Credit Cards 2022

[stavebuyer]

I noticed a sign in my Vet's office a couple months back that they were going to start charging a 3% surcharge on credit card transactions but personal checks were now being accepted(previously they weren't unless you had a credit account established).

I have been building some fence and the local feed and seed also started charging for credit cards but debit transactions were same as cash. Went to pick some posts this morning and now debit cards are also subject to the 3.5% surcharge.

I totally agree with the store policy changes and have grown accustomed to reaping the cash back "extortion" kickbacks from the card companies. So whatever was changed to allow stores to pass on the fees will certainly help them but does this portend the unraveling of the big banks cash cow?? I will be sure to carry my checkbook henceforth. I buy lots of little junk on-line but dollar wise its probably 10-1 over the counter.

[Ianab]

Checks are history here in NZ since last year, but we have a good National Point of Sale system that isn't connected to the CC companies. Works on the same machines as the CC, but it's a real time bank to bank system with low merchant fees. 

So some stores, usually the smaller ones, don't accept CC, only EFTPOS cards or cash.  But because it's a "real time" system, if you don't have the funds, you get "declined". You can't go over your limit like a CC. So even kids can get a card, when they spend all their pocket money they get cut off. No credit limit to blow out. 

Others merchants do charge a surcharge for CC payments, while most just take it as a "cost of doing business". Checks, accounts and even cash still costs time / money / security risks to handle. It's just the CCs have the highest direct fees. 

[newoodguy78]

It’s hard for me to figure out a higher risk to myself other than handing out a card to a stranger with numbers on it linked to me or my personal accounts. It’s way too easy for them to be used inappropriately.
It’s become a way of life but it makes me wonder every time I do it. 

[Ianab]

Eftpos cards have no ID info on them, just a serial #, that's not directly linked to your bank account. 

Credit cards here are all chip and pin, it doesn't leave your hand to use it, and no mag strip to card and load onto a clone card.

Main risk is online data theft, where the thief breaks into a merchant's web page and skinms your details that way . So be careful about who you give those details to for sure, even if you are protected by the bank.

[WV Sawmiller]

  I did a report on credit cards in high school and the 3% fee was generally considered insignificant to the CC companies - they made their money on the interest on the unpaid balance.

  I am seeing more local businesses levy a fee for credit card use and when they do I generally pay by check on cash. We went to dinner in Birmingham Ala a couple weeks ago at an Indian Restaurant, had a good meal and when the waitress brought the check she said !0% discount for cash so I paid cash. I think what we are seeing is such low profit margins businesses can no longer eat the card fee in anticipation of the increased business from them.

  I worked a project in Norway in 2007 -2008 and checks were never used. I guess their system may have been similar to what Ian describes above. The businesses took cash, card or provided an invoice that could be paid on line. As the office manager and the only one on the project with a bank account, I paid everything from normal business expenses, to parking tickets, ski lodge reservations, etc. If the charge was a personal expense (such as a parking ticket or ski lodge) the employee brought me the invoice/ticket and cash and I paid it on line on the spot and printed them a receipt and put the cash in the petty cash box to keep the account balanced at all times. The auditors did not like it but they still wanted 2 signatures on a check for every payment and Norway did not even use checks. Our process was clearly outlined and blessed by very senior management so the bean counters could complain but not stop what we were doing.

[Southside]

If you think about it that 3% is based on the gross dollar amount.  Everyone in business has had to raise their prices just to keep the same margin as before due to "it's transitory", but now the 3% represents more of their profit than it did just a year ago, so what choice do they have but to pass it along?  We have only begun this ride.  

[Ianab]

The auditors did not like it but they still wanted 2 signatures on a check for every payment and Norway did not even use checks.

Some of the Scandinavian countries are close to going cashless. NZ Govt is still committed to keeping cash in circulation because there is a % of people that do need it. But it actually costs to keep the cash system operating. That's also why the smallest coin is now 10c, and smallest note is $5, and banks will charge businesses cash handling fees. They also have a Smartphone payment system that everyone uses, so for transactions that we might do with cash, they basically  TXT you the money, and your phone beeps a few seconds later to confirm it's gone through. 

When larger organisations use online banking  here it's usually 2 "signature", with proper 2FA with a little electronic dongle that produces a code to verify the user.  So you need the sign-in, password, AND the security "gadget". (x 2) So the payroll or accounts clerk will input the payments and save them in the bank system. Then a manager has to sign in separately, double check and OK it. 

The business accounting software we support does direct electronic invoicing. It's a charged service of about $1,50 per invoice (it's all secured etc). But this saves the business several $ compared to printing and mailing paper. The cost is about the same as the postage stamp, but once you add in the cost of the staff to print it out, stuff the envelope and post it, the electronic system is much cheaper. 

BTW, if they are offering a 10% discount for cash, they will be pocketing some of the cash and dodging the tax. If the business is running straight books there is no incentive to drop the price by 10%. A ~3%  surcharge for a CC I can understand if margins are tight. Local discount electronics chain and airline apply that, but if you pay via the EFTPOS system they wear the ~0.5% fee that incurs. So most stores actually prefer to take the EFTPOS card, no cash handling / security issues, that also costs money. 

