso is it legal or not to charge the customer more for using a credit card? Not roping the fee into the price of the product/service, but rather passing through the cost directly to the customer. i.e. instead of a service being $20, it's $22 if you use a card. I can't find an answer to this online.

[groar]

it's not illegal. however it's often specified that you can't do that in the agreement the retailer makes with their credit card processor. having a minimum charge before people can use a credit card is also often a breach of the agreement. so stores that do those things are not breaking the law but they may be in breach of contract and could risk losing the ability to take credit cards. i have no idea how many credit card companies/processors have that policy or enforce it.

[1ondoner]

Credit card funds are usually available the next day. If merchant requires funds immediately, then they have cash flow issues. Handling cash in a business brings all sorts of issues. Just because one is not paying merchant fees does not mean there is no cost associated with receiving cash.

You also need to understand that customers spend less when they are paying with cash as opposed to customers who pay with credit cards. So if one is discouraging use of cards, they are stiffing their sales. Credit card customers will spend more. They are not limited to bank notes in their wallet and can use their future income.

Personally, I rarely use cash. Cash is also dirty so I will do anything to avoid receiving change.

Originally Posted by 2e1m5a

Or, they'd rather not deal with credit card transaction fees, and receiving payment at a later date. Cash is always preferable and not just to "evade taxes".


I've never really seen businesses (except gas stations) charge more for using a credit card though, but there are minimum purchase requirements at just about anywhere.

[MarketStEl]

Originally Posted by 1ondoner

Credit card funds are usually available the next day. If merchant requires funds immediately, then they have cash flow issues. Handling cash in a business brings all sorts of issues. Just because one is not paying merchant fees does not mean there is no cost associated with receiving cash.

You also need to understand that customers spend less when they are paying with cash as opposed to customers who pay with credit cards. So if one is discouraging use of cards, they are stiffing their sales. Credit card customers will spend more. They are not limited to bank notes in their wallet and can use their future income.

Personally, I rarely use cash. Cash is also dirty so I will do anything to avoid receiving change.

I think both you and 2e1m5a are projecting your own preferences onto the world here.

Usually, I find that independent smaller merchants are the ones who set minimum purchase requirements for credit cards. Given their sales volume, it's entirely believable - at least to me - that the merchant fees eat into their bottom line in a way they wouldn't at a larger business or chain or franchise operation. The "costs" of handling cash usually work out to time spent, not money lost, and since these merchants often deal with lots of cash customers anyway, they're really spending not that much more time counting the cash from the disallowed credit-card purchases. Most of the stores I've run across that do this are also of the corner-grocer/bodega variety and so don't get lots of "big-ticket" purchases of the kind I think you're referring to either.

But as for this practice being found "just about anywhere"? Maybe in the geographic sense, in that you'll find businesses that do this in rich as well as poor neighborhoods (though in my experience it's more common the further down the socioeconomic ladder you go), but in terms of total number or share of merchants, it's not that large.

Y'know, I'd be glad to give you a walking tour of the low-socioeconomic-status neighborhood I call home. The statistics improve a good bit on the next block north, and there's a Catholic university five blocks south and a well-known Catholic shrine two blocks west. (Most of the residents aren't Catholic, though.) And I can round another corner about three blocks away and walk past large, well-maintained houses, one of which was recently purchased by this city's leading gueriila preservationist. I'll bring hand sanitizer.

[thedirtypirate]

Originally Posted by MarketStEl

Usually, I find that independent smaller merchants are the ones who set minimum purchase requirements for credit cards.

That is not always true. I have noticed at a lot of gas stations, particularly in NJ, that have two prices for gas. One for cash and one for card.

[1ondoner]

Seen a lot of these. The discount is usually a 1 or 2 cents per gallon. Which comes to less than 30 cents per fill. Not enough to entice me but psychologically it registers as a reward for customers and I guess they pay by cash.

Originally Posted by thedirtypirate

That is not always true. I have noticed at a lot of gas stations, particularly in NJ, that have two prices for gas. One for cash and one for card.