AMEX not accepted or surcharge

[Buzzard]

You both might want to have a close look at section 48 of the COMPETITION AND CONSUMER ACT 2010 - SCHEDULE 2 (otherwise known as the ACL)

http://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html#_Toc424644331

Can you dumb it down for me please Dr Ralph?

 

[Moopere]

I would agree if the establishment only accepted Amex, however while they have multiple fee free payment options, we are all smart enough not to rely on amex alone or we may go rather hungry.

I suspect that legally the implication here is that 'the price' is a "cash price" and cash, I think, must always be accepted.

However, in these enlightened times I find it simply dishonest to not be completely upfront about CC fees. If an establishment accepts cards and decides it wants to apply a surcharge then it shouldn't be in the least bit embarrassed by those same surcharges. However, the way most places appear to handle surcharges gives the customer the very firm impression that they _know_ they are being a bit cheeky .. its almost an embarrassment.

 

[Moopere]

Probably as it's still 2% and that would mean putting up the surcharge for visa/MC to above what it costs so that they are on par.

Its a real challenge to find credit cards these days that don't present themselves as 'platinum' or some other status laden/marketing driven label. Now, for sure, a big part of this proliferation _is_ marketing driven - who wants a mere gold card when you can have a platinum? But, the presentation of premium cards, talking mastercard and visa style here, cost the merchant more than the fast dwindling 'standard' cards and as another poster to this thread has recently presented, can oftentimes cost _more_ than a reasonably negotiated Amex cost to merchants.

Of course the customer for the most part is oblivious - but the thing that strikes me is how in Australia we are so focused, as merchants, on these small percentiles and surcharges. Other countries with far more competitive markets and much much slimmer margins for merchants don't even go there - customer service and the retention of customers beats out all other considerations.

Of course, as a general rule in Aus we don't give a damn about customers - so perhaps thats the basis from which this nickel and diming comes?

 

[TomVexille]

Of course the customer for the most part is oblivious - but the thing that strikes me is how in Australia we are so focused, as merchants, on these small percentiles and surcharges. Other countries with far more competitive markets and much much slimmer margins for merchants don't even go there - customer service and the retention of customers beats out all other considerations.

Of course, as a general rule in Aus we don't give a damn about customers - so perhaps thats the basis from which this nickel and diming comes?

You can say that again.

Quite simply the cost of accepting a card is part of the cost of doing business in this day and age and realistically shouldn't need to be passed onto the customer.

 

[coriander]

Of course, as a general rule in Aus we don't give a damn about customers - so perhaps that's the basis from which this nickel and diming comes?

I just checked my till - we now are taking about 85% of our gross in cards of one description or another: card breakdown is 75% credit, 25% debit. We don't have a surcharge - I figure I'll make it as easy to pay as possible and I don't care what card you use. When I set my fees I factored in 1% for cards, so if someone pays me in cash it's a 1% bonus for me which is insignificant in the broader scheme of things - things like client retention, clients telling friends and neighbours how easy it is to come to me etc. are much more important long-term.

If you're a restaurant charging $28 for a main and the 42c that Amex charges you is going to send you broke "...... and you're intimidated by the merchant charge, maybe you don't deserve your customers...." paraphrasing Peta Credlin. Or if your margins are that tight, just charge $28.50 for the main and be done with it.

There's a restaurant locally that wouldn't accept Amex because he said clients arced up at the 3% surcharge he HAD TO CHARGE to stay in business - to which I called BS as small business is offered an Amex rate of 1.51%, about same as Platinum Visa. I almost feel like taking in my last three dockets from a neighbouring restaurant into this idiot and saying "you mean you passed up $870 gross takings because you couldn't afford to lose $13.05 in merchant fees? Big mistake....... big..... huge!" and turn and swish my way out of his establishment.

But I won't. I don't wear dresses. We just don't eat there any more.

C.
(who, on reading this post back to himself, thinks he may be turning into a grumpy old man :shock .

 

[TomVexille]

(who, on reading this post back to himself, thinks he may be turning into a grumpy old man :shock .

