Funny story about credit card fees

[widebody911]

So, I managed to break one of the wheels on my M3. After doing some hunting, it seemed the only choice was to go back to the mfg, hat in hand, and buy a replacement. I called them today to order said wheel, and in going through the line items for my order, the guy casually threw in a 4% "Credit Card Processing Fee" - I stopped him with a "whaaaa????" "Yeah, we have to charge that." Since I was bent over the figurative barrel, I had to just suck it up and take it like a man - a man in prison, that is. After all was said and done, a $640 wheel became an $800 wheel.

A few hours later, the guy calls me back; "Um, I have some bad news and some good news..." The bad news is they no longer sell wheels in the same finish a the broken wheel. The "good" news is they can bro me up on one of several options, a) make a new wheel and re-finish my old ones all to match - $2600; b) trade in my 3 good ones toward a new set of 4 in a finish they do sell (right now anyway) - $2500; c) trade my 3 good wheels towards a new set of 4 3-piece wheels (an upgrade) - $3500.

After listening to his schpiel, I ask "with the same 4% credit card surcharge?"
"Um, yeah"
"Sounds like an opportunity to go with a different brand of wheels."
"uhh...."
"I'll think about it and get back to you."

Now granted, I'm still stuck with 3 good wheels and one cracked wheel. I might suck it up and buy a replacement, and get them all powder-coated or something.

[stomachmonkey]

Visa/MC expressly prohibit it.

Pretty sure AMEX does as well.

4% is way above what a merchant will typically get hit with.

Normal is in the 2% range plus about $0.20.

Varies depending on certain factors but at 4% I would not be surprised there is profit built in for the merchant.

[fastfredracing]

I have always wondered why the merchant is supposed to absorb the cost of allowing the customer to use credit. As far as businesses go, I am small potatoes, and I am always shocked at how much money I shell out in credit card processing fees every month.

[Mark Henry]

Can't you find a rim at a wreckers?

My brother hit a curb, broke one rim and the oil pan and BMW wanted 3K (parts only) in mid 90's dollars, I've never been even remotely interested in them since.

I agree with stomachmonkey, I don't think they are allowed to add a CC fee.

[Noah930]

Originally Posted by Mark Henry

I agree with stomachmonkey, I don't think they are allowed to add a CC fee.

Threadjack: So how do gas stations get away with it?

[Joe Bob]

Even PayPal/eBay has rules on surcharges. Screwing the buyer when the seller is getting protected by using the service....low. Anytime a I see an ad with a surcharge for cc or PayPall, I pass.

As to BMW wheels, if YOU can't find a single, there should be a market for YOUR singles.

[stomachmonkey]

Originally Posted by Noah930

Threadjack: So how do gas stations get away with it?

You can charge a higher price for an item and offer a discount for non CC payments, cash, check, BJ.

[widebody911]

Originally Posted by Mark Henry

Can't you find a rim at a wreckers?

Not these

[stomachmonkey]

VISA states that "you may not impose any surcharges on VISA transactions. You may, however, offer a discount for cash or another form of payment (e.g., proprietary card or gift certificate) provided that the offer is clearly disclosed to customers and the cash price is presented as a discount from the standard price charged for all other forms of payment"1

MasterCard states that "A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction. A Merchant may provide a discount to its customers for cash payments."2

Discover states that "You may assess a surcharge on a Card Sale conducted using a Credit Card provided that (i) the amount of the surcharge may not exceed the Merchant Fee payable by you to us for the Card Sale, and (ii) you assess surcharges on card sales conducted using other credit cards accepted by you."3

American Express states that "You must not accept the Card for costs or fees over the normal price of your goods or services (plus applicable taxes) or Charges that Cardmembers have not specifically approved."4

Every originator except for Discover forbids surcharging credit card sales, however, as MasterCard so clearly states, "A Merchant may provide a discount to its customers for cash payments." This statement holds the secret to passing credit card processing fees on to customers. The trick isn't charging customers more for using a credit card; it's charging them less for using cash.

In order to charge customers for credit card processing fees you must create a dual pricing model. To accomplish this, raise all prices to offset processing fees and then offer a discount on cash purchases that's equal to the price increase.

The catch is that the cash price must be presented as a discount to the true price. This means that price tags, signage and advertisements must display the higher (credit card) price first and then display the lower (cash discount) price as a discount. For example, many gas stations offer a cash discount but they post the higher (credit card) price on their roadside signage

[Por_sha911]

Unless you are totally locked in on those wheels I'd politely tell him he can stick his options where the sun never shines and give him the link to this thread.
Think about this: what happens if you hit a pothole and need another wheel? You're still married to those crooks.

