As if high gas prices aren't enough ...

[Just thinking]

Is this happening near you?

You pull into a gas station where from the road you see the price on the large marquee at $4.02 for regular. But when you hand over your charge card and happen to glance at the pump, you see that the price is registering at $4.11 per gallon. Then you glance over at all the pumps only to see that there are two prices for each grade ... one for cash and one for credit. What? Are we back to stations giving "Discounts for Cash"? Not exactly, as there is no obvious advertising as such. Plus, who carries around the $$$$ needed to fill a tank these days? ... I mean, with prices now quite high, credit card use is much more common and sometimes necessary, and I see this as a sort of misleading practice (if not outright scam) in order to boost sales and profits. If they want to go back to "Discount for Cash" they should have a sign stating such and post the credit prices on their marquees, otherwise I feel it's not just misleading and false advertising, but in clear violation of credit card policy (http://www.gofso.com/Premium/LE/06_le_ic/fg/fg-merchants.html#C).

Visa and MasterCard prohibit surcharges, and American Express discourages them. Amex does prohibit "discrimination" against the Amex card, however, so if a merchant accepts Visa and MasterCard (and cannot impose a surcharge under those companies' rules), the merchant may not discriminate against Amex by imposing a surcharge.

[Jaggy Bunnet]

Is this happening near you?

You pull into a gas station where from the road you see the price on the large marquee at $4.02 for regular. But when you hand over your charge card and happen to glance at the pump, you see that the price is registering at $4.11 per gallon. Then you glance over at all the pumps only to see that there are two prices for each grade ... one for cash and one for credit. What? Are we back to stations giving "Discounts for Cash"? Not exactly, as there is no obvious advertising as such. Plus, who carries around the $$$$ needed to fill a tank these days? ... I mean, with prices now quite high, credit card use is much more common and sometimes necessary, and I see this as a sort of misleading practice (if not outright scam) in order to boost sales and profits. If they want to go back to "Discount for Cash" they should have a sign stating such and post the credit prices on their marquees, otherwise I feel it's not just misleading and false advertising, but in clear violation of credit card policy (http://www.gofso.com/Premium/LE/06_le_ic/fg/fg-merchants.html#C).

As prices go up, the credit card charges (based on a percentage of the gross figure) also go up. Someone has to pay for this, either all customers (if there is a single price) or only those who use credit cards (if you have differential pricing). My guess is that some garages looked to get a competitve advantage by offering lower prices for cash allowing them to offer cheaper fuel (for cash customers) than those who went for a single price.

I agree that the prices should be clearly stated, but apart from that it seems perfectly reasonable for customers who use credit cards to bear the additional cost this imposes on retailers.

[Just thinking]

Yes, it's the lack of it being clearly stated (and against credit card policy) for them to continue doing it as they are.

[JonnyFive]

The page you linked to says it a couple paragraphs down:

Note that a cash discount is legal and permitted under all credit card companies rules. A cash discount offers a lower price for cash than credit; for example, many gasoline stations offer cash discounts. While this may merely be a loophole, it is permitted. In addition, there are a few state governmental agencies, including state tax offices and motor vehicle departments, that are permitted to charge surcharges due to state laws that do not permit them to pay discount fees. However, retail merchants may not impose surcharges

Sounds like it's a technicality, where it is a "discount" if you pay cash, not a "surcharge" for using credit. I guess if you paid by check you would also get the higher price. Does any gas station even accept payment by check?

Interestingly enough, a gas station near me also offers the "cash" price if you use a debit card, although it has a ridiculously low $35-per-transaction limit on the pumps.

[Francesca R]

Yes, it's the lack of it being clearly stated (and against credit card policy) for them to continue doing it as they are.
I am pretty sure that such a "policy" has no legal teeth. Or, the worst that a credit card company could do would be to not allow a seller to take their card from customers. Which smacks of cutting off one's nose to spite one's face.

As for "clearly stated" that would be something that a government regulator would need to enforce. Merchants and credit card companies are not likely to do that themseleves.

[Jaggy Bunnet]

Interestingly enough, a gas station near me also offers the "cash" price if you use a debit card, although it has a ridiculously low $35-per-transaction limit on the pumps.

Debit card fees are, I think, much lower (and often a fixed sum, not a percentage of the transaction) than credit card fees. I would be more surprised if they didn't offer the "cash" price on a debit card transaction.

[JonnyFive]

Debit card fees are, I think, much lower (and often a fixed sum, not a percentage of the transaction) than credit card fees. I would be more surprised if they didn't offer the "cash" price on a debit card transaction.

That makes sense.

[Just thinking]

Sounds like it's a technicality, where it is a "discount" if you pay cash, not a "surcharge" for using credit. I guess if you paid by check you would also get the higher price.

I wouldn't mind the price difference if they were more up-front about it. In other words, don't post one price and then add a credit card fee once you're at the pump. That's at the very least misleading. When a price is advertised and then becomes more if you use a credit card, that's a surcharge.

