Interestingly just around the time when this was introduced in mid-2015 all major German supermarket chains suddenly started to accept Visa/MasterCard; before they only supported the German Girocard system. The fees Visa and MasterCard demanded before were probably way too high.

Compared to that the 2-3% fees in the USA really seem to be very high as well.

As such, almost every store in Denmark accepts Dankort. But - like every other place - they are not allowed to pass that charge onto consumers directly. So it mostly happens indirectly, i.e. the prices in the stores. It is important to note, that until a few years ago, there was no transaction fee on Dankort transactions. It was practically a public subsidised credit card system.

And it worked great.

Now the EU is requiring that bundled cards get a choice. You see, one disadvantage of the Dankort was that it only worked in Denmark. So they made a deal with Visa to make a bundled card, called 'Visa/Dankort'. In Denmark, it would use the Dankort part and abroad it would use the Visa part.

But now consumers are required to make a choice for each transaction whether they want to use the Visa or Dankort part. It might seem great that you get a choice, but there is really no reason to pick the Visa part in Denmark. But since stores aren't allowed to pass the costs directly onto the consumers who pick Visa, prices are likely to go up, even if just 1% of every transaction is suddenly a Visa transaction.

I assume these rules are part of the capping of fees in the rest of the EU, and many Danish observers also suggest that these rules probably work great in the rest of the EU, just not that beneficial in Denmark.

Anyway, the same regulation that introduced the application choice also stopped the schemes from prohibiting surcharges.

Ticketmaster charge 0.66kr, for example: http://www.ticketmaster.dk/help/gebyrer.html?language=en-us

So either the Danish implemented regulations they didn't actually need to implement or the Germans are not following the regulations.

Actually, CB (for "Carte Bleue") looks so close to the generic "carte bancaire" word for "bank card", that few people even know that it's just a national card thing.

I don't know if stores are allowed to charge customers differently for different payment means, but I guess not since I have never seen it. However some stores only take cards for a minimum amount. The largest chains though don't have any limit, and I've actually already paid amounts less than 1€ with my card.

But people actually still often say "carte bleue" to refer to any kind of payment card (even a Mastercard one). Apparently just because it was the name of the first payment card in France.

So yeah, you have to swap carte bleue and carte bancaire in my previous post, I guess.

Need to implement? There still is such a thing - albeit not much of it - as independent national legislation, even in these nightmarish sunsetting years of the EU.

In Finland our local national system was shutdown (due to sepa) and now all the cards issued are either visa or mastercard (debit / credit cards).

Interestingly it also seems that credit card theft has risen to a whole new level.

In the same timeframe, VISA and Mastercard have seen a surge in merchants participating in the system, like grocery stores that used to accept BankAxept cards only. This might have something to do with people changing their preference to credit cards with benefits like airline miles, but also to allow travelers access to what's more and more becoming like a cashless society.

i.e. You and non-participating parties were paying for it through taxes. So the transaction fee was hidden by layers of bureaucracy but was still existent.

The German banks are just too greedy and invested in their own shitty Girocard scheme which doesn't even support tokenization which would be required for Apple Pay.

For Maestro/MasterCard Debit/VPay/Visa Debit that's 0.2% in the whole EU (UK & DE included).

The girocard scheme negotiates the fees with the merchants and it's around 0.15% - 0.2%.

At least for the banks, it's not a big difference.

> Compared to that the 2-3% fees in the USA really seem to be very high as well.

Keep in mind that US credit cards offer 2% cash back, so the system isn't actually handing a bunch of money to middlemen.

Not exactly--there are companies taking a bite out of the fees all the way down.

I run two retail stores, and after initially using Square (which charges a 2.75% flat fee), we switched to a merchant processor that uses what's called "interchange plus"--where they just charge us the interchange rate plus a small additional fee.

Chase Visa debit cards are the #1 card we process, and our fee went from 2.75% with Square to 0.05%. Yes, you read that right! That is on a signature process, not a PIN.

We do have to pay a monthly fee now, but the savings is ridiculous--some $500+/month over Square's rates.

That $500/mo was Square's profit margin, basically. Our numbers showed that at about $5K-$8K/month in transactions, interchange plus processors will start to beat Square, and by the time you're doing $10K-$15K/mo in sales, it really starts to add up.

I've used credit cards for almost all purchases for many years, and the only other place a surcharge is likely is a tiny, struggling business, like a convenience store or a rural pub.

