How do some large chain stores get away with charging an extra fee for using credit/debit?

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How do some large chain stores get away with charging an extra fee for using credit/debit?

In: Economics

4 Answers

Anonymous 0 Comments

I usually see this at small stores, not large chains – but it’s because there’s a direct overhead to the store by a third party that handles the transaction and all the regulations associated with it. Some contracts are a charge per transaction, which is easier to get into for small business, and why you’ll sometimes even see a ‘minimum’ for credit card transactions.

Probably one of the most transparent examples of this business model is Square, because they were marketed to be the ‘easy’ credit card handling company, allowing a small peripheral to change your phone/tablet into a point-of-sale device – I would look at their services if you want a peek into why some stores would rather deal cash, or pass the fee directly to the customer.

Anonymous 0 Comments

Credit Card companies and payment processors charge Retailers a % of the transaction. Normally between .5% up to 3.5% per swipe.

The retailer then passes that cost on to the consumer.

Anonymous 0 Comments

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Anonymous 0 Comments

Often times it is done by discounting a cash or debit purchase rather than by charging a fee for credit card use. It’s a work around for the bank agreement for not passing the charge on to the customer.

I only see gas stations do this on a corporate level. Often they also have their own credit cards to offset this. Small businesses often have the surcharge, usually as a flat fee as a “Processing Fee”.

Other stores (Such as WinCo) merely choose to not accept credit cards to avoid the fees.