Interestingly enough, a gas station near me also offers the "cash" price if you use a debit card, although it has a ridiculously low $35-per-transaction limit on the pumps.

Yet in NJ, businesses that accept debit cards are far and few between --- true debit cards that is, not ones through a credit card agency.

[JonnyFive]

I wouldn't mind the price difference if they were more up-front about it. In other words, don't post one price and then add a credit card fee once you're at the pump. That's at the very least misleading. When a price is advertised and then becomes more if you use a credit card, that's a surcharge.

You might have a point vis. their advertising the lower price, but I don't know if it would still be a clear violation of credit card policy. I suppose the simplest solution would be simply to post "with cash" or something similar near the price.

Yet in NJ, businesses that accept debit cards are far and few between --- true debit cards that is, not ones through a credit card agency.

I'm not sure what you mean by "accept debit cards." Do you mean that they don't accept cards that only work through the ATM/POS network and not through one of the card issuer networks?

It's not strictly correct to call only cards using the ATM/POS networks "true" debit cards. A debit card is simply a card that draws directly from the user's account rather than against credit offered by the bank. The VISA/Mastercard logo only implies that the card can be used through those communication networks, which are far more widespread than the ATM/POS networks (and, for example, allow you to use the debit card in most places a credit transaction through the VISA or Mastercard network would be allowed).

Every debit card I've ever been issued (or seen issued to friends and family) has had one of those two networks available to it, and I believe that is more common than to have one that would only work through ATM/POS networks. I've received the "cash" price at the gas station I mentioned above by completing a PIN debit transaction with a VISA branded bank debit card.

[Just thinking]

I'm not sure what you mean by "accept debit cards." Do you mean that they don't accept cards that only work through the ATM/POS network and not through one of the card issuer networks?

Yes. For some reason, the bank issued debit cards have never been widely accepted throughout my state. When I travel out of state, that very same debit card is accepted everywhere --- at least as far as my travels have taken me. Only food stores (supermarkets) in my state seem to accept them as much as any credit card. (There are of course exceptions, but they are very rare.)

It's not strictly correct to call only cards using the ATM/POS networks "true" debit cards. A debit card is simply a card that draws directly from the user's account rather than against credit offered by the bank. The VISA/Mastercard logo only implies that the card can be used through those communication networks, which are far more widespread than the ATM/POS networks (and, for example, allow you to use the debit card in most places a credit transaction through the VISA or Mastercard network would be allowed).

Strictly speaking you are correct, yet there obviously must be some sort of difference as noted in my previous comments.

Every debit card I've ever been issued (or seen issued to friends and family) has had one of those two networks available to it, and I believe that is more common than to have one that would only work through ATM/POS networks. I've received the "cash" price at the gas station I mentioned above by completing a PIN debit transaction with a VISA branded bank debit card.

Now you've hit on something else. The credit card company debit cards are not as safe (IMHO) as the bank ones that require a PIN, yet in NJ you have a hard time using the safer card. (Note, I'm comparing those that don't require a PIN as per those that do.) To date, no one has offered an explanation as to why NJ businesses seem so reluctant to accept a card that is accepted everywhere else.

[JonnyFive]

Any debit card issued by a bank is "bank issued," including those with credit card network logos on them. The bank is the one who takes care of customer service issues, guarantees funds, punishes you for overcharges, etc. All that logo means is that you can use the POS network of the CC company with whatever provisions that entails (like being able to use a signature for an offline debit).

Strictly speaking you are correct, yet there obviously must be some sort of difference as noted in my previous comments.

The only difference between the ATM/POS bank cards and those with a credit card company logo on them is the access to a given POS network. Saying they're not a "true debit card" or anything of the sort is like me saying that AmEx isn't a true credit card because many businesses don't have access to their POS network, and therefore won't take it.

The requirement of a PIN number on the ATM/POS network cards (I use this to refer generally to the various NYCE-type networks, of which I only know the names of one or two) is a function of the fact that those POS networks won't process non-PIN transactions. In addition, the business needs to have the equipment to process PIN transactions, which is something I've seen a lot of smaller businesses not have.

I don't know the specific reason for the lower adoption among NJ businesses, but it probably has something to do with them not wanting to pay whatever costs are associated with setting up the POS network required to take non-CC company debit cards. Primarily, that would seem to mean PIN machines, plus whatever network costs are involved.

What percentage of NJ businesses don't have access to the ATM/POS networks, anyway? Is this something you've seen numbers for, or is this something you've seen personally?

Also, are you including companies like Wal Mart, Best Buy, Target, and other big retailers in this observation? It wouldn't surprise me in the slightest that small businesses tend not to have the facilities to process PIN transactions, as most around here don't either. It would surprise me a lot more that big retailers tend not to have them either, since they could bear the additional cost far more easily (and tend to standardize retail technology across the country).

[Just thinking]

What percentage of NJ businesses don't have access to the ATM/POS networks, anyway? Is this something you've seen numbers for, or is this something you've seen personally?