I've met you, definitely not grumpy. Annoyed at incompetence maybe

 

[ComeFlyWithMe]

Its a real challenge to find credit cards these days that don't present themselves as 'platinum' or some other status laden/marketing driven label. Now, for sure, a big part of this proliferation _is_ marketing driven - who wants a mere gold card when you can have a platinum? But, the presentation of premium cards, talking mastercard and visa style here, cost the merchant more than the fast dwindling 'standard' cards and as another poster to this thread has recently presented, can oftentimes cost _more_ than a reasonably negotiated Amex cost to merchants.

Of course the customer for the most part is oblivious - but the thing that strikes me is how in Australia we are so focused, as merchants, on these small percentiles and surcharges. Other countries with far more competitive markets and much much slimmer margins for merchants don't even go there - customer service and the retention of customers beats out all other considerations.

Of course, as a general rule in Aus we don't give a damn about customers - so perhaps thats the basis from which this nickel and diming comes?

In my business (IT) we are lucky to make a 10% margin on equipment on a good day. Take out 2-3% and that margin is 7%. To be honest, without a surcharge it wouldn't even be worth selling anything. Luckily our clients are all business customers and apart from the small annoying ones, have no issue paying by EFT. We charge the customer exactly the percentage we get charged, and we wear the small cost of the transaction processing fee (anywhere from 60 cents to $2.50). We accept Bpay too and that costs us 88 cents from a bank account, or 0.5% from a credit card, so we don't allow Bpay from credit cards, as we can't really add a surcharge.

If my clients have a problem with the surcharge, we have fee free EFT and Bpay for them to use. If they want to pay the surcharge, we'll run the credit card. Simple as that.

This is not profit gouging or ripping off consumers. A business is perfectly entitled to recover the reasonable cost of processing a transaction via credit card.

In a retail store however, this is an entirely different scenario. Some get blended rates of 0.4% for Visa/MasterCard, however most have margins upward of 30%. Easily absorbed by them.

Out of interest, just the interchange rate (that is the part that goes to Visa/MasterCard) can be up to 2.4% on ultra premium cards. Blended rates get around these but businesses that don't know about this may pay huge fees to process our Visa Infinite and World MasterCard attached to the black cards we know and love as consumers.

Saying all that, Amex wants restaurants to accept their card, and the merchant can negotiate a much better rate down around what they pay for Visa/MC if they try. Some of them may just not know this or feel they have any negotiating power.

 

[ComeFlyWithMe]

I just checked my till - we now are taking about 85% of our gross in cards of one description or another: card breakdown is 75% credit, 25% debit. We don't have a surcharge - I figure I'll make it as easy to pay as possible and I don't care what card you use. When I set my fees I factored in 1% for cards, so if someone pays me in cash it's a 1% bonus for me which is insignificant in the broader scheme of things - things like client retention, clients telling friends and neighbours how easy it is to come to me etc. are much more important long-term.

If you're a restaurant charging $28 for a main and the 42c that Amex charges you is going to send you broke "...... and you're intimidated by the merchant charge, maybe you don't deserve your customers...." paraphrasing Peta Credlin. Or if your margins are that tight, just charge $28.50 for the main and be done with it.

There's a restaurant locally that wouldn't accept Amex because he said clients arced up at the 3% surcharge he HAD TO CHARGE to stay in business - to which I called BS as small business is offered an Amex rate of 1.51%, about same as Platinum Visa. I almost feel like taking in my last three dockets from a neighbouring restaurant into this idiot and saying "you mean you passed up $870 gross takings because you couldn't afford to lose $13.05 in merchant fees? Big mistake....... big..... huge!" and turn and swish my way out of his establishment.

But I won't. I don't wear dresses. We just don't eat there any more.

C.
(who, on reading this post back to himself, thinks he may be turning into a grumpy old man :shock .

Just FYI, the default rate for small business from Amex is 2.9% + GST. I know, I applied for a facility on behalf of a small business last week.

 

[basso]

That should read 'contract', not 'transaction' - you enter into a contract with the business when you order and consume food based on the printed price on the menu in the same way you enter into a contact with a petrol station when you fill up your car based on the price displayed at the pump and then pay afterwards - a merchant can't legally advertise one price to entice your business, gain that business and then change the price of the goods already consumed after the contract has been entered into at a particular price but before payment is finalised. Surcharges are perfectly legal, but must be disclosed in a way that allows the consumer to back out of the purchase completely, which means they must be disclosed on the menu (and at petrol stations, on the pump itself).