But the terms that forbid passing on the transaction fee cost to the consumer is wrong. It's an externality that causes us to all make the wrong choices. The business gets hit with variable transaction feed per customer, but that's aggregated, the merchant has no way of knowing which cards cause the highest fees to be incurred. If it were possible to charge the actual cost of transaction to the customer right at the moment of sale as I line item, just like government tax, we'd all be making smarter choices.

We don't even have to cap the cost, if people could see this, they'd overwhelmingly make a smarter choice possibly even driving the cost down less than the debit card fee cap.

> We don't even have to cap the cost, if people could see this, they'd overwhelmingly make a smarter choice possibly even driving the cost down less than the debit card fee cap.

The two problems I have with this are:

1) I'm not a partner in the business. I have zero interest in seeing fees and other costs "deaggregated," especially if I have virtually no control over them. And I am cynical enough to think that, since meaningful control is not really a thing, the marketplace will rapidly descend into "everybody does this and they all charge roughly the same fee so there's really no competition at all," like the random fees on telco stuff. Besides, under the current system, if the cost of taking cards is too onerous, stop taking cards. One of the most annoying trends in business in the last decade or so is the idea that the base price of an item or service almost seems to come out to be the amount of profit the merchant expects to receive and 14 items of below-the-line fees make up the actual cost of doing business. I don't care what a merchant's cost of doing business is. Put a price on the item, preferably the out-the-door price but that's just wishing for a pony, and if I'm willing to pay it, I will.

2) Unless and until the day arrives that the entire value of my transaction account can't be wiped out just because I dared use my plastic payment card at a merchant with less-than-realistic security measures, I flatly refuse to use a debit card. Yes, I know that I am technically not liable for fraudulent purchases on a debit card but the several-day delay between "oh shit this bad thing happened" and "ahh my money is back where it should be" is unacceptable. As is the stunning lack of any other consumer protections on a debit card ("had a problem with a merchant? Sort it out yourself, puny customer," is the reaction on a debit card).

The merchant clearly receives a benefit for taking cards as do I. But our interests are not aligned to the point that I should be the only one picking up the cost of that benefit.

(Oh, and it irritates me out of all proportion to the provocation how a lot of merchants handle the fees. "Your total will be $5.19." presents card "Oh, now your total will be $5.47 because card surcharge that's buried on a label sitting under the till." Grrrrrrrr.)

100% agreed. As far as I'm concerned, one of the things I'm buying when I deal with a business is minimized cognitive load. Any time I see somebody tacking on a bunch of extra fees that I can't control, I resent it. E.g., the "fuel surcharge" thing, or SF restaurants adding health care costs as a bill line item. Put 'em in the price and stop screwing with me.

Right now the federal law actually says businesses can't pass on the cost of the debit card fee, but can pass on the credit card fee (not in certain states). But in either case you learn what your card costs you, rather than passing on that cost to everyone who uses debit cards, cash, or credit cards that incure lower fees to the merchant.

In the uk, nearly 20 years ago, the supermarkets started offering "cashback" on every transaction, where you bill would be increased by eg 10 pounds, and in return they'd give you a 10 pound note along with your receipt.

The genius being that they could save huge amounts on their cash handling/management fees by moving the value through the card networks instead.

(I believe this was via debit cards, which had lower fees and are by far the more popular card type in the UK, possibly in the EU as a whole)

Indeed. The debit card charged a flat fee per transaction, so giving the customer money instead of paying the bank 0.x% for cashing it in was a logical choice.

yup...the point of sale systems skip the cash-back step entirely if the card is a credit or cheque card.

Since Jan. 27, 2013, merchants have had the ability to assess a surcharge on customers who pay with credit. However, if they choose to take this step, there are a lot of rules that must be followed, including:

- Notifying consumers that they’re being charged for using credit, both at the register and on the receipt. On the receipt, the merchant is required to state the exact dollar amount you paid in credit card surcharges.

- Charging customers only what they’re paying to the credit card payment networks in swipe fees (again, this is usually around 1%-3.5% of the cost of the transaction). In other words, merchants are allowed to pass on the fee to the customer, but aren’t allowed to make a profit on credit card surcharges.

- Staying on the right side of state laws. As of August 2014, nine states prohibit retailers from passing credit card surcharges onto consumers. They are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas.

