By ROB W. ANDERSON
Since Jan. 27, merchants across the country have been allowed to pass on “swipe fees,” or credit card surcharges, to customers to defray overhead costs of providing the service.
The move stems from a July 2012 settlement among major merchants and the credit card companies Visa and Mastercard, as well as big banks. The merchants said the percentage fees imposed by Visa and Mastercard were unfair, and ultimately forced them to raise prices – which impacted all customers, even those who pay with cash.
Oklahoma is among 10 states in which surcharging isn’t allowed. According to Visa, laws also limit surcharging, or swipe fees, in California, Colorado, Connecticut, Florida, Kansas, Main, Massachusetts, New York, and Texas. Customers who are charged a swipe fee, or checkout fee, in these states may report the retailer to their state attorney general’s offices.
Credit card service is considered a convenience service for customers, and this process comes at a cost to the business or merchant. The surcharge imposed by the credit card company is determined by the amount of sales made, said Tahlequah Lumber Store Manager Bill Kissinger.
“It’s the cost of doing business,” he said. “The one thing about cash sales - obviously you’re not having to deal with any kind of expense, but the other part of that is, we’re coming to be more and more of a cashless society. I see people use credit cards not only at convenience stores, but they’re using them at doughnut shops; Sonic has the deal where you can use a credit card. And more and more people are starting to make online purchases. I think a lot of it is it has become part of the culture. You’re going to see a lot more of it.”
Depending on the size of the business or service, credit card surcharges can make it hard on a merchant trying to make it in the business world, said Hit-N-Run No. 1 Stop owner/operator Danny Reese.
“Our [surcharge cost] is 3 percent. Let’s say you come in and get $10 worth of gas, and I have it marked at $3.10. They’re going to take 9 cents per gallon. The minimum I can charge to break even is $3.09,” he said. “So, yes, I would much rather be paid in cash.”
Reese said prices have to be adjusted to cover overhead costs, and this is an effect created by swiping fees. Some believe using a credit card saves time, but Reese doesn’t agree.
“It’s like that commercial where you see all these people in line swiping their cards and they come to one who wants to pay with cash. They say he’s holding up the line. That’s just hogwash,” he said. “I would rather deal with cash.”
One way businesses get around the high swipe fees is through offering a store credit card, like JC Penny, Dillards, and Stage. These cards not only help the business avoid surcharges, but can even provide a financial benefit, said Stage Store Manager Kristina Escalona.
“We get a kickback percentage. I believe it’s 50 cents for every transaction,” she said. “We have more credit card transactions - both our store card and third-party cards - than we do cash. It’s a benefit for us to let them use a card, and we pay the fee. It’s a plastic world. Cash sales are not as common as they used to be.”
Surcharges, or swipe fees, are not to be confused with processing fees. Some services or businesses may charge the customer a processing fee when the transaction includes use of a credit or debit card.
For example, debit and credit card transactions made with Lake Region Electric Cooperative are handled by a third party vendor, which charges LREC $3.95 for each transaction processed whether it is via debit, credit or check action, said LREC CEO Hamid Vahdatipour.
“This transaction/convenience fee is passed on to our customers, and it is clearly stated on the receipts issued,” he said. “If a member walks up to a counter at our offices and pays with a credit or debit card, our customer representative logs on to the online billing services and pays the bill just as you would if you do it online yourself. The transaction fee would be the same.”
Vahdatipour said LREC doesn’t use credit card readers like other merchants do.
“I would like to emphasize that this fee is charged for all transactions conducted, regardless of debit or credit card,” he said. “There is no fee for paying by cash or check at the counter, since we simply deposit them in the bank ourselves.”
The other advantage of using credit cards is loss or theft protection, said Billy Davis, who responded to the Daily Press’ Facebook post about credit card use.
“I prefer credit/debit cards. I like the safety and security of it. If I lose the card, it can be replaced,” he said. “If I lose cash, it’ can’t [be replaced]. Paying in cash doesn’t always help the business. It can actually hurt them. You would have to outweigh the possible decrease in sales as a result of customers not having cash.”
Robert Priddy said he never uses cash.
“I use my debit card and PayPal for everything,” he said.
Cindy Dozier prefers plastic, because obtaining cash at an ATM can increase a person’s chances of becoming a crime victim.
“I feel better knowing I’m not carrying around cash. People often watch ATM machines and know these people have cash on them. They become targets,” she said.
Mark Jordan would rather pay with cash.
“I haven’t used a credit card in several years,” he said.
Erik Edwards likes cash to help avoid identify theft.
“I prefer cash,” he said, “because you have too much information on your card when someone steals it.”
Darla Carloss-Hall agrees with Edwards and opts for a cash transaction when possible.
“I use cash more than anything. It seems like every time you turn around, there is some kind of credit card fraud,” she said. “It seems people find new ways to scam your cards when you use them.”
Theresa Coulter embraces cash to avoid the self-imposed fees.
“I dumped my cards years ago, although it is a struggle for an admitted shopaholic to not charge, charge, charge,” she said. “The fees are not worth the minute of joy you get from a shiny new object.”