A question everybody can contribute to...

Brad Churchill
09/16/13 16:49:28
527 posts

I am having the following dilemna: My business is about transparency, and I am struggling with the whole issue around accepting credit cards.

Simply put, credit cards are an expensiverip off. Both the consumer and merchant pay to use them. Small merchants pay close to 5% when all is said and done (1.9% to Visa, plus merchant fees, plus their internet connection fees, plus equipment fees, plus bank fees, plus the cost of their time to reconcile everything monthly).

The average consumer has no clue how much businesses are charged, because most merchant agreements have up until recently forbid the merchant from charging service fees at the time of the sale. As a result, most businesses have simply increased their prices across the board, building the fees into the overall cost of their product.

But what about the cash buyer?? 50% of my customers pay in cash. Why should THEY subsidize the person who buys $200 worth of bars on his Master Card?Mr. $200 purchaserdoesn't want to pay ATM fees, but they don't realize that the ATM fee is just $2.50, whereas the cost of that order to them for using their credit card is $10. The merchant certainly isn't going to suck it up.

What's worse is that as a consumer I don't see many merchants giving incentive to pay cash. Instead they are grabbing the extra $$ from the cash customer and hanging on to it. The cash customer is subsidizing the credit card buyer, and to me that's not fair.

The question I have is, AS A CONSUMER, (not a business owner) which option would you feel better with?

A) The price be increased overall by 5%, and cash purchasers offered a 5% discount.

B) The price be what it is and know what you are being charged for the "convenience" of using your card.

Personally, to me A is deceptive, but that's just how I am.

There is no right or wrong answer here. I am just soliciting feedback.



updated by @brad-churchill: 04/10/15 16:33:28
Ruth Atkinson Kendrick
09/16/13 18:39:37
194 posts

As a consumer, I put everything on a credit card because 1-It is easier, 2-I can track where I spend my money, 3-I get cash back at the end of the year (a percentage of all charges). I rarely carry much cash. I also pay off my card each month so I don't have any fees. I think most people assume the fees are built into the price. As a business owner, I have to accept credit cards. Online sales would be non-existent (I know, you don't do that). Also, at pop-up markets, which I rarely do, they are a necessity. Square is perfect, fees are low, and it is on your smart phone or iPad. Bottom line--I vote for B.

Brad Churchill
09/16/13 19:44:04
527 posts

Thanks Ruth. We actually do offer online ordering, but it's for pick-up in our stores. The online event booking does require credit card use. We have been accepting cards for event booking since day one.

You're right. Square is great for individual proprietors. I see it all the time at farmers markets and outdoor markets.

Cheers. Brad.

Potomac Chocolate
09/16/13 20:49:56
191 posts

Someone recently mentioned to me that they have some sort of square in-store device so they can take advantage of square's low fees. While not an answer to your original question, it may be worth looking into as a way to lessen the difference between cards & cash.

09/16/13 20:50:07
110 posts
As a consumer I (we) have been trained to accept that credit/debit card price and cash price should be the same. This is good marketing on the part of card companies. Deviating from this would require endless explaining.That said if I were able to be a consumer of your products, I think I could come inboard with a cash discount or another incentive such as a drawing for a class or box of truffles.Knowing that you have a loyal base and they are accustomed to exceptional clarity I think they could catch on quickly.Would I get the same price for a check as cash?Also just thought of an advantage if the mix of payment methods. Cards are faster than checks and sometimes faster than cash.Great discussion topic.
Brad Churchill
09/16/13 22:21:50
527 posts

Square works great for sole proprietors, but doesn't work for multiple bricks and mortar retail locations with multiple staff. Square also only works on Iphone. Won't work for my application, as I have multiple stores and am now signing up dealerships.

Brad Churchill
09/16/13 23:03:59
527 posts

Thanks Larry.

I Really like the idea of a draw for event tickets. That's an $80 value!

We currently accept corporate cheques only, as personal cheques here in Canada are more or less a thing of the past. Here in Canada the big thing is Interac (debit).


