Credit Card Fee

[OlympianHiawatha]

Starting Sunday merchants in most states will be allowed to collect an additional 4% vigorish on credit card sales to offset fees. Any word on whether or not Amtrak will impose this fee? Considering how the travel industry is already struggling in this economy, I would hope providers will think twice else face a downturn in sales.

 

[roadman3313]

I live in California and had not heard of this. But I believe California has laws that would prohibit this practice. Then again California has many rules and regulations that don't exactly match the rest of the country... :wacko:

 

[OlympianHiawatha]

I have heard NY and MA laws will prevent the charges but many states are "fair game."

 

[MrFSS]

Is there a list of states who can and can't do this somewhere?

 

[the_traveler]

First I heard of this. And I don't think Amtrak would do so anyway.

After all, if you buy your ticket in NY, MA, CA, etc... you pay $200 - but if you buy that same ticket in one of the unlucky states you pay $208 for the same thing, and the person who pays with cash or check next in line (standing behind you at the ticket window) pays $200. I can hear the lawsuits being flung around already!

 

[Swadian Hardcore]

Only parts of the travel industry are struggling. Amtrak is doing very well even though they still lose money. And Greyhound is making a turn for the better, too.

 

[OlympianHiawatha]

Only parts of the travel industry are struggling. Amtrak is doing very well even though they still lose money. And Greyhound is making a turn for the better, too.

So true. I would venture to guess a large part of that is folks who are fed up with the airlines and air travel in general coming over to the good side. Our little Heartland Flyer continues to thrive and Megabus has now started service from Norman to Dallas with fares as low as a buck and they are doing fine as well. With money tight people are migrating to where the deals are and if some carrier is sneaking on an extra 4% vig, their share of the market will likely drop.

 

[Alexandria Nick]

With money tight people are migrating to where the deals are and if some carrier is sneaking on an extra 4% vig, their share of the market will likely drop.

And that's why you won't see this 4% get widely used. Say you're going to get a cup of coffee. Most people are going to balk at the 4% extra and go over to Starbucks who can eat the 4% without batting an eye. Rather than save the little guy the 3% surcharge, he's out 100% of that sale.

I can't imagine an outfit with the sheer volume of customers that Amtrak has and the pricepoint of their product doing it. I'd wager that upwards of 90% of their transactions are credit cards. They're probably getting a lower fee from the credit clearinghouses than, say, the independent gas station down the street.

 

[battalion51]

I would venture to guess that many businesses will not impose these fees. It will likely be the very small merchants that prefer to deal in cash that will do this. For many companies (and consumers) electronic transactions are beneficial because it doesn't require handling large volumes of cash and the risks associated with it. From a business perspective, once you've got the authorization number you're guaranteed funds. Granted chargebacks can occur, fraud, etc., but most agree the plastic transaction is the way to go versus the cash transaction.

 

[TML]

It may be legal to do so, but I doubt that Amtrak would be willing to actually implement this. I bet that a significant portion of Amtrak's revenue (tickets, food, etc.) comes from credit card purchases, and adding a credit card surcharge will surely discourage many customers from even riding Amtrak. That is why most big-name retailers around the country are not considering this practice - even if it is perfectly legal in their local jurisdictions.

 

[Shanghai]

I heard on the news this morning that New Jersey is one of the states that can charge the 4%.

 

[KWBud]

As I understand the situation Amtrak would currently be prohibited from charging any kind of surcharge. Both Visa and MasterCard have rules that require all a company's outlets to handle credit card sales the same way. Since Amtrak has ticket offices in states where the practice is banned, it would be banned at all locations.

And for reference credit card surcharges are banned by law in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

--

Bud

 

[Tumbleweed]

Wouldn't this fee pretty much wipe out the value of AGR points earned on a purchase? :angry2:

 

[Ryan]

No, not at all.

 

[RRrich]

IMHO Charging this fee would put merchants at a competetive disadvantage and not be profitable.

 

[Cho Cho Charlie]

And for reference credit card surcharges are banned by law in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

I thought such was banned in PA too? A few years ago, gas stations in PA creatively circumvented their law, by instead giving a 4% discount to cash purchases.

 

[Trogdor]

IMHO Charging this fee would put merchants at a competetive disadvantage and not be profitable.

Many merchants seem to disagree.

I don't purchase motor fuels, since 90% of my local trips are walking (and the vast majority of the rest of my local trips are by public transit), but I note that lots of motor fuel vending outlets charge different prices for cash vs. credit. If it caused them to be unprofitable, they wouldn't do it.

