In the next few years your credit card experiences will change. Don't worry, your rewards, air miles and cash back bonuses aren't likely to disappear, but perhaps they are about to lose their luster.

When your local merchant accepts your credit card he/she is usually subject to minimum charge for each card use. Those charges commonly include a variety of fees together totaling between 2.5% to 3.5% of the transaction (called the effective rate.) Slapping down a debit card is less costly to them, but will incur a cost called a swipe fee, commonly a quarter to a half dollar (25-50 cents).

This doesn't seem like a lot of money, until you add it up. An average sized restaurant or convenience store can easily be paying $20,000 a year in credit card costs. A year-round medium sized mom-and-pop hotel/motel might pay 2x's to 3x's that amount.

Just like convenience stores are a little more expensive, credit card use will soon be too. Merchants across the country are adopting 'discount for cash' policies.

Right now, 'discount for cash' policies are somewhat common at gasoline stations. Credit customers pay one price, cash customers pay a lower price. That paradigm will soon be as common as mosquitos among many different kinds of businesses, except with a twist - credit card customers will be charged a convenience fee (usually 2.5% to 4%) instead of 'across-the-board' higher product/service costs and it's all perfectly legal.

I know, the concept rankles the soul. Your first instinct is to protest, loudly! But, but... the New Testament says 'the laborer is worthy of his hire.' If you like the service/food/lodging the merchant provides would you rather (s)he spend more money to raise his rates across the board (think signage, brochures, menus, etc.) or simply surcharge his credit card customers so he will still be around tomorrow?

That $20,000 a year change makes a HUGE difference to your favorite restaurateur, innkeeper, convenience store owner or plumber. If you'd rather he/she change his prices instead and recoup the costs of typesetting and printing new brochures and menus, and changing the signs, possibly even remaking the TV commercials, be sure to mention it. Your neighbors will appreciate the 6% increases in prices (instead of the 2.5% - 4%) I am sure!

If you want to avoid the charge, next time just pay cash! No worries!


Posted 2/3/18