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Credit Card Fees on the Horizon?

Written by Nickel - 15 Comments

on?

Well, that didn’t take long… Just a week or so after the Visa and MasterCard agreed to a settlement over their refusal to let merchants charge extra for using a credit card, Kroger (the nation’s largest grocery chain) is considering offering discounts to shoppers who opt to pay cash instead of using a credit card.

The stakes are quite high, with Kroger paying “hundreds of millions of dollars” for credit card processing each year. But at the same time, differentiating between payment types (even if they pitch it as a cash discount vs. a credit card surcharge) could turn customers off.

Interestingly, according to MSN/Money, several companies have already stated that will not be charging more for credit card usage. These include LL Bean and Darden Restaurants (parent company of Olive Garden and Red Lobster). At the same time, Target, Walmart, and the National Association of Convenience Stores have worked to scuttle the deal, which has still not received final approval.

And, of course, this is all a non-issue in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas, where state laws prohibit the surcharges or checkout fees.

Source: Cincinnati.com

Published on July 27th, 2012
Modified on August 15th, 2012 - 15 Comments
Filed under: Credit Cards

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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15 Responses to “Credit Card Fees on the Horizon?”

  1. 1
    Jenna, Adaptu Community Manager Says:

    Seems a little backwards. Aren’t we moving towards a cashless society? I think that stores that agree to keep prices the same will stay in business longer than those who will offer discounts for those paying in cash.

  2. 2
    Mark Says:

    I think anyone who is around 40 or older will remember when gas stations used to have separate prices for cash or credit. Far fewer people carry cash these days, though.

  3. 3
    Lance @ Money Life and More Says:

    Thank you Florida! I’m glad I don’t have to deal with this headache because I love using my credit card and can’t stand carrying cash. If I lose my credit card I can cancel it but have you ever cancelled cash and got it back?

  4. 4
    Tommy Z Says:

    Having a credit card is a privilege, not a right. Business owners are charged fees when their customers use credit cards vs. 0 for cash. Business owners should have the right to offer lower prices for cash purchases and if they did, I would start paying with cash. If they do not, I’ll continue to use my card and get a portion of the fees the businesses pay back in credit card rewards.

    Logic stands to reason that we would save more money paying in cash vs. paying with a credit card and then getting some small rewards back.

  5. 5
    Jonathan Says:

    While traveling through MS recently, I saw a lower price advertised at the gas pump if paying in cash. I have never seen that before..

  6. 6
    dave Says:

    It’s quite common to see different gas ‘Cash’ and ‘Credit’ prices in (eastern) Massachusetts…

  7. 7
    lostAnnfound Says:

    @dave: same in Western Mass.

  8. 8
    Aaron B Says:

    I thought, at least for large merchants, there was inherent cost savings to be had by taking payments via credit card. There’s very little activity involved in electronic payments, as opposed to having to handle the cash at least a few times before it gets into their bank account. I obviously don’t know the real numbers involved, but I imagine that motivating more customers to use a labor-intensive payment system (cash) by charging less becomes lose-lose at some point.

  9. 9
    Melissa Says:

    I might be a bit backward with this, but I prefer to pay cash and would welcome a discount on my shopping trip. Hey, if it works at Costco, it seems like it should work at Kroger.

  10. 10
    KT Says:

    Kroger is the main grocery chain in my area, but heck, Walmart and Target and Harris Teeter have perfectly good grocery stores too. It’s one thing if Kroger reduces current prices for cash – fine. But if they increase prices for credit cards, I’m beating feet over to the competition. Simple.

  11. 11
    Steve Says:

    There is no difference in the cost of a cash discount vs. credit card surcharge.

    Nevertheless, from the comments on these types of articles (and the recommendations received by those comments, e.g. on the MSN site), it is clear that a large number of consumers don’t understand that, and take the very idea of such fees as a personal insult. So I suspect that very few large businesses will start charging credit card fees.

  12. 12
    Glenn Says:

    I noticed that quite a few gas stations in Idaho are doing this. I think it is fine to offer a cash discount, but the thing that irks me is the word cash in small letters next to the large price. If gas stations want to give a cash discount, they should post 2 prices; cash and credit. It really irks me to pull into the gas station and notice a higher price on the pump.
    For me personally I just find another gas station that charges the same “cash” price for all purchases.
    It is too much of an inconvenience to have go into the store, wait in line, give some form of collateral (if they will do that), then go back out, pump the gas, then come back in, wait in line again, then pay. That may work for some people, but I like to get a completely full tank, so I have to stop at the gas station less. I also keep tabs on mileage as it is a good indicator of how I am driving or if there is an issue with the vehicle.
    Now with that being said, I am the guy who asks vendors/service companies if they offer a cash discount. You would be surprised how many companies will give you a better deal for cash. I don’t do this for small purchases like fuel though as it’s not worth the hassle.

  13. 13
    BG Says:

    That explains why I have never seen cash discounts in Texas (state law). Time to write my state representatives: merchants should be able to charge more to recoup the Visa/Mastercard Tax.

  14. 14
    BAMTN Says:

    We won’t shop Kroger if they charge such fees. With bank fee legislation tacked onto ObamaCare, we’ll be assessed on all deposits/withdrawals regardless of transaction type. We’ll shop with cash but hate we’ll be charged a fee to withdraw cash we’ve already paid a fee on just to deposit in the first place!

  15. 15
    BAMTN Says:

    Forgot to include in above comment: whether you have your own private insurance or use government healthcare plan, ALL of us will be paying those bank fees.

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