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I am having the following dilemna:  My business is about transparency, and I am struggling with the whole issue around accepting credit cards.


Simply put, credit cards are an expensive rip off.  Both the consumer and merchant pay to use them.  Small merchants pay close to 5% when all is said and done (1.9% to Visa, plus merchant fees, plus their internet connection fees, plus equipment fees, plus bank fees, plus the cost of their time to reconcile everything monthly).


The average consumer has no clue how much businesses are charged, because most merchant agreements have up until recently forbid the merchant from charging service fees at the time of the sale.  As a result, most businesses have simply increased their prices across the board, building the fees into the overall cost of their product.


But what about the cash buyer??  50% of my customers pay in cash.  Why should THEY subsidize the person who buys $200 worth of bars on his Master Card?  Mr. $200 purchaser doesn't want to pay ATM fees, but they don't realize that the ATM fee is just $2.50, whereas the cost of that order to them for using their credit card is $10. The merchant certainly isn't going to suck it up.


What's worse is that as a consumer I don't see many merchants giving incentive to pay cash.  Instead they are grabbing the extra $$ from the cash customer and hanging on to it.  The cash customer is subsidizing the credit card buyer, and to me that's not fair.


The question I have is, AS A CONSUMER, (not a business owner) which option would you feel better with?

A) The price be increased overall by 5%, and cash purchasers offered a 5% discount.

B) The price be what it is and know what you are being charged for the "convenience" of using your card.


Personally, to me A is deceptive, but that's just how I am.


There is no right or wrong answer here.  I am just soliciting feedback.





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As a consumer, I put everything on a credit card because 1-It is easier, 2-I can track where I spend my money, 3-I get cash back at the end of the year (a percentage of all charges). I rarely carry much cash. I also pay off my card each month so I don't have any fees.  I think most people assume the fees are built into the price.  As a business owner, I have to accept credit cards. Online sales would be non-existent (I know, you don't do that). Also, at pop-up markets, which I rarely do, they are a necessity. Square is perfect, fees are low, and it is on your smart phone or iPad. Bottom line--I vote for B.

Thanks Ruth.  We actually do offer online ordering, but it's for pick-up in our stores.  The online event booking does require credit card use.  We have been accepting cards for event booking since day one.


You're right.  Square is great for individual proprietors.  I see it all the time at farmers markets and outdoor markets. 


Cheers.  Brad.

Someone recently mentioned to me that they have some sort of square in-store device so they can take advantage of square's low fees. While not an answer to your original question, it may be worth looking into as a way to lessen the difference between cards & cash. 

Square works great for sole proprietors, but doesn't work for multiple bricks and mortar retail locations with multiple staff.  Square also only works on Iphone.  Won't work for my application, as I have multiple stores and am now signing up dealerships.

This device was targeted at brick & mortar retail locations. I just looked into it and it looks like it doesn't really take multiple stores into consideration. All of the sales would probably just show up in the same account with no differentiation.

Side note: Square works on Android too.

As a consumer I (we) have been trained to accept that credit/debit card price and cash price should be the same. This is good marketing on the part of card companies. Deviating from this would require endless explaining.
That said if I were able to be a consumer of your products, I think I could come inboard with a cash discount or another incentive such as a drawing for a class or box of truffles.
Knowing that you have a loyal base and they are accustomed to exceptional clarity I think they could catch on quickly.

Would I get the same price for a check as cash?
Also just thought of an advantage if the mix of payment methods. Cards are faster than checks and sometimes faster than cash.

Great discussion topic.

Thanks Larry.

I Really like the idea of a draw for event tickets.  That's an $80 value!


We currently accept corporate cheques only, as personal cheques here in Canada are more or less a thing of the past.  Here in Canada the big thing is Interac (debit).



I pay for almost everything in cash, when possible.  Obviously i'm having a hard time sending $20 bills through the internet, they keep getting stuck in my dvd slot for some reason. must be a jam.  anyway, CC's are terribly convenient, but, as you note, expensive.  I've also gotten in the habit of asking merchants if there are discounts for cash - i was surprised by how many offered up to 10% discounts simply for me paying cash - now, some don't (any store that's a major retailer or chain, for example), and that's fine.  

Interestingly, a few years ago my wife had her identity stolen and a bunch of things put on a CC under her name. the charges were reversed, yadda yadda, but we wanted to take it further and nail the guy.  the CC company effectively said that this was simply the cost of doing business, and there was no intent to further pursue/prosecute it from their end.  Basically they just told the criminals they've got a very, very low chance of getting prosecuted, making it such a tempting target to continue to do more theft.  Part of those transaction fees are going to subsidize that cost of doing business.

I prefer to pay for everything possible with CC. It is very convenient for me to not have to carry cash plus I can track expenses. I do think most consumers have an idea of what it costs the vendor to accept CCs but maybe they don't factor in the Internet and equipment costs. That said, I still think accepting CCs is a cost of doing business. I can understand a small vendor having a sign up saying they only accept cash but for some reason I find it annoying when a place has a sign up saying they charge less when you pay with cash. Locally there is a place that does this for a commodity you can buy at various places. Their cost, even at their "reduced cash price" is higher than you can buy it elsewhere and pay however you want.

I am also the customer who would not be incented to pay cash for the possibility of winning a basket of goodies. I look at those giveaways as a way for the store to collect my personal information for the mailing database.

Where I live, I have not found stores willing to offer a discount either when I buy in bulk, buy an expensive item or pay in cash especially for an expensive item. I have asked! I can't see a store lowering their prices overall if they decided to not accept CCs - I think most would simply keep prices where they are and pocket the difference.

Keep us posted on how you decide to handle this. It would be interesting to see the response down the road if you decide to offer a cash discount to see if it caused confusion with the customers (I.e. how much time do you take out of the day explaining the specifics to customers) or if they seem to really love it and it maybe boosts your sales.

"...but for some reason I find it annoying when a place has a sign up saying they charge less when you pay with cash."

I also think consumers would be annoyed with the reverse -- getting hit with a credit card usage fee during checkout. I think it's pretty well understood that by and large we're a plastic-using society (for better or worse), there is a price to pay for that convenience, and it's expected that companies factor those costs into the price of doing business.

There's a regional liquor store that offers a 5% discount if you pay with cash or debit card. The cashiers consistently mention this at checkout and signs are posted everywhere. Customers love this. This offer (along with a great product selection) is effectively building customer loyalty.

I think it's also important to consider the cost of accepting cash, as it is a real expense and it grows especially with multiple stores, and high cash volumes.  These include transporting cash deposits to the bank, the cost of internal and external theft, banking fee's (at least here, it's common practice to charge fee's for monthly cash deposits exceeding $10,000).

From the consumer standpoint I'd pick your option A.

Debit cards rule here in the Netherlands.  Credit cards are only wielded by tourists. But I still prefer to pay cash, and would appreciate a discount for cash.  I think more of us should do so just to publicise the point that the banks are getting rich on transaction charges.


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