Shops Not Accepting Credit Cards

maybe because of the CC processing companies fees. they take a % of the charges

http://online.wsj.com/article/SB116891597127377254-search.html?KEYWORDS=credit+card&COLLECTION=wsjie/6month

This article talks about the recent trend of retailers pushing back in the face of large credit card fees. They're increasingly trying to get customers to use debit cards instead, or of course cash. For those w/out a subscription, here's are some excerpts:

Of all the fees merchants pay to process plastic, those for purchases made with a PIN are among the lowest.

"It's the No. 1 thing that we can do on our end to save quite a bit of money," says the 32-year-old cycling enthusiast, who estimates that using PINs could cut his card-processing costs by a fourth. Last year, he paid about $40,000 in fees to banks and middlemen that handle card processing. His shop rings up annual sales of nearly $2 million.

Fed up with the rising cost of accepting plastic, a growing number of merchants are taking matters into their own hands. In the industry, the practice is known as "steering" -- encouraging customers to pay using methods that carry low transaction fees, in particular PIN-based debit cards.

... according to Visa USA Inc., the country's largest card network, a typical supermarket pays 24 cents in fees when a customer buys $40 of groceries with a debit card and a PIN. The fee rises to 35 cents for a signature-debit transaction and can be more than 50 cents when a customer uses a plain-vanilla credit card...

...The issue has come to the forefront because Americans are pulling out plastic more than ever. Electronic payments surpassed the use of cash and checks for the first time in 2003; consumers now use cards to pay for daily purchases at the grocery store and fast-food restaurants...

As the use of plastic has grown, banks and credit-card companies have been pitching new credit cards loaded with juicy perks and rewards. Merchants typically pay higher fees on these cards than on other credit cards.

The cost of accepting and processing electronic transactions is a source of growing tension. Small merchants and big chains like Safeway Inc. and Walgreen Co. have filed lawsuits accusing payment companies of price fixing, collusion and conspiracy in the setting of fees. The lawsuits, which have been consolidated, are pending in federal court in Brooklyn, N.Y....

...Mr. Paterson estimates that large retailers can convert 80% to 90% of their debit purchases to PIN transactions. Assuming that merchants can save 20 cents on each transaction, a retailer with 100 million annual electronic purchases can save $8.5 million by steering, he says.

Sure, you can do things to try and get customers to use an alternative, but you're throwing away business by not accepting credit cards at all. Few of the businesses in the area can afford to do that, 'specially the fledglings. Also, I'm a little biased, not being a cash person, but places that don't take cards just seem... unprofessional... like they're not making any commitment, they're just making a half-assed attempt... like they're not confident in their own business plan.

grandzu wrote: Plain and simple, it is to avoid paying taxes on profit. They could even declare a loss and benefit even further.

They should do what everybody else does - get a better accountant.

It wasn't until I moved here in April from Atlanta that I even carried cash. Back home I used plastic for absolutely everything I bought. But if carrying cash and using it to pay for inexpensive items (under $20 or so) will help keep local area businesses in the black, I'm all for it.

And I strongly disagree with the notion that using cash for a transaction with a merchant is unprofessional or half-assed. Let's all decide what's unprofessional when we open our own small businesses and give a percentage of our earnings to Amex. I'd rather my local Brooklyn business keep that cash.

LeffertsGirl wrote: And I strongly disagree with the notion that using cash for a transaction with a merchant is unprofessional or half-assed. Let's all decide what's unprofessional when we open our own small businesses and give a percentage of our earnings to Amex. I'd rather my local Brooklyn business keep that cash.

I didn't say that - I said that it's half-assed, as a merchant, to accept only cash. And as I said a few posts above that, my wife and I have set up merchant accounts with Visa/MC and Amex. Our money (plastic?) is where our mouths are.

Why is it half-assed? As stated in the WSJ article above, credit is the number one form of payment today. As a business owner, I would find it silly to exchange goods and/or services without accepting the preferred method of payment. I'm not saying that they shouldn't accept cash, I'm just saying that they are throwing away business by not accepting credit. Most people that buy only a croissant will probably still pay with cash, but if you're average sale is more than 10 bucks, or if you aspire for an average sale of more than 10 bucks, you're not going to be doing yourself any favors by limiting the transactions to cash only.