[SwampDonkey]

There is also 'Swipe' on CC and also Debit with the chip. You don't touch a device. The only issues I've seen over an over again is with etransfers. Transferring money with email. But a lot of that is people falling for scams and not thinking about what they are doing.

[Spike60]

We've thought of adding the fee, (and still might), but just raise the prices instead. Simpler and I don't have to have repetitive discussions 100's of times explaining it. Plus, those additional surcharges are still considered income on which sales tax has to be paid.

Guess we got used to this as when large ticket items like Exmarks are sold they are usually financed through an OEM finance partner such as Sheffield Financial. Their dealer fees are more than the credit cards on all of these "zero interest" programs that are advertised.

[Ianab]

Scam bank sites and spam emails are an issue.  But in the same way that pick pockets, Nigerian Princes and lost wallets are. Stay alert for scams and keep your computer up to date. It's like locking your door and not walking down random dark alleys.  

Scams have existed since money was invented. Buying a "Pig in a poke" was and old school scam. A "poke" was a barrel, and if you didn't check there was actually a pig in there before you handed over the coin, you might get scammed.  

[WV Sawmiller]

Ian,

  In southern terms a poke was a bag but the same saying was common for buying something unseen that might or might not be what was promised - if anything.

  I guess another way would be to set prices for cards then offer a discount for cash or check. I don't take cards so its a moot point for me.

  I don't doubt the 10% cash discount could become or already could be shaky but I figure that is between them and the tax collector just like when someone gives me a tax exemption for for my sawing work or lumber purchased from me. He has now shifted the sales tax collection burden completely off my back and on to his own. When I show that little paper the onus is off me to collect sales tax. It is not my business to verify the product was truly used for exempt purposes.

  I regularly get the "I'm paying with cash so let's skip the sales tax" lecture and tell my customers "I pay sales tax whether cash or check so it's no difference to me just like it is at WalMart." Their indication is plain that I don't have to report the sale if it is cash. I do and I sleep better for it. I complain about taxes getting wasted just like everyone else but that does not mean I'm going to cheat on them.

[Sedgehammer]

Several states it's illegal to pass the 3% fee on to the customers 

I'll only use the credit card , as I have a rework to go through if what we bought isn't what we ordered . Try doing that with a check . Currently the concrete company sent us the wrong spec on the concrete . If they don't fix it , I'll dispute the entire purchase . As to those that 'worry' about a stranger getting their number , you are not responsible for fraud on your CC account . That's a lot harder to deal with a check and takes a lot longer . CC it is instant

[WDH]

Howard, just like you I report all my sales, cash or check as income and pay the taxes.  I do not cheat, even though it would be very easy.  It is a principle thing.  I currently do not take credit cards either, but I do take Paypal.  If the customer is paying with Paypal, I add 3.5% to the bottomline but do not show that as a line item charge.  It is part of the price for the wood.  When I transfer the money to my bank, Paypal keeps the 3.5% so the customer is paying for the convenience of using electronic numbers rather than real money, not me. 

[Ron Wenrich]

I'm one of those guys that use primarily cash.  CC for gas because of convenience for me.  We have no debit card.  I recognize that I'm paying the same for cash as CC and that the business gets to pocket the extra fee that is no longer paid.  I'd rather see the local business with the extra cash than the bank.  For me, its a lot easier to stay within budget when paying in cash instead of delaying the payday to the bank.

Some businesses have gone the no CC route.  Some have gone the no cash route.  I don't go to the ones that don't accept cash.  I was at Lowe's the other day and paid cash.  I mentioned that I bet they didn't see much of that anymore.  The cashier says they're starting to see it more often. 

There are cards out there that have high incentive rates.  5% payback for gas, etc.  The vendor pays the amount above the 3.5%, not the CC company.  I've seen signs that won't take certain CC cards due to the high incentives. 

[Erik A]

What frustrates me is a national gas company that did not take cc charged .35 for using debit. They then changed to taking cc but have the fuel maybe .10 higher for cc. Then shifted the debit from cash price to cc price but still charged the debit fee. A debit card is just cash to them if I’m paying the fee, why am I paying credit price for cash?

I use cash for fuel a lot more now.

[Erik A]

Wally World will scan your check you write to them that converts it to a debit (maybe a money transfer? I noticed this years ago) and hand you the check back! So using a check with the big guys may not save you!