09/17/13 04:21:45
754 posts

I pay for almost everything in cash, when possible. Obviously i'm having a hard time sending $20 bills through the internet, they keep getting stuck in my dvd slot for some reason. must be a jam. anyway, CC's are terribly convenient, but, as you note, expensive. I've also gotten in the habit of asking merchants if there are discounts for cash - i was surprised by how many offered up to 10% discounts simply for me paying cash - now, some don't (any store that's a major retailer or chain, for example), and that's fine.

Interestingly, a few years ago my wife had her identity stolen and a bunch of things put on a CC under her name. the charges were reversed, yadda yadda, but we wanted to take it further and nail the guy. the CC company effectively said that this was simply the cost of doing business, and there was no intent to further pursue/prosecute it from their end. Basically they just told the criminals they've got a very, very low chance of getting prosecuted, making it such a tempting target to continue to do more theft. Part of those transaction fees are going to subsidize that cost of doing business.

Potomac Chocolate
09/17/13 06:30:41
191 posts

This device was targeted at brick & mortar retail locations. I just looked into it and it looks like it doesn't really take multiple stores into consideration. All of the sales would probably just show up in the same account with no differentiation.

Side note: Square works on Android too.

Andrea B
09/17/13 08:31:37
92 posts
I prefer to pay for everything possible with CC. It is very convenient for me to not have to carry cash plus I can track expenses. I do think most consumers have an idea of what it costs the vendor to accept CCs but maybe they don't factor in the Internet and equipment costs. That said, I still think accepting CCs is a cost of doing business. I can understand a small vendor having a sign up saying they only accept cash but for some reason I find it annoying when a place has a sign up saying they charge less when you pay with cash. Locally there is a place that does this for a commodity you can buy at various places. Their cost, even at their "reduced cash price" is higher than you can buy it elsewhere and pay however you want.I am also the customer who would not be incented to pay cash for the possibility of winning a basket of goodies. I look at those giveaways as a way for the store to collect my personal information for the mailing database.Where I live, I have not found stores willing to offer a discount either when I buy in bulk, buy an expensive item or pay in cash especially for an expensive item. I have asked! I can't see a store lowering their prices overall if they decided to not accept CCs - I think most would simply keep prices where they are and pocket the difference.Keep us posted on how you decide to handle this. It would be interesting to see the response down the road if you decide to offer a cash discount to see if it caused confusion with the customers (I.e. how much time do you take out of the day explaining the specifics to customers) or if they seem to really love it and it maybe boosts your sales.
George Trejo
09/17/13 12:34:37
41 posts

I think it's also important to consider the cost of accepting cash, as it is a real expense and it grows especially with multiple stores, and high cash volumes. These include transporting cash deposits to the bank, the cost of internal and external theft, banking fee's (at least here, it's common practice to charge fee's for monthly cash deposits exceeding $10,000).

From the consumer standpoint I'd pick your option A.

Adam G.
09/18/13 10:55:38
20 posts

"... but for some reason I find it annoying when a place has a sign up saying they charge less when you pay with cash."

I also think consumers would be annoyed with the reverse -- getting hit with a credit card usage fee during checkout. I think it's pretty well understood that by and large we're a plastic-using society (for better or worse), there is a price to pay for that convenience, and it's expected that companies factor those costs into the price of doing business.

There's a regional liquor store that offers a 5% discount if you pay with cash or debit card. The cashiers consistently mention this at checkout and signs are posted everywhere. Customers love this. This offer (along with a great product selection) is effectively building customer loyalty.

Julie Fisher
09/19/13 01:20:57
33 posts

Debit cards rule here in the Netherlands. Credit cards are only wielded by tourists. But I still prefer to pay cash, and would appreciate a discount for cash. I think more of us should do so just to publicise the point that the banks are getting rich on transaction charges.

Joe Suhrada
09/24/13 20:48:50
4 posts


I have run retail chocolate shops for half of my 48 years. For those of us who went to public schools that is 24 years.