Example - I've only been to Sepia once. I had a great time. I've often considered going back, but when I rifle through my pockets, and find that I have less than $5 on me, I'd rather go someplace else that's just as appealing, but more convenient, in that they take cards. If Sepia took cards, they would have had hundreds of my dollars that I spent someplace else. Alone, I probably would cover months of their CC transaction fees - everybody else (that they wouldn't have captured without cards) is gravy.

grandzu is right, at most places it has little to do with credit card fees and a lot to do with running a cash business so you can avoid paying taxes

To be fair, Carlton, it is indeed against the law for a business to require minimums on a credit card. So a customer can indeed legally use a credit card for a two-dollar purchase.

However, it is also legal for a person to pay for purchase using all pennies, but you don't see anyone doing so. A certain payment method may indeed be legal, but one might also want to consider whether it is convenient as well.

If I'm away from my apt and don't have any cash on me, I'll go to a nearby fast-food restaurant and put a cheeseburger on my credit/debit card way before I'll go to the nearest bank and withdraw some money. Sometimes I just plain don't have any money with me.

It used to embarrass me when I charged for a $1 burger, but not any more. It's not important enough to be embarrassed about.

arZan wrote: [quote=The Changeling]But what about people who may get frequent flyer miles or some other benefit for using credit? So what if they whip out the credit card? I can see having an attitude with someone who pulls out a credit card and it gets rejected when you run it through (people with bad credit should be shot), but getting an attitude just because you think the person should have a certain amount of cash in their pockets? Please! Just turn around and run the damn card through the machine.

You hit the nail on the head. One of the biggest incentives to me for using my Citibank AA miles card....is well the miles. !! And I get 2 miles for every dollar which amounts to a ticket to europe or asia every year !!

ArZan, you're accumulating enough points to get one free overseas trip a year? Nice.

arZan wrote: [quote=queencallipygos]One of the biggest incentives to me for using my Citibank AA miles card....is well the miles. !! And I get 2 miles for every dollar which amounts to a ticket to europe or asia every year !!

The Citibank AA card is only ONE mile for every dollar.

No it dosent. There are two choices. A dollar a mile and two dollars a mile. The annual fees differ. They also have special times when there are triple miles offers.

queencallipygos

Are you here on the board just looking to belittle people and pick out issues ?? All your comments on this topic, except the first one, have some or the other point not at all related to the post.


I'm sorry you took it that way. That time I was just trying to be helpful and point out what I understood to be a discrepancy; I have the one-mile card and was unaware of the difference.

But since you'd like an on-topic post -- I think that every business has the right to use or not use credit cards as they see fit, and for a business such as Connecticut Muffin, who largely deals in small items for a few dollars each, I can definitely understand them not installing a credit card machine, because most persons actually use cash to purchase items that are only a few dollars in price. So instead of getting a credit card machine just on the off chance that a rare individual comes in wanting to charge two bucks to his credit card, but then as a result having to pay fees monthly for a credit card machine that sits idle 95% of the time, they choose to simply institute a "no credit card" policy.

In other words -- yes, it can make fiscal sense for SOME businesses to have a credit card machine handy. But it does not make fiscal sense for ALL businesses to have a credit card machine. Some places, you're just going to have to suck it up and pay cash, that's all.

Subject: Cash vs. CC's

IMHO when you're buying something like a hot chocolate or a coffee or a whatever that costs under $2 you should be prepared to pay in cash.

Most of those establishments depend on a high volume in order to make a profit and if a CC purchase takes longer then a cash transaction then you're going to slow everything down and potentially effect their bottom line - in addition to the processing fee they have to pay for your convenience.

What I don't understand are the restaurants that operate on a cash only basis. To me restaurants not accepting CC's is a far greater affront to quality customer service then Connecticut Muffin or John's Donuts having a cash only policy.