Update 6/25/24: US District Judge Margo Brodie issued a ruling blocking this settlement and the parties must respond by June 28, 2024. The details of the ruling have not been made public.
Original post: Visa & Mastercard have reached an estimated $30 billion antitrust settlement to limit card fees for merchants but have denied any wrong doing. Under the settlement Visa & Mastercard will:
- Reduce swipe fees by at least four basis points (0.04%) for three years
- Ensure an average rate that is seven basis points below the current average for five years
- Remove anti-steering provisions (meaning merchants can offer cash discounts or impose surcharges on cards with higher interchange fees)
The fact is that the transaction fees are more than worth it for going cashless. The costs of handling cash exceed the fee %.
That is, unless you are underreporting taxes in order to save a much bigger %, which I’m sure is what cash-based businesses are doing.
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Merchants are trying to game the system as much as Visa/MC do. Seems they to want it both ways too.
1. They want the credit card customer but at the same time charge them a fee.
2. They’d prefer cash over credit card to avoid the fees.
+ What they should do is make a business decision, to be a cash only or all payments business.
+ Calculate the cost of accepting credit cards and look at it as overhead (cost of doing business) and adjust their prices accordingly.
I think small businesses like cash so they can lie on the taxes as well.
Accountant: “Do you use the cash or accrual method of accounting for tax purposes?”
Small Business Client: “We use the break-even method of accounting.”
Somewhat agree. I’ve talked with many small business owners in passing. The like avoiding taxes by offering discounts for cash. HOWEVER – the US is heavily credit card centric. One salon I went to finally gave in after fighting for YEARS and got a CC machine because most people don’t like carrying cash. It’s a pain. Cards are easier and faster, which in this day and age, many people prefer. Faster.
Additionally, many banks have started limiting or asking questions when you deposit large amounts of cash. I had a situation where I was depositing $500. They questioned me where the cash came from and stated that if I did this a lot, I would have to provide receipts. Some new law or something in the last few years. Unsure if true or not, but I encountered this “please show ID + you can’t deposit too much in cash” line from Truist and TD Bank… The teller said some people rent out rooms and deposit $1k in cash monthly and it gets flagged…..
Total BS bank rule implemented by your bank.
I worked in banking for many years. Never cared for any amount of cash coming in. Only thing was if amount was over 10k we’d legally have to file a BSA (Bank Secrecy Act) report. Funnily it’s a misconception to avoid 10k so people do 9,900. Exact 10,000 isn’t reported, it has to be over 10,000, so even 10,000.01 gets reported but not 10,000.
Second one is SAR(Suspicious activity Report) where if you feel the money is involved in illegal activity. You can even report a penny for it. And usually 9,900 cash transactions get reported because it’s obvious attempt to avoid 10,000. I have seen 10,000 transaction and never reported it but have reported every 9,900 ones.
Very untrue and it’s just your bank budding their nose in your business. You can literally go to the ATM and deposit that cash without human interaction if you wish.
Structuring.
I am wondering why ATM deposits of 9900$ won’t get a SAR.
Almost no human intervention happens on ATM deposits. Unless it’s old school cash in envelope deposit via ATM, most banks don’t even deal with ATMs. Money is processed by cash vendors. Most banks will do is take out check deposits and put somewhere.
Good!
Why is it that Brazil can implement a safe, secure and free instant payment system that consumers can use, but the USA apparently can’t. Pix is a state-owned instant payments system in Brazil that allows people, companies, and government entities to make money transfers 24 hours a day, seven days a week, in a matter of seconds. Its immense popularity has dethroned cash as king and is putting card networks and Brazil’s three-decades-old cash-based payment voucher—the boleto bancário—on notice.
Instead we are funding a bizarre private system that acts as a middleman and siphons $$$ from all involved.
State-owned?
Yes, it is controlled by Banco do Brasil.
So the government knows where you spend every penny of every dollar and every penny of every dollar you pay to someone for whatever. Hmmmm.. I can’t see the future abuse for this business plan in any way shape or form.
Are we pretending that the US gov’t cant see all of that now?
Oh please, don’t bring politics in this, as if US corporation has never willing to hand over your data to the fed when demanded.
Exactly. Not to mention there is already something called the IRS that knows about your bank accounts, etc. It’s always amazing to me that people mistrust the government so much, yet they don’t blink about a for profit corporation having all of their information. At least with the government you have a vote for representation. With companies their only loyalty is to their shareholders to maximize profits.
I’m a big fan of credit card rewards, but I’ve come to the realization that we have a horrible system, where a middle-man is fleecing billions out of the economy each year and throws a few “credit card rewards” out there to distract as to what is going on. We’re all paying for it.
Agreed. Governments have found a loophole in tracking certain people by basically using data brokers to track people. Rather than going through court systems to subpoena and obtain tracking. All legally.
