Thursday, February 14, 2013

4% Surcharge to Consumers....Worth it or Not?

By now you've seen the news about the new law that will allow merchants to tack on an additional 4% to the bill of every credit card purchase. DO NOT DO BUSINESS WITH THESE MERCHANTS WHO DO THIS!!! Let me tell you why......

1. The credit card... processing fee is just a part of a business's overhead expense. All businesses have already factored this cost in to the price of their goods and services.... You're already paying for it. And you should; just as a consumer pays for the electric bill, employee costs, gas costs, shipping costs etc. that a business incurrs in order to exist.
2. You ALREADY pay for their processing costs. Ever pay a "handling fee" or "courtesy fee" online? That's what that is; the costs involved with accepting your credit card. As stated above, for face to face purchasing you are already paying for these costs as they are bundled into the the cost you are already paying.
3. With today's processing fees, most merchants are paying on an "Interchange Plus" fee structure. With this fee structure, the cost to accept your card is well under 2%. A high fee averages 2.5-2.75%. Very few hit 3% anymore. It depends on the type of the card and how the merchant accepts it. Your retail giants such as WalMart, Target, Penney's, Macy's, Tire Kingdom etc. are paying much much less than the fees I quoted above.
4. Because of what I stated in #3, this additional 4% is nothing but pure profit to the merchants and has nothing to do with paying for their banking fees.

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