[Noah930]

Originally Posted by stomachmonkey

The catch is that the cash price must be presented as a discount to the true price. This means that price tags, signage and advertisements must display the higher (credit card) price first and then display the lower (cash discount) price as a discount. For example, many gas stations offer a cash discount but they post the higher (credit card) price on their roadside signage

Thanks for the education. FWIW, that is NOT what I see being practiced. Usually the more prominently displayed price is the lower cash price. The higher credit card price is printed in significantly smaller numbers below/alongside.

[Noah930]

OK: for the wheels, are those not 3 piece wheels already? Why can't you just bolt on a new rim half? It shouldn't cost more than about $100 per wheel to mess around with finishes afterwards.

OK, looking at your pricing, I'm guessing those are not 3-piecers.

I'd go with your original idea of buying a new wheel and getting them all powdercoated/refinished to match. Cheapest option.

[Radioactive]

Buy two wheels in the new finish and put them on the same side.

You can't look at both sides of the car at the same time.

[ZOO]

Originally Posted by Radioactive

Buy two wheels in the new finish and put them on the same side.

You can't look at both sides of the car at the same time.

Although that's a good idea to save money, it would drive me crazy . . .

I've always hated directional wheels that only work on one side of the car. I can't imagine two different sets, no matter that you can't see them both at the same time.

[Porsche-O-Phile]

As a customer I prefer to deal with businesses that accept cards. I live on my debit card and for one HATE cash (PITA, takes up too much room, is nasty/dirty, etc). Yes I realize that cash transactions are the "best" from a personal privacy standpoint but I far prefer using my debit card and I've never had an issue. I don't really like the feeling of things in my pockets so this way I carry a very minimalist wallet with a DL and two debit cards (one from each of my two credit unions) and have an emergency $100 folded in behind the license. That's it.

I really get annoyed by businesses who expect me to carry around pocketfuls of filthy bills or who are obnoxious enough to try and charge two different prices (one for cash, one for credit, usually to incentivize cash transactions). I think the tactic and the oft-cited rationalization for it (I have to pay fees) is pretty thin - there is just as much overhead (maybe more) with cash handling... One has to implement security protocols, have secure storage and transfer mechanisms, possibly hire additional staff to perform these transactions (and people or cameras to watch/audit them), etc. So the notion that cash is without cost to a business is pretty thin.

Also, I'm the customer and ultimately I have a choice about where to take my business. If I don't get satisfaction in one place, I have no trouble going elsewhere (and do!) to get the level of service I expect, even if it's marginally more expensive. A smart business will provide its customers with service better than the competition and always come out ahead long-term for it (Pelican here is one good example). Stupid, petty inconvenient idiosyncrasies only alienate customers, as do stupid nickel-dime tactics. As a former boss of mine once said, "better to make a little off of a lot of people than try to make a ton off of a few". I completely agree. Take care of your customers, give them what they want (within reason) and the revenue/profit will take care of itself.

[Christien]

Originally Posted by stomachmonkey

4% is way above what a merchant will typically get hit with.

Normal is in the 2% range plus about $0.20.

Varies depending on certain factors but at 4% I would not be surprised there is profit built in for the merchant.

Our merchant fees for Visa are 4%.

[GH85Carrera]

Just have the one wheel repaired. It can probably be repaired to like new for less than the cost of one new wheel.

[cstreit]

For those REALLY upset with higher prices for cc transactions, you've never been a merchant....

With 80% of consumers shopping strictly for price, it's driven merchants to accept lower and lower margins in order to survive.

So now imagine you've been driven to accept a 7-10% margin on a large portion of your items... Then the customer walks in with his international-super-points-with-cash-back visa card. Guess what? we do have to pay 4-4.5% on some of these. So now visa has taken FIFTY PERCENT of your profit margin.

...then same consumer goes out and complains that all the small helpful merchants are gone and the horrible customer service at Walmart.

Agree that the dealer misrepresented the price though!

[stomachmonkey]

Originally Posted by Christien

Our merchant fees for Visa are 4%.

You are in Canada?

May make a difference.

My experience is in MOTO, card not present transactions. Card present transactions rates are typically lower than MOTO.

Typical rates are between 1.5-2.5%. Rates are determined by a number of factors, average number of transactions, type of card, item, merchant performance etc....

If you have had good performance, few returns, few disputes, high volume, you may want to speak with your Merchant Bank and see if you can negotiate a better rate.

[FrankyV]

Paid a ticket yesterday and was charged extra for the privledge of using Visa. Another case of the the government violating rules and laws with impunity, big surprise. In fact the speed camera that gave the ticket is illegal, but the judge did not want to hear about that.