As someone that ACTIVELY attempted to fight privacy invasion issues (to be explicit: having only a dumb phone, paying cash for sim cards, and not a ‘tracking’ smartphone; paying in cash for all purchases, etc) YEARS ago — while it’s possible, at the end of the day, you are wasting more time AND money to fight all of this. Every aspect of our lives uses either a computer or phone app. Unless you’re willing to become Amish and swear off tech forever… that’s the only way to “show the gov’mint” who’s boss.. LOL
I also did the math – companies are giving fairly big discounts for you to use their apps. Yes, likely for data mining and tracking. But also – long term goal of LESS employees and more profits. McDonald’s, Pizza Hut, just to name two – they have about 20% discounts either on the app or on their website. Heck, even mom and pop shops have online ordering with 10-20% discounts!
It is insane to be on a deals website and also complain about government tracking. You can have one or the other..
I feel like the the market being saturated on every side, the only way to make money is to squeeze in between and take a small percentage of profits – whether you’re moving data along or moving actual product. Our financial system leaves a lot to be desired, but it makes a lot of money for companies that are intertwined.
Similarly, there is a government support payment system called Ru-Pay which gives Visa and MC run for their money in India.
I was worried about this so happy to see it blocked.
Can you explain what it means and why this is good?
My understanding is this deal is rejected so now Visa/MC will have to give an even more favorable deal to merchants or this goes to trial. How is this good for me? I just want my churning money…
I can offer an explanation.
It’s good because the anti-steering provisions are pretty ass and a merchant can offer “cash discounts” in excess of whatever percentage gain you’d get for a product. Basically imagine a product is $20 cash and $22 card. Your 5% category bonus you get for the product will still net you a loss over using cash. Sure you can spin this as a “well X points are worth X cpp” but that really only applies for travel (especially since the Chase PYB is seeming to fizzle away slowly). If you’re on team cashback you are mostly screwed. Even if you’re on team travel you’re still mostly screwed unless you know exactly how to game the airline points (this is a whole other topic). Even Chase’s 1.5 modifier won’t be enough to make that 5% category make sense, you’d save money if you use cash.
Basically this would have been a loss for us in the churning/finance community. Those who transfer points and know how to game airline points for cheap F/J fare travel would still see some degree of loss.
I think in reality, most merchants won’t offer a cash discount in excess of the card fees though. Most of the time I see a card surcharge its only for about 3% so using the 5% card will still net something at least. I don’t think the surcharge provision would have changed too much in the long term.
Yes my example was a bit extreme but let’s also imagine the “$X amount required for credit purchases” thing some merchants do and the fact that most purchases are not at the 5% or even 3% category for general every-day spend. The churners who do this as a true hobby will probably find a way to make it work but it’ll just get more annoying.
Those who like to be a bit more casual about it will have to find some other hobby.
It’s funny how if the business simply bakes these rancid surcharges into their costs, and then gives a 3% discount instead of a 3% surcharge for using cash/debit, it would totally change the tone of this conversation into something positive.
I think we’ll start seeing that more if any of these businesses had $0.02.
Otherwise, FORGETABOUTIT!
I don’t see how surcharges for higher priced cards will work in practice. How can the store tell you what you’re going to pay until you actually swipe? Will they have you do a preliminary swipe to see whether it’s a high-interchange-fee card and then ask for your approval of the surcharge? Or will they charge the same surcharge for all credit cards?
They would probably put responsibility on the customer to know what kind of cards they have and just post a blanket statement that high-interchange-fee cards will be processed with an extra fee. Kind of like foreign transaction fees. The price at the merchant doesn’t change directly and the fee is added after.
If the $ amount charged is higher than what I agreed to at the moment of purchase then I would have every right to dispute this charge. Possibly putting the merchant on the hook for the dispute fee and eventually the possibility to accept the type of card revoked in the future due to abuse.
Is this what Biden was referring to during the SOTU?
I did it!
Always carry a $100 bill and a checkbook.
If a coffee shop charges a fee, hand them the $100 bill.
If a grocery store does it, pull out your checkbook.
They can either hire more cashiers or drop the surcharge.
The $100 bill only works (legal tender) if you already got your coffee, otherwise they can refuse service and no coffee for you.
Checkbook… I have no idea why anyone would accept such payment.
They could always simply ban you from returning to the shop.
Or they could just accept your credit card and keep your business. Smartest policy is to accept all payments and make paying as easy as possible.
How can you simply assume that? Plenty of places don’t, so clearly it makes sense in at least some cases.
Sales 101: FAIL
How can you simply assume that? Plenty of places don’t, so it must make sense in at least some cases.
So there’s 100’s of other coffee shops within spitting distance. They offer coffee which is a bean that’s been around for thousands and thousands of years. If it’s available on every corner and the quality is basically the same. The consumers will eventually weigh their pros and cons and pick the business with the best customer service and the least resistance to the way that the person with the cash wants to do business.
Maybe but humans actually started eating it sometime between the 6th and 8th centuries.
And then comes the deserved Google or Yelp review. Enough of those and the merchant will go out of business because online word travels fast
Agree but unless you’re a well known face there I kind of doubt they’ll take checks. Does Costco even take checks anymore? Since you need a membership there if your check bounces they can just shut the doors on you.
In CA, SB 478 will ban hidden fee starting July.
How does it affect the merchant surcharge?
Nothing most likely, since merchants could just make it an unhidden fee and charge the customer anyways.