You are correct in that credit card surcahrges must be disclosed. You are quite wrong in saying that in a restaurant that they must be on the menu.

 

[Mr_Orange]

You are correct in that credit card surcahrges must be disclosed. You are quite wrong in saying that in a restaurant that they must be on the menu.

But surely, they need to be somewhere the customer can see them before they order and consume food?

If I went to a restaurant that was clearly surcharge gouging on Amex, I would leave without ordering and tell them why I was leaving.

 

[ComeFlyWithMe]

But surely, they need to be somewhere the customer can see them before they order and consume food?

If I went to a restaurant that was clearly surcharge gouging on Amex, I would leave without ordering and tell them why I was leaving.

Why do they? So that you know what you'll be charged for using your *preferred* card? It is not the merchants responsibility to put their surcharge in 48 point print and in lights upon your entry to the restaurant. It is also up to them whether they accept Amex or not, and whether to levy a surcharge for a card that typically costs them more to process.

If all credit cards incur a surcharge, I believe it needs to be disclosed, however if it is only on a card type other than Visa/MC then their acceptance and surcharge are discretionary.

Storming out of a restaurant in what could only be described as a dummy spit is entirely your choice, but I can tell you that you are missing out on some of the best dining experiences, all for the points differential of about 0.5 ppd.

And you keep saying surcharge "gouging" but you have absolutely no idea what it costs that business to process the card, nor do you seem to care. Do you run a successful business? If so, perhaps you can take said restaurants under your wing and offer a consulting service. If not, this is armchair management at its finest.

 

[Chicken]

Why do they? So that you know what you'll be charged for using your *preferred* card? It is not the merchants responsibility to put their surcharge in 48 point print and in lights upon your entry to the restaurant. It is also up to them whether they accept Amex or not, and whether to levy a surcharge for a card that typically costs them more to process.

I don't read it this way:

Businesses can choose whether or not to pass on the cost of accepting credit card payments to their customers. However, if you decide to impose a credit card fee, you must ensure your customers are aware—before they enter into the transaction or contract—that a fee will apply and the amount of the fee.

And you keep saying surcharge "gouging" but you have absolutely no idea what it costs that business to process the card, nor do you seem to care.

I did run a business up until few years ago, when most acquirers started charging higher MSF for premium cards; yet the bank I used Suncorp Metway was charging well under 1% for all cards, no transaction fee, and I also negotiated AmEx down to 1.95%. My taking was nowhere near what a restaurant would put through.

 

[Mr_Orange]

Why do they? So that you know what you'll be charged for using your *preferred* card? It is not the merchants responsibility to put their surcharge in 48 point print and in lights upon your entry to the restaurant. It is also up to them whether they accept Amex or not, and whether to levy a surcharge for a card that typically costs them more to process.

If all credit cards incur a surcharge, I believe it needs to be disclosed, however if it is only on a card type other than Visa/MC then their acceptance and surcharge are discretionary.

Storming out of a restaurant in what could only be described as a dummy spit is entirely your choice, but I can tell you that you are missing out on some of the best dining experiences, all for the points differential of about 0.5 ppd.

And you keep saying surcharge "gouging" but you have absolutely no idea what it costs that business to process the card, nor do you seem to care. Do you run a successful business? If so, perhaps you can take said restaurants under your wing and offer a consulting service. If not, this is armchair management at its finest.

Settle down. There is plenty of anecdotal evidence that some businesses over-surcharge as soon as they hear Amex mentioned. As has been mentioned plenty of times, said businesses can also negotiate better merchant rates if they chose to. Perhaps they don't because they are happier to make a small margin on the surcharge.

 

[coriander]

Just FYI, the default rate for small business from Amex is 2.9% + GST. I know, I applied for a facility on behalf of a small business last week.

Just FYI, here is the Amex flyer........

 

[ComeFlyWithMe]

That is a targeted offer to small retail stores.

 

[coriander]

That is a targeted offer to small retail stores.

Ok, fair enough, I was working on a mistaken premise then....... (now crawls back into hole, extracting foot from mouth!)

 

[ComeFlyWithMe]

Ok, fair enough, I was working on a mistaken premise then....... (now crawls back into hole, extracting foot from mouth!)