- Limiting surcharges to credit card transactions. If you pay with debit, the retailer isn’t allowed assess the fee. This includes debit transactions where you sign for your purchase as opposed to entering a PIN. Only credit card users can be hit with a surcharge.

Source: https://www.nerdwallet.com/blog/credit-cards/credit-card-cha...

The problem was the Most Favored Nation clause in the credit card contracts. Merchants could offer cash discounts, but they could not offer discounts to non-Visa credit cards.

Since the antitrust settlements, all four U.S. credit card networks have allowed surcharges. Also, the Most Favored Nation clause only applies to "equal or higher cost" competitors.

Walmart US could fight Visa by adding a surcharge only to Visa cards. Walmart Canada cannot. In 2013, a similar antitrust case was dismissed in Canada.

In Massachusetts at least there's a loophole for gas stations. In fact that's always been the case...

http://www.mass.gov/ago/consumer-resources/consumer-informat...

> Staying on the right side of state laws. As of August 2014, nine states prohibit retailers from passing credit card surcharges onto consumers. They are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas.

Do you know the rationale for these laws?

http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Displ...

As a Florida resident I can tell you that if there is any enforcement of this, I've never seen it. It's very common to see verbiage like 'must pay x% if using credit' or 'credit cards additional $x', especially in non-chain restaurants. Some gas stations just list two prices. I don't like it, but I am not going to carry cash around so it's just how it is; I was almost denied service at a restaurant once for pointing out that their credit surcharge was not legal.

Also, some merchants cater to a demographic that likes to use cards a lot and is sensitive to convenience; and making that distinction may cost the merchant in terms of customer appreciation.

If you are a large business then cash handling companies that securely transfer, count, and deposit / clear it for you charge the same and even more than many credit card companies.

Cash is only "cheaper" for really small businesses that handle the count and the deposit themselves.

And even then there are some fees because banks can also charge a deposit fee when you bring in unsorted cash.

But there are other reasons for preferring cash. For instance, a bank or authorities cannot quite as easily shut down your business if it runs on cash money, compared to having everything in bank which can be confiscated instantly, on-line.

I haven't found that to be true at all. Are you speaking about a non-US context?

In the US you can almost universally go to your bank ATM and withdraw cash without a fee. There's also no fees for having a checking account.

Here's a comparison of checking account fees for various banks: https://www.nerdwallet.com/checking-accounts?account_feature...

> There's also no fees for having a checking account

In the US, people with poor credit are often unable to get even a checking account. This is because banks figure those customers are not going to be profitable since they're not going to use the services they can earn fees on.

"Going to your banks ATM" isn't very convenient 99% of the time unless you never leave town. You end up going to the closest ATM. Especially if you are on foot.

Credit unions have alliances that they can join to use each others ATMs fee free, same with banks. That doesn't change the fact it's often inconvenient to go to an ATM you don't have to pay for and you need to pay sometimes.

Banks treat cash very carefully. If you bring in a stack of cash that they have to count once to see how much it is and then again to verify it's going to take time and they might charge you for that.

They literally said "withdrawal fees."

I don't know of any bank which charges you to deposit cash. I occasionally drop off large stacks of cash and have them count it—there's never been an issue.

If you get paid via direct deposit then you almost certainly have many options for getting a free checking account regardless of what city you live in.

Maintaining ATM's and counting and transporting cash costs money, cash isn't free I don't know about US banks specifically.

What other fees? I've literally never paid a fee to my bank for anything. And it's a major bank (Chase).

Because the bank is buying Treasuries at ~1% or so and making money off of your deposits, and is likely only giving you 0% or maybe 0.05% interest.

If you've got $10,000 in the bank, that's basically a profit of $100 / year that the bank is getting from your account.

But that's not a "fee." Obviously banks cover their operating expenses somehow. That doesn't mean they charge me to have an account or to deposit cash (in fact, charging for deposits would be counterproductive).

Square, iZettle and I think PayPal and a few other are doing things in this area, leveraging smartphones, but it's still early days.

I've never been impressed with anything using a cell phone though. It's too clunky of an experience. I get that it might be useful for farmer's market and other very small retail situations, but when I'm going into a retail store, a real POS terminal is better.

https://www.cardpaymentoptions.com/fee-sweep/debit-fees-expl...

Frankly I wish more places would offer a cash discount. The rewards program schemes have always bothered me.