Accepting credit cards is kind of like adapting to the internal combustion engine & automobiles about 90 years ago. At that time there were still horses in use, but you really had to be backwards looking to believe that the trend to automobiles was not going to overwhelm everything and the horse and buggy would really become a thing of the past. Cash is the horse, and credit/debit cards are the automobile. It is what it is. In five years we will be accepting 90% of our sales that way. In ten years we will be pushing 99% credit/debit to 1% cash.

In 20 years, youngsters will not even grasp that we used to exchange paper money! It will not exist.

Raise the price and everyone pays it, just stop agonizing over the inevitable and focus on doing something else in your business better, and that 3 or 5% won't bother you OR the customer as much.

Joe Suhrada
09/24/13 20:48:54
4 posts

The underground economy in Europe is not about credit cards, it is about TAXATION! LOL!

Simon Norton
09/27/13 07:28:25
5 posts

I live in Germany and everyone uses debit cards. There are plenty of business with "cash only" signs. I used to use the credit card very often but these days, I really have gotten use to cash and debit cards. I really find it easier to keep track of what I'm spending. If it is impacting your business, why not try and implement a scheme with just debit cards and cash and see if it pays off? If not, you can always revert to the way it was.

Andy Ciordia
09/27/13 13:40:31
157 posts

The real question is whats your split? We see only 10% cash here the rest is all CC, so is your demographic a huge cash basis or real even split? CA may be different than the US I dunno.

Making up lots of rules confuses customers. I educate card goers on fees from time to time but otherwise they just want their product and no one cares.

If you are also paying 5% for your fees you really need to find another provider. You have more power than you realize if you stick with traditional merchant services. You're a hard core arguer so you should really battle them. Or go with a one size fits all like Square, Paypal, Fee Fighters, etc.

Lastly I wouldn't raise your rates unless you felt that you weren't doing 5% more business by accepting the cards. I educate a lot of people at farmers markets. If you don't accept cards you have nothing to lose. If you accept cards and you do 20% more business, is it worth paying them 5% for that? They don't call it Cost Of Doing Business for nothing. ;-) Again though you should be able to get a much much lower rate.

Brad Churchill
09/27/13 16:36:08
527 posts


Thanks for the feedback.

Hard core arguer eh? I resemble that comment! LOL

The credit card fees are low (about 1.9%). However there are lots of other "fees" involved when it comes to accepting credit cards, and all of them add up to almost 5%. My system is 100% web-based, so I pay a merchant fee (to Visa) for each transaction, then a gateway fee, then a monthly service fee, plus the cost of connecting to the Internet. If it were just paying Visa I wouldn't complain.

Last year I paid $20,000 in "fees" to accept credit cards and subsidize people's desire to collect airmiles. At $20 per average transaction, over 1,000 people would have to walk out out my doors without purchasing anythingbefore I break even with my losses in fees. That's a lot of people.

The challenge I'm faced with is that with multiple stores, consistency in the eyes of the consumer is very important. Accepting cards at one and not others pisses people off. One of my stores is in a marquee financial building in Calgary, and EVERYONE uses their corporate cards to buy things. It's crazy!!! You wouldn't believe how many people buy their $2morning Starbucks tea with their visa!! That's just ridiculous!

My manager at that store is getting pushback, and that is the reason I'm exploring the option.

Now having said all of that, I have given my staff the green light to begin accepting cards again, and have designed the cash register so that it just adds 5% to the total when the person chooses to pay with plastic. You know what? Nobody even looks at the invoice or cares about the increase! (at least not yet). Sales have gone up at the corporate location significantly (we put a 6 foot high sign up saying we now accept visa and mastercard), and at our other stores, revenue has remained flat, but the split has become about 50/50 between cards and cash.

My conclusion: People are strange......


Julie Fisher
09/28/13 00:52:53
33 posts

Slightly off topic. But you said that customers use credit cards, even though they are being charged an extra 5%, without noticing. I have a small shop and normally we avoid stocking items that the big supermarkets stock... simply because they will normally be cheaper.

However some products we simply have to have, and even though we can be 20% more expensive, people will still buy them... not everyone, but enough. And I would say that over half the customers never look at the price, at least not in detail.

My conclusion: People are strange......


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