Attention: We are retiring the ASP.NET Community Blogs. Learn more >

Really irritated with credit card fees for merchants

When you swipe your credit card to pay for something, you probably don't think much about it. It doesn't really cost you anything directly, if you pay off your balance every month. But the truth is that it does cost you something, because the merchants get screwed and they have to pass that cost on to you.

I accept credit cards for CoasterBuzz Club memberships, to pay for event tickets and subscriptions to this site. Right now, if you add all of the fees and discounts together and divide by the amount I charge, my costs come to 10% of the transaction amount! So that $20 membership costs me $2 just to process. How ridiculous is that?

Visa and Mastercard need oversight. They can charge whatever they want because there is no one else. I've seen studies that estimate the true cost of a credit card transaction, for everyone including Visa/MC and the banks, to be around five cents. Yeah, five cents. So why am I paying $2 on a $20 transaction? Part of the problem is that I'm penalized for being relatively low-volume, but it still sucks.

Write your congressman. Ultimately you pay this as a consumer.

6 Comments

  • Jeff I hear you, but it's still a heck of a lot better than doing things the old way of taking a PO or having somebody send check and dumping it into the bank. I do business online and I wouldn't want to ever going back to doing things differently since with CC processing the entire process can be automated.



    10% is very high, but as you say low volume and low price items are penalized the most.



    There are alternatives for you though. You can use PayPal or PayPal's new Payment Pro which is a bit cheaper overall because you avoid the monthly fees which is what is probably killing you.

  • I would never work with PayPal. Too many horror stories and very little recourse if something goes wrong, since there's no real oversight.



    Monthly fees aren't really hurting me that much. It's the high discount and per transaction fees, again because of low volume.



    Truth be told, for everything I do, I accept checks too, and it costs me nothing. I sign the check and deposit. The irony there is that a great many humans spend time processing a check, and it doesn't cost me, or the customer, anything. That's what's so screwed up. Processing the card requires zero human intervention, and costs a ton. It doesn't make sense.

  • Also, the electric company has the nerve to charge you for electricity, which in the end is passed on to me as the customer in your prices. Bastards. We should all read Marx and make his visions reality ;)

  • Come on Jerry... you're smarter than that. I'm all for capitalism, but this pricing isn't logical and there is no competition.

  • But the goal of any company under capitalism is to make the most money - not to have a lot of competition that will make the market better for consumers but much much worse for the companies. I'm still waiting for AmEx to do anything with their court victory that ruled Visa and Mastercard monopolistic companies just like Microsoft. I t was heralded as a big win to the users of the system but I have yet to see anything.

  • From Mastercard "• Achieved Double-Digit Revenue Growth, Up 19% to $772 Million• Net Income Up 82% to $120 million, or $1.20 Per Share"



    ---



    Clearly they are profiting significantly but the 'a transaction costs 5 cents' statement seems to be invalidated otherwise their profit would be more than 90% of their revenue. Running a company has a lot of costs that are not in a transaction alone. The credit card companies have to deal with fraud and identity theft, provide customer service, employ are marketing and sales team so that their card is universally accepted and used, they have to deal with storing records and data, they have to process your payments to them and their payments to retailers such as yourself.



    As for checks, I have to buy them in books for about 10 dollars a book, and not to mention needing money in a checking account which generates little or no interest. Ever had a check bounce from a customer, or had a check of yours bounce on someone else. They costs, the fees, the penalties are horrible. At least with credit cards you know as long as you are legit you are going to get paid by the consumers bank, and the bank will send their people (another cost) after the cardholder.

Comments have been disabled for this content.