But there are a lot of markets where price competition drives down the margins for the "main" product, so that the retailers make up their profits on smaller stuff. I've read that a store selling electric guitars or bicycles makes relatively little profit on those items, but instead, makes their nut on accessories, things that wear out, service, lessons, etc.

Additionally, some small restaurants and shops did the same thing. Usually these folks get charged more for processing credit cards than the large places.

I was going to link to The Good Guys and their "Pay Cash Pay Less" marketing, but it appears they scrapped their cash discount after finding customers increasingly prefer to use electronic payments:

http://www.smh.com.au/business/the-good-guys-scraps-cash-dis...

That's a weird reason. Surely that's the whole point of the discount? If customers preferred paying cash, then no discount would be required.

I think the point of removing the cash discount is they can use the 'extra' 3% margin earned on those remaining cash sales to subsidize lowering their price via credit card to be more competitive. Their business is based on offering the lowest prices, but the cheapest price was cash only. The discount for cash no longer lures customers to come to their stores, so there's no incentive for the store to continue passing on the discount to the customer.

That's what I meant.

Yes, you have this exactly right. It is one of the most diabolical scams ever. It is essentially a 2-3% private tax on the entire retail economy. If the government did that, the torches and pitchforks would come out in an instant. But because the cost is hidden behind regular retail prices, no one cares. (Well, that's not quite true. The merchants care. But they are too busy running their businesses to organize an effective opposition.)

You may be too young to remember when a person had to carry a significant amount of cash around all the time, and/or a checkbook, to pay for routine purchases. When every payday involved going to the bank, waiting in a queue to deposit your check and get enough cash to get through to the next payday. It was a PITA.

Compared to the convenience of direct deposit, ATMs, and card transactions, most people would think it's well worth slightly higher retail prices.

It's both. The cash-back part is a scam. They take 3% out of your back pocket and hand you back 1% and you think you've gotten a good deal.

Modern technology enables secure money transfer to be provided at an order of magnitude less cost than the credit card companies charge. Competition is supposed to take care of egregious inefficiencies like this, but the banks have an effective monopoly, enough regulatory capture to keep out competition, the ability to fob all the risk of fraud onto the merchants (who pass it on -- tacitly) to the consumer, and hence no incentive to change, and so they don't. That is the scam.

> You may be too young

LOL, I'm 52.

I pay for most things with a credit card. Here are the value-adds that I receive in exchange: * net-25 payment terms (eg free short term credit)

* anti-fraud: the money isn't actually taken from my account until I make a payment at the end of the month. This gives processors some skin in the game to solve fraud.

* warranty extensions

* risk of losing cash, either by loss or theft

* centralized accounting. No data entry.

I'm not saying the system is perfect. It can definitely be improved. But, personally, that's a pretty nice set of value that I receive in exchange for using the cards.

Is 2-3% excessive? Probably could be cut back. But if I'm getting 1% back, we're now talking 1-2% that it costs me. Seems likely that a big chunk of that is due to fraud, which isn't something that would disappear by legislating lower rates. (additionally, it opens the opportunity for me to churn cards. I haven't done the math, but I open 2-4 accounts per year and receive ~$500 in rewards. $1k in signup bonuses is at least 3-4% of my credit card spend. For those who are able to safely take advantage of the system, you actually can be net-positive PLUS receive the benefits above)

I do understand the frustration for people using cash, because they typically pay for these features regardless of whether they want to. I also sympathize with folks who want their purchases to remain more anonymous.

For me, however, the value is greater than the cost.

http://time.com/money/4036511/venmo-more-check-than-cash/

http://www.slate.com/articles/business/moneybox/2015/09/venm...

http://www.slate.com/articles/technology/safety_net/2015/02/...

Venmo is not the solution, it's a symptom of the problem.

I also see it on any "public" transaction. Try to pay your property or income taxes, university tuition, etc. using a credit card -- there will be a "processing fee" tacked on.

2-3% is the top rate applicable only high risk traffic with the card not present.

Also, most appliance stores will give you a better discount when haggling if you pay with cash/debit card.

Some countries in the EU started requiring cash registers and receipts and some merchants were able to make some quite good revenue improvements in the month they were introduced :)

I don't know about (aboot?) Canada but the Durbin amendment outlawed that restriction in the U.S. So any merchant is free to offer a discount for cash.

But as you rightfully note, consumers are generally happy with the card system. Many receive a 1-2% discount or other benefit via reward programs, so the opportunity to steer consumers to cash via discounts is limited.