The Amex rate depends on a lot of factors, turnover, nature of business, etc etc. There is no one rate that gets offered to businesses. It's the same with the "blended" or flat rates offered by the banks for Visa/MC. The Shop Small campaign is a targeted promo for small retail shops with average sales of below $50 or so.

The point is, sure, some merchants may overcharge, however some perspective is also important to understand what merchants are or may be paying to take the card. It is also their choice whether they take the card, and whether they impose a surcharge. It is also your choice whether to use that card at the point of undertaking the transaction.

Also, there are other costs to accepting credit cards, including time for reconciliations, liaising with the banks/Amex and also dealing with chargebacks. All of these costs have been considered "reasonable" by the reserve bank when a business sets a surcharge.

 

[Moopere]

In my business (IT) we are lucky to make a 10% margin on equipment on a good day. Take out 2-3% and that margin is 7%. To be honest, without a surcharge it wouldn't even be worth selling anything.

Sounds like wholesale .. or discount web sales and if so these businesses rely upon massive, absolutely staggering volume. I'm in IT as well and got out of hardware years ago, I couldn't maintain the volume required. If shops can exist (somehow) on 5-10% more power to them.

Luckily our clients are all business customers and apart from the small annoying ones, have no issue paying by EFT. We charge the customer exactly the percentage we get charged, and we wear the small cost of the transaction processing fee (anywhere from 60 cents to $2.50). We accept Bpay too and that costs us 88 cents from a bank account, or 0.5% from a credit card, so we don't allow Bpay from credit cards, as we can't really add a surcharge.

Surely the larger clients will want to pay against account in 30-60 days? More commonly these days, 30 days after end of month. I know I do for my larger suppliers. Sometimes a supplier who is cold calling for business will offer such terms but with a monthly account keeping charge ... I just laugh. My point in raising this is that those 30-60 days aren't free for the merchant. You may get an EFT transfer at day 60, but up till then its cost you money. I'd suggest far better off encouraging business customers to pay immediately with CC.

If my clients have a problem with the surcharge, we have fee free EFT and Bpay for them to use. If they want to pay the surcharge, we'll run the credit card. Simple as that.

I use a corporate Amex and won't be doing any funky or weird things to pay. As the customer I have myriad choices of supplier, including from overseas (none of the overseas suppliers even bat an eyelid at Amex ... its all good and no surcharge)

One-off suppliers that fill a need on the day will occasionally bite me with a 'no amex' or CC surcharge, but its the last time they will see me. As Coriander says above, if losing 1,000's or 10,000's in gross revenue against the 2% or 3% cost of gaining this revenue is part of their business plan... well, thats fine, fine for them, fine for me - I'm going to spend the money regardless, but someone else will see that revenue - and I certainly wouldn't deny a business needs to make money. If a deal is going to cost money (not make it!) then sure, both parties need to walk away.

This is not profit gouging or ripping off consumers. A business is perfectly entitled to recover the reasonable cost of processing a transaction via credit card.

What about the cost of dealing with cash? Or tracking those EFT payments? This costs time, therefore money. This is what is meant by 'cost of business'. I'd far prefer a customer of mine to pay by CC than to give me a wad of cash (for example).

Australian businesses are fond of the CC surcharge, but, interestingly, at the same time, Australian customers are _extremely_ sensitive to paying those surcharges. You can see just how sensitive any time you line up somewhere to pay for something and see the interactions of the merchant and the customer around this subject.

The weird thing is that up until the last 15 years or so you couldn't charge these surcharges, I believe it was against the law. I remember the new recommendations (or was it law???) coming in, and everyone jumped on board immediately, an easy grab for a few more percentiles. But, as we ponder the past, how did the slim margin businesses survive prior to the allowance of CC surcharging? On 4-5-6-7%???

 

[Freq Flier 2013]

I went to get get lunch at a new place and they had a sign - "5% discount if pay by cash"
First time I saw a sign like that.
Also a restaurant I went to for dinner a few days ago and paid by credit card had a sign during lunch time that its cash only.
Are they trying to encourage more cash payments? Very inconvenient and I will not be back.

 

[andye]

Sushi places seem to be one of the most likely to be cash only near me-no idea why