[Old Greenhorn]

I watched my wife suffer through all iterations of taking credit cards over 15 years, from the handwritten slip to the slide machine, then internet. It was always a problem and cost her more than it was worth. She even wound up giving away a couple of sales because the numbers on the slip were wrong and she could not get in touch with the buyer. She does craft shows where there was little if any WiFi or internet connectivity and cell service, if there was any, was overloaded by the crowds at the show. She tried it all, ending up using the 'Slide' and then gave up. She got stiffed on a few checks too from city folks. So now she only takes cash or local checks, period. It costs her a lot in lost sales because so many people go to a show and bring neither money nor checks. (This I still don't understand.)
 For my business all income winds up on the books regardless of form. I take cash, check, Venmo, or PayPal as a last resort. I discourage PayPal in the strongest terms because of the fees. Seems like they always throw in more than 3.5% and besides, I work too hard to earn that money and usually don't have a lot of margin to give away. My favorite is Venmo, by far. I don't have a business account, just personal, but it is tied into my business banking account. I have two repeat clients that use it and I love it because I pay no fees and the money goes right from their account into mine. If there is cell or WiFi service at the POS, that money is in my account before I leave. Repeat purchases take mere seconds because buyer and seller each have the other in their list already. And there is no trip to the bank as I have to do with checks. Cash gets recorded the same but goes into an envelope for petty cash. I like to have a small bundle here for incidentals on the spur of the moment, the craigslist find that pops up on a Sunday, a yard sale, taking somebody to lunch, whatever. If the petty cash exceeds about $1k, I put the rest in the bank. I pay just about all of my bills on the debit/credit from that account. Regular stuff like Home Depot, etc is also paid from that for easy tracking purposes.

[snobdds]

I went into the polaris dealership one day to get an oil change kit for the Ranger.  They had sitting there a brand new 4 door razr 1000 with the new turbo on it.  One other guy was looking it over and trying to convince his wife to buy it.  I have wanted one for the ranch as I have enough dirt roads to really open it up and get it. 

I went to the finance guy, handed him my card and said I will take it. This was a Saturday and my bank was closed.  I was planning to just go in Monday and transfer money to pay for it.  So the finance guy gleefully runs it after we added a few accessories and off I go.  

Well two months later the GM of the dealership calls me and asks if I can come in.  So I did and he explained to me that they did not factor in the 3.5% charge Visa would hit them for on running my card.  It was around a 1,100 hit to them.  So I didn't want to beat them up as they do all the servicing on a few polaris machines I own. I did get some free fluid changes out of the deal, but I did end up paying that 3.5% for the pleasure of impulse buying. 

It is a fun machine.  It's crazy fast and powerful. 

[WV Sawmiller]

   One thing I learned doing my HS report on CC was there is a $50 liability on a CC if it is used before you report it and none after you report it as stolen. I used to get calls from scammers trying to sell insurance on my CC and telling me my liability was the same as my credit limit which is false. I have one business CC with a $25K limit and used it to buy my mill. WM would take the card but not a check so they ate that fee and I got the 1.5% back on my card account. Anyway when I told the CC insurance scammers I knew my true liability and their rate was excessive for the limited liability I actually had and then they'd hang up.

  I agree to try to keep business local. Years ago I went to buy a new truck and contacted my local bank president and asked the best finance rate he could offer. He asked what I had gotten and I told him what my Credit Union offered and he said he'd match that. I asked the process and he said since I had a checking account to just write a (rubber) check and call him in a day or two and they'd deposit enough to cover it. Made shopping easy.

  I found I could not deal with Ford. I was looking for a vehicle for our, then, college age daughter and I went in and asked for a vehicle price they'd say "You have to fill out a credit report." If I asked the best finance rate they could offer they'd say the same thing. I went down to the Dodge dealer a block away and asked the same questions and they gave me direct and immediate answers. It was simple math and they did not need to know my life history.

    Reminds me of the old saying I heard "I'm so broke I'd have to get a co-signer to pay cash."

 

[21incher]

Reading this brings back memories about how paying  cash has changed.  I have always believed  if you can't pay cash you shouldn't  have it. I bought  a 1991 F350 new and at that time when the truck arrived  at the dealer I went up to the dealer with 22k cash threw it on the salesman's desk, he called the cashier over to count it and I was driving my new truck home in 15 minutes.  Fast forward to 2002 and I ordered a new Harley. told the salesman I would be back with  cash when it arrived.  Two months later it arrived and took 2 days for them to do the modifications. My wife and I went up to pick it up and the first thing the salesman did was send me to the finance guy while my wife was shopping for new t shirts.  The financial guy was trying to push a loan on me. I opened my little zipper bank bag and dumped 22.5k in cash on his desk telling him the salesman said cash was ok. Well the look on his face was amazing and the first words from his mouth were " only drug dealers pay cash ". That *pithed me off and I told him if I was a drug dealer I wouldn't  be buying a Harley from him. 
Then he gets up and goes over to close and lock his office door.  I told him don't worry  if anyone tries to steal it I am carrying  my 357 and my wife is right out there wit her 9 mm so they wouldn't  make it out alive. Now the guy seems to be getting  nervous.  He calls the dealership owner and tells him to come in and open the safe. Then he calls in a cashier to count it and bring in special  paperwork to file with  the IRS and DOJ We both had to sign. The owner shows up a little  later takes the money and locks it in the safe.  Took me almost an hour to pick it up because I used cash. The salesman  later said most people say cash but bring checks because of the hassle.  We got a good laugh when it was over.
  Before 2000 I bought 4 new vehicles with  cash and no additional hassle but after 2000 something  changed. Once  the government got involved everyone seemed afraid to take over 10k cash. One thing about paying cash is It hurts your  credit score so you have to carry large ballance credit cards to keep a good score that lowers your  car and homeowners insurance rates. I can't  figure  that one out.