Saturday, February 16, 2013

just charge it

"Credit card surcharges?  Don't expect to see them anytime soon"

The headline seemed a bit incongruous.  A bit of angst and an equal measure of relief.  All in one sentence.

I seem to recall American retailers and the credit card companies were involved in a law suit over swipe fees -- the 2 to 4 percent charge the credit card companies charge retailers for credit card charges. 

That law suit settled a year ago.  And a big settlement it was.  $6 billion worth.  The retailers also gained the right to charge a checkout fee of up to 4 percent on credit card charges. 

The news story was that most retailers are not going to use the surcharge.  Not just yet.  Adding additional costs in a recovering economy is not the way to win back customers.  But the surcharges are undoubtedly coming.

They are already here in Mexico.  There are not very many places locally that accept credit cards.  But those that do add the credit card company charge on the price.  Usually just under 3 percent.

I first noticed that items had a cash price and a credit card price in the local circulars from the electronic stores.  Coppel.  Office Depot.

The dual pricing system seemed odd to me.  Until I remembered when all-purpose credit cards were first issued.

Bank of America, with its BankAmericard, was the first.  In the 1960s.  There were plenty of revolving credit cards with gas stations and retailers.  But Bank of America's card was meant to cover a broad range of purchases.

At the time, my family owned a lawn equipment and motorcycle shop.  My mother and I were reminiscing last night about the impact of the card on our business.

It was not much.  Most people could not qualify for the card.  And our customers, who carried one, usually chose direct bank finacing for motorcycle purchases.

But, even then, there was tension between merchants and the Bank of America about who would pay the fee.  Well, there was no controversy.  The bank merely decreed -- if you accept the card, you pay the fee.  End of story.

That is how matters stayed -- with a few skirmishes in the Carter inflation years when merchants attempted to get around the use of credit card fees by allowing a "cash discount" -- until last year's settlement.

Having finally won, merchants are now in a quandary about when they should start applying the charge.  And there will be a stir.  For five decades the merchants have been paying the fee.  Breaking that custom is going to be tough for consumers.

Or maybe not.  We commercial air travelers have learned to do without in-flight meals.

Mexico, at least, will not have that problem.  There is no custom to break.


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