Plus, many places used to have unofficial policies in place that either had a minimum purchase amount, or a surcharge (or both) on credit card purchases, even though they technically weren't supposed to do that according to their credit card agreements.

Many small businesses run on really thin margins, and don't have a lot of overhead or other costs they can reasonably cut. So when they're faced with fees for accepting payments (fees which can run, in some cases, 5-6% of the sale), that actually puts them at a disadvantage and can turn a profitable sale into an unprofitable one.

The larger the vendor, the less of an issue this becomes for two reasons. First, high-volume sales outlets get lower fee rates than low-volume ones do. Second, when it comes to cash handling, that in itself can become expensive if you have to hire employees and trust them with your cash, plus have a place to collect and store large amounts of cash, plus have some kind of way to transport that cash to the bank, you wind up with very high costs (or potential costs, in the case of theft) for cash handling. In that case, credit cards become considerably more cost-effective.

Checks are an entirely different story. These days, many places no longer accept checks (and this includes Amtrak), and banks are now charging higher and higher fees for processing checks, in part simply because they have to maintain check-processing infrastructure for a dwindling business (on a side note, it wouldn't surprise me to see the personal check simply disappear in 5 years; or at least require a high-fee account to be able to have them).

So, for now, at low-volume, low-overhead businesses, cash is cheaper to handle, and at high-volume, high-overhead businesses, credit cards are cheaper to handle.

Amtrak clearly falls into the latter category. In fact, I believe the Lake Shore Limited PRIIA report includes a proposal to go to a cashless diner. Reducing or eliminating cash handling on trains would greatly streamline the operation.

 

[yarrow]

off topic but i thought greyhound owned some of the curbside busses

 

[PRR 60]

Two comments:

First, the settlement requires merchants to charge the fee at all their outlets. Ten states ban credit card surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Any retailers who have outlets in any of those states are banned from imposing the surcharge anywhere. That would certainly include Amtrak, along with almost all large retailers.

Secondly, the settlement requires the same surcharge to be applied to all accepted cards. American Express continues to ban surcharges. Any merchant who accepts Amex, and that includes Amtrak, cannot impose the surcharge on any accepted cards.

Bottom line: don't worry about it.

 

[Paul Dow]

I saw an interesting way Massachusetts gas stations are getting around the surcharge issue. they give a 10 cent discount if you use their "membership" card. We all know the "membership" is being used for massive data mining, but these are also tied into the purchaser's checking account for an instant transfer with low fees to the merchant.

I know there's no such thing as privacy anymore, but I'll pay the 10 cents extra. Of course the credit card companies have the 3rd largest data mining operations after Amazon and the government

 

[Swadian Hardcore]

off topic but i thought greyhound owned some of the curbside busses

Yeah, they own BoltBus. But the blue Greyhound is better.

 

[RRUserious]

There are some small businesses that have charged extra for purchases below $5 for some time. But travel charges are large enough to simply absorb the fee or put it into the price of the service, not tack it on where it might disrupt business.

 

[jis]

Only parts of the travel industry are struggling..Amtrak is doing very well even though they still lose money. And Greyhound is making a turn for the better, too.

Actually most of the travel industry is doing rather well. Most airlines have posted a profitable year last year.

I heard on the news this morning that New Jersey is one of the states that can charge the 4%.

It is not the State that can charge anything. It is merchants in the state that do the charging, lest someone get the impression that this is another tax being collected by the State.

 

[Cho Cho Charlie]

I heard on the news this morning that New Jersey is one of the states that can charge the 4%.

It is not the State that can charge anything. It is merchants in the state that do the charging, lest someone get the impression that this is another tax being collected by the State.

It was pretty obvious to me, and am sure many others, that this is what Shanghai meant.

 

[fillyjonk]

There are some small businesses that have charged extra for purchases below $5 for some time. But travel charges are large enough to simply absorb the fee or put it into the price of the service, not tack it on where it might disrupt business.

And a lot of small businesses around here (Oklahoma) either request that CCs not be used for purchases under 5 or 10 dollars, or outright say they won't take a CC for that small of a purchase.

I don't know, it seems perfectly reasonable to me for a business that is having to eat the surcharge to ask that their customers only use credit cards for purchases over some minimum threshhold. I don't carry a lot of cash on me, but I usually have at least $10.