Expert: Small Business Model Of Discounts For Paying With Cash Also Possible
NEW YORK (CBS 2) — Every time you use your credit card, the store pays up to 3 percent of your total purchase to the credit card company. It’s called a “swipe fee” and now some fed-up retailers are getting ready to pass this cost on to you, in the form of a surcharge.
While others want to reward you for paying with cash.
Paper or plastic? It’s a simple choice, but it’s about to get a lot more complicated, CBS 2’s Emily Smith reported.
“You’re going to start to see retailers really weighing what they’re going to charge consumers for using a credit card,” said Kelli Grant of Smart Money magazine.
That’s right, major retailers — from supermarkets to drug stores — may soon be charging you more if you choose to pay for an item with a credit card, instead of paying with cash.
“An extra 2 to 3 percent,” Grant said.
It’s all because Visa-MasterCard and several major banks settled a long running lawsuit alleging they conspired to fix “swipe fees.”
As part of the settlement, retailers are now allowed to charge customers a surcharge if they pay with plastic.
“It’s going to be, for consumers, an interesting dance of convenience versus cash,” Grant said.
Grant, a consumer expert, said up until now most business owners rolled the cost of processing a credit card into the prices customers pay. But for businesses that sell small-ticket items and are hit hard by 3 percent swipe fees, it may make more sense to ask for the surcharge.
“To actually discourage people from paying credit when they think ideally you should be paying cash,” Grant said.
Conversely, retailers may also start offering discounts to those paying with cash, a practice that’s not completely foreign and seems to be growing with small business owners.
“If you want to pay by cash, we’ll be more than happy to give you a cash discount for not using a credit card,” said Tony Dicesare of Auto Body Service in New Jersey.
It’s becoming such a popular practice there’s even a website that tracks businesses that offer “discounts with cash” by zip code.
“If I can get an incentive to do so, I have no problem doing that,” one consumer told Smith.
Overall, people Smith spoke with have mixed feelings on the cash-versus-credit options.
“Merchants are going to do what the merchants are going to do and people are either going to pay it or not,” one person said.
But consumer experts said it’s a great way to help your bottom line.
“Not only are you able to stick within your budget but you might actually save a little bit of money, too,” Grant said.
If you’re buying an expensive item, experts said it’s better to pay with a credit card so you’re protected should the product be defective or not as advertised.
These changes won’t happen overnight. Computer systems, price tags and employees will all have to be updated by stores who choose to offer two different prices for cash and credit.
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