3 Myths About Credit Card Fees for Businesses

And what do I find. $1.00 charges, $2.00 charges from gas stations where I've used my debit card. When I go to the pumps, I never see a sign indicating that they are charging any additional fees for using a card. This includes 7-11.

Scruffy of MD 11:31AM March 19, 2010

The funny thing is, 15 years ago plastic amounted to about 25% of payments. Today it is over 75%, and the interchange fees increased. One would expect the increase in volume would allow for a reduction in the interchange rate. However it does not work that way when one is dealing with a bank.

John S of FL 6:54PM October 26, 2009

There are gasoline/service stations in the New York city area offering lower prices (usually 10 cents per gallon) if you pay your gas purchase in cash rather than by credit card. Isn't this an illegal practice?

Paul Stevens of NY 10:30AM October 15, 2009

If we compare bankcard fees now to those we paid twenty-five years ago, they have actually declined. As owner of an independent jewelry store, I have negotiated reasonable rates, based on volume and average transaction, and appreciate the freedom to do so. There is, however, a concern that I would like to see addressed. There is a growing trend to offer larger and larger premiums to cardholders, and to pass the costs of those on to the merchants who accept those cards. As a business with typical bankcard fees around 1.8%, we can be "blindsided" by a card with fees much higher either because of high premiums paid to the cardholder or because it is technically a "business" bankcard. There are instances in which very expensive items can be brought in and sold very close to cost in terms of percent, with reasoning like "even 5% OF $50,000- WOULD BE A PROFIT OF $2500." If an extra two or three percent were added to the cost of accepting a particular bankcard, and the merchant were unable even to know this until his statement arrived, that would skew the economics of such a transaction dramatically. The second part of my concern is the question of fees being billed on a "gross" or "net" basis. For years, we have had a written agreement with our processor that returns would have their fees credited back to us. That is what I mean by "net" basis. That was important to me not because we get a lot of returns, but because I could really be hurt by someone returning a very expensive item and our still having to pay the fee. With the new "premium" card fees, I discovered (by analyzing some statements) that only the "basic" part of the fee is credited, and the excess portion is not. I haven't figured out how to deal with that because I can't tell which cards will carry what surcharges. This lack of transparency would seem to be a reasonable area for legislative scrutiny. Discover and Amex have always billed exclusively on a "gross" sales basis, so we imprint all receipts with the caution that returns for credit will be charged restocking fees of 2% if on Discover and 3% if on Amex. (We have yet to actually impose such a fee, but we can't afford the risk of a really expensive item coming back and having to eat the fee.) In short, I have no complaints over bankcard fees overall. I am, however, very concerned by the growth of "premium" cards, with fees the merchant has to pay, will not recover even if the item is returned, and will not know about until the statement arrives at the end of the month - and only then if he is vigilant.

Eric Phillips of MN 4:22PM October 13, 2009