Debit vs. Credit Cards

[MossRoad]

Wouldn't the vendor just price the cost of the transaction fee into the product.

A $5 hotdog would cost $5.15 at 3%.

 

[Eagle1]

Yup

 

[Jstpssng]

Wouldn't the vendor just price the cost of the transaction fee into the product.

A $5 hotdog would cost $5.15 at 3%.

It's figured into the overhead somehow. In a lot of cases the rest of us subsidize those who don't carry cash.
Gas is one exception. I don't know about other places but here we pay an extra dime per gallon at a lot of stations for the convenience of using a card.

 

[DK35vince]

Wouldn't the vendor just price the cost of the transaction fee into the product.

A $5 hotdog would cost $5.15 at 3%.

Thats exactly what they do.

 

[scootr]

Sales tax is another example of hidden costs. Collect it, then labor to separate it out of the income and file a report only to pay an additional fee of paying by CC.

 

[Sprinkler Fitter]

Wouldn't the vendor just price the cost of the transaction fee into the product.

A $5 hotdog would cost $5.15 at 3%.

We price our food assuming a card will be used, we don’t add a percentage for a card, we make a little more if you pay cash

 

[MossRoad]

Sales tax is another example of hidden costs. Collect it, then labor to separate it out of the income and file a report only to pay an additional fee of paying by CC.

What labor? Very few businesses do paper and pencil labor. It's almost all electronic. If anything, paying by credit card uses much less labor than paying with cash on both ends.

 

[Torvy]

We price our food assuming a card will be used, we don’t add a percentage for a card, we make a little more if you pay cash

It's harder to track, but you may actually make more because you accept cards. Basically, your customer base is considerably larger because people can use plastic. Many small businesses and consumers only look at individual transactions rather than the aggregate. This makes them inadvertently dissuade customers by penalizing them for their choices.

According to Gas Buddy, about 4% of people pay with cash. So, for every 100 customers, you would make a little more on 4 of them, but would potentially lose up to 96 customers if you did not accept plastic. Sure 1/2 of those are debit card transactions, but without the credit card, processing would not even exist. (it is a loser for the bank).

 

[Torvy]

What labor? Very few businesses do paper and pencil labor. It's almost all electronic. If anything, paying by credit card uses much less labor than paying with cash on both ends.

Good point. Cash is also much more dangerous to keep on hand.

 

[Sigarms]

Wouldn't the vendor just price the cost of the transaction fee into the product.

A $5 hotdog would cost $5.15 at 3%.

This is on primary reason why HVAC contractors who offer financing usually build it into the job estimates. When you see a company offering 5 year 0% interest, doing a 15k job, a contractor can easily be looking at being charged 10% , and that's at a buy down rate on the contractors end.

As noted, you can't charge for credit, but you can build it into your cost and then offer a cash discount.

My SIL is a massage therapist and has her own business. She refuses to take credit cards due to the finance charge. I explained to her to build it into her price and offer a flat rate discount if paying by cash to make it easy on her, but won't listen.

Running a business today, you have to accept credit cards today. No running to the bank and no bounce checks.