See: http://blog.legalsolutions.thomsonreuters.com/wp-content/upl...

First, I have to find an ATM somewhere. Luckily my bank reimburses ATM fees, but many don't. Plus, I can only take out $20 at a time. If I want to buy something that costs $5, I take $20 out (+ a $3 fee which is 15%, a hell of a lot more than credit cards charge). Now, do you think I'm going to put the remaining $15 back into the bank? Hell, no. I'll find something else to spend it on. So this $5 purchase effectively cost me $23. That 2-3% doesn't sound too bad.

What ATMs do you use where you can only take out $20 at a time? I usually see caps of $200-300 and once in a while, on the nasty-fee ATMs they're $100 but I just find another one.

By your logic, when I'm out of cash and make a $300 withdrawal to buy a $3 snack with it, the other $297 evaporates instead of sitting in my wallet like real money.

It's weird to me that so many people refrain from carrying cash on the logic that they might be mugged or lose their wallet. Okay, those things could happen, but how often? I've been mugged zero times and lost my wallet once in the last 20 years. Assume I had $150, half my usual withdrawal amount, in the wallet at the time. How long does it take someone to rack up $150 in ATM fees while trying to avoid that exposure? Quite a bit less than 20 years! I'd wager most people spend more on fear fees than they'd potentially lose if they simply carried the cash, because the loss events are so very rare.

As for compulsively spending money in one's pocket, http://www.nbc.com/saturday-night-live/video/dont-buy-stuff/...

This is known as surcharging. The rules differ by country, the same goes for interchange. To give you an example: my country it was forbidden to forbid the merchants to do surcharging (no really). Essentially the merchants where allowed to do surcharging. Then interchange was regulated down and the ban on forbidding surcharging was lifted. In theory the acquirers or payment schemes could forbid the merchants to do surcharging. AFAIK none of them did.

What you can do as a card holder is file a charge back over the surcharge amount. These get accepted.

However starting in 2013 merchants can now charge a processing/convenience fee. This came about as per of a class action lawsuit I believe. There are still several state and municipal laws and nuances to consider though.

Why?

The alternative would be that companies either don't accept credit cards at all (inconvenient) or charge an extra 2-3% for credit card purchases.

I don't see how that is any fairer than forcing cash customers to pay the full price as well. Somebody is losing either way, and I see absolutely no reason that cash should be privileged.

The problem, as criddell points out (https://news.ycombinator.com/item?id=11888198), is that it's not a matter of whether or not to charge cash customers full price, but of whether or not to force cash customers to subsidise the fees the merchant must pay for credit customers.

Undoing this is still forcing cash customers to pay full price, but credit customers to pay full price + the associated extra fees. Pretending that the difference is a "cash discount" rather than a "credit fee" is, I think, just terminological skulduggery (much like stores where every item is always on sale).

In practice, I think most traditional retailers like it when consumers use cards because it makes their lines go faster and wouldn't really increase their prices for most card carriers if they were allowed to do so (AMEX might be a different story). The cashier doesn't have to wait for the consumer to fumble around for the correct combination of bills and coins, the customer doesn't have to wait for the cashier to count out change, and that means the line moves faster and the retailer can process more transactions and make more money.

It seems reasonable that the costs associated with the various payment methods can be passed on to the consumer that chooses that method.

If I decide to use digital currency could I opt out of all the associated costs related to cash? Including printing it, shipping it, storing it, transporting it, counting it and other aspects that a digitized monetary transaction automatically handles?

It makes a huge difference. A market economy depends on prices to guide behaviour. It's very important to make sure that all costs are internalized.

One problem with Interac, however, is that most banks have limits on how many transactions can be done per month, or pay additional fees. The fees can easily add up to ~ 100-150$/year for an average bank account. We can go around it by leaving 2000-3000$ at all times in the bank account, or get a credit card. Win-win for the bank. So yeah, Visa deserves the pushback.

I work in the payment processing industry and I am just disgusted in the way everyone operates (particularly Visa / MC). Low security, trying to push liability, etc. All of this to shave money off of the transactions at just about every step of the way.

Also, I gave had stores in the small town I live in tel me that they prefer getting cash, and I try to oblige them.

I am not happy with the system since I categorize the money back programs essentially a corruption of the buyers in order to keep them on the card.

I want to pay safe, fast and easy. No higher prices and no cashback incentivation program needed for me.