I can't give you numbers, as it is a personal experience. But I can tell you that both large and small companies by and large don't take them (the PIN type). Maybe someone else here can tell of their experiences of using non-CC debit/ATM cards in NJ. But if it's the hassle of having PIN machines, why are they so common elsewhere?

[CriticalThanking]

I thought there was also a difference in that ATM/POS had a $50 limit of liability upon fraud (with proper notification), but the others had a $500 limit. I could have sworn that was the case several years ago. I used to fight with banks to make them give me just the ATM/POS. The only reasons I could think for them pushing it would be to put more risk on the customer and/or marketing funds from Visa.

CT

[JonnyFive]

I can't give you numbers, as it is a personal experience. But I can tell you that both large and small companies by and large don't take them (the PIN type). Maybe someone else here can tell of their experiences of using non-CC debit/ATM cards in NJ. But if it's the hassle of having PIN machines, why are they so common elsewhere?

Like I said, I have no idea. Really, without something more substantial I couldn't even begin to guess, as all I have right now is your personal experience.

If you found that a lot of big chains (Best Buy, Wal Mart, CVS) didn't have them, that might say something about how NJ is connected with the ATM/POS networks. Without more information, like I said, I couldn't even guess.

There seems to be a distinction made in the law between a "debit card" and an "ATM card," but given the availability of ATM/POS networks to perform POS transactions, I'm not sure that distinction is really all that meaningful. Maybe better to do what we've been doing and just call them all "debit cards" rather than "debit" for those with access to card issuer POS networks and "ATM" for those that can't access aforementioned networks.

The distinction seems more meaningful in countries where there are debit cards without CC company branding that aren't also ATM cards.

I thought there was also a difference in that ATM/POS had a $50 limit of liability upon fraud (with proper notification), but the others had a $500 limit. I could have sworn that was the case several years ago. I used to fight with banks to make them give me just the ATM/POS. The only reasons I could think for them pushing it would be to put more risk on the customer and/or marketing funds from Visa.

It depends on how quickly you notify the issuing bank. Within two days and your liability is limited to $50 under federal rules. After that, you have a maximum liability of $500. [Source (http://www.ftc.gov/bcp/conline/pubs/credit/atmcard.shtm)]

This is for any stolen debit card or ATM card. In Federal Law, there is no difference. As JT said, the need to enter a PIN might make the ATM card a bit more secure.

Really, a credit card provides the most insulation against fraud.

[Steve]

Debit card fees are, I think, much lower (and often a fixed sum, not a percentage of the transaction) than credit card fees. I would be more surprised if they didn't offer the "cash" price on a debit card transaction.

I wonder if this is actually the case. A local small business (dog groomer) that I have dealt with for years accepts only cash or credit cards. Recently they had some new equipment installed that looked like a debit card reader so I asked if they were now accepting debit. The answer was no, it was just a new credit card reader. I then asked if it was more expensive for them to accept debit than credit cards. The answer was "much more". So, at least locally here in BC, debit cards seem to carry a significant cost for the merchant.

[Jaggy Bunnet]

I wonder if this is actually the case. A local small business (dog groomer) that I have dealt with for years accepts only cash or credit cards. Recently they had some new equipment installed that looked like a debit card reader so I asked if they were now accepting debit. The answer was no, it was just a new credit card reader. I then asked if it was more expensive for them to accept debit than credit cards. The answer was "much more". So, at least locally here in BC, debit cards seem to carry a significant cost for the merchant.

It may vary be location, but certainly in the UK debit cards are much cheaper. Indicative prices from a couple of sites dealing with adding the ability to take card payments to your website:

"The bank will also charge a percentage for each transaction. Again this depends on the bank and your business category. But it can range from 1.5% to about 5% per transaction. Debit cards such as Switch are cheaper to process -from about 0.10p to 0.30p per transaction."

http://www.smartmerchant.co.uk/prod1.asp?ID=205

"Then there would be a merchant service charge between 1.6% - 2.8% levied on any credit card transactions depending on many factors such as the anticipated volumes, the number of years you have been trading, average transaction amount etc. On debit cards the bank would normally charge a fixed price per transaction ranging from 20p – 50p on average."

http://www.securehosting.com/merchant_accounts.html

Logically it makes sense that debit cards would be cheaper as there is no credit being extended to the customer and therefore there is no interest cost, credit risk etc which would impact the price. In addition (and again speaking from a UK perspective) credit cards offer an element of insurance to the customer if the goods are faulty, not supplied etc. which is not available with debit cards. Again this means there are additional costs with a credit card rather than a debit card.

[69dodge]

I am pretty sure that such a "policy" has no legal teeth. Or, the worst that a credit card company could do would be to not allow a seller to take their card from customers. Which smacks of cutting off one's nose to spite one's face.

But threatening to cut off your nose can get you stuff from those who would prefer you didn't, if they think you're crazy enough to do it.