Also doesn't work online if you're not signed in, or if it's the first time you've visited that store and you haven't given them a card number yet.
The price says 100DKK, but they pay 101.50DKK or whatever it is.
People trying to get air miles, cashback or similar have to pay the cost of that.
Don't most people have the normal visa/mc debit cards there?
That was pretty much specific to German-speaking countries (or at least they were the only one, where I noticed that). Elsewhere, there was no such thing as ATM-only card (or even ATM-only PIN).
Don't even exist in many places anymore. e.g. in the EU country where I live both were replaced ~8 or so years ago by Visa/Mastercard Debit (since they removed embossed characters the only way to distinguish them is the word 'debit' written in a tiny font.
I assume there's gradually less and less appeal for a card that isn't as broadly accepted, and if it encourages more fee generation, all's the better.
I know there are extra fees for business/corporate credit cards, and these are specifically excluded from the EU cap. (The cap was for consumer protection, so business transactions aren't regulated.)
Foreign (non-EU) fees are also not part of the EU cap, as there's no way to control those.
It could be poor wording on the sticker, or it might be including the other fees. The 0.3% is just Visa/MasterCard's fee, there's also the fee from the card processor — HN is familiar with Stripe, but there are many companies offering this.
But yeah, I guess that doesn't differ by payment method, so it wouldn't affect the choice of payment method.
It can be very convenient for retailers since sales can vary in different counties let alone states:
https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat...
just try to imagine what a mess it would be if any advertisement, price sticker etc. would have to show the full price.
> everything is owned by like one company right now anyway so they already have systems in place to deal with differing tax rules in different states.
Yeah I agree it would generally be a much higher burden for small businesses than for Amazon.
Then there’s an incentive to produce higher inequality: high sales tax affects mostly poor, while low property tax usually benefits rich. Poor people are usually underrepresented in democratic institutions, so it would not be surprising if inverse redistribution would be a frequent problem.
Finally, local tax as a way to fund communities is not the only alternative and relying on it would mean that some communities will never get out of financial trouble. Tourist towns are minority, after all. Other countries just keep some of the collected VAT locally and redistribute excesses from richer to poorer communities through federal transfers (German solidarity tax did exactly that, for example).
The stores have the info to calculate this, and do at checkout, so it's really the first two points mostly.
So it could 10.25% in one place, 9.75% in the next town 8.750% and 8.975% if you drive for another 15-20 minutes. Imagine if you run a business, have multiple locations and want to buy a TV/Billboard/etc. ad with the price how would that work? You'd also need to make different price stickers, won't be able to print the price on the packaging etc.
Of course this does change the incentives for localities setting their sales tax, and they might be inclined to set them higher if the cost isn't borne by local residents. I don't know if that's a bad thing, if that money improves local services and / or lowers other taxes.
Convenience isn't even a factor.
Compared to other places, where the price is what you pay (in most cases). You would be adding inconvenience and a little uncertainty to one form of payment. Americans would switch too, if this were the case.
Edit: Actually I think there's a simple solution: the fee should be assessed on the consumer side, not on the merchant side. Your issuing bank charges you 200bps on your end instead of taking it from the merchant cut. The net effect is the same.
People would hate it, and it would never happen, but it's fun to think about :/
On the other hand, that's probably why sales tax is around 5%? whereas VAT is 20%+
Sales Tax ranges from 0% through to 12%
I have to pay it if I order from Amazon or Etsy, for example. If I order from the US, I pay later.
Every sales receipt has the VAT right on the receipt. I can see it every single time. If I order from inside the country, I can see it before I pay.
It isn't hidden. It isn't secret.
It wasn't even secret to an immigrant that didn't yet understand enough Norwegian to know.
What I do get is to be reasonably certain what I'm going to pay when I get to the cash register. I don't have to do mental gymnastics with a total if I'm tight on money - like I have many times in the US. It won't change if I'm in a different part of Norway. There simply aren't as many price surprises like that.
Greece is in the EU, which means they are paying at least 15% VAT on most stuff, assuming everyone is paying their taxes (which might or might not be). Trust me, even being built into the cost, everyone knows how much they are paying in taxes on goods. Greek folks aren't unintelligent. This sort of tax isn't a secret any more than sales tax was in the US.
Regulation is warranted in monopoly/oligopoly situations. Either by changing the rules to favour/promote increased competition, or, as the EU has done here, by capping the fees which they can charge.
Merchants are typically happy to take them, because their fees are lower.
> Regulation is warranted in monopoly/oligopoly situations. Either by changing the rules to favour/promote increased competition, or, as the EU has done here, by capping the fees which they can charge.
I suspect you might want to look into lightening regulations, so that upstart competitors have an easier time entering the market. Instead of piling on ever more regulations that only those who are big enough to afford an army of lawyers and accountants and lobbyists can manage.
This is unlikely to happen in the US, however, where market-dominant corporations have huge lobbying power and can ensure the rules are written in their favour, and any potential upstarts drowned in a sea of red tape.
Instead, private credit cards are built into the system. That makes no sense to me. The US system of credit cards does very little for economic stability or growth. It has clear harms to the vulnerable and it hardly benefits the economically stable. Instead, there should be a system of frictionless debit payment. Governments shouldn’t pick winners and losers, but they should build infrastructure for healthy markets.
Signing credit card slips? What is that? Clearly irrational. Visa and Mastercard are not just normal market players. American capitalism would function better without the excessive role of credit cards in commerce.
Here in the UK we have frictionless debit payments and we all use credit cards. Credit cards have a safety net in case of fraud. Much better.
Cash is 15%, the rest are various types of bank transfer. Note this is all transactions, online and in-person, including things like subscription renewals.
(How can a debit card be cloned, anyway? I'm not aware of any case of this, only a possible problem in the USA where data is 'cloned' onto a magstripe card.)
https://www.ukfinance.org.uk/system/files/2022-08/UKF%20Paym...
Er yes, you're right about debit card cloning I think. I'll retract that one :) However if purchase something that doesn't work your CC company is jointly liable (crazily enough) and if your card details leak you have protection against fake purchases. Neither is the case for debit card use.
[0] https://www.ukfinance.org.uk/data-and-research/data/card-spe...
In this scenario, it is much easier to change the sales tax at the register than to reprice the entire store every time one of the several sales tax authorities decides to change the rates or rules.
This has begun. Many restaurants near me have a credit card fee, as does at least one car repair place.
No fee of paying with cash/debit.
https://www.lawpay.com/about/blog/credit-card-surcharge-rule...
If you don't believe parent, and you don't believe me, I hope you believe Visa's own FAQ.
> Q. Can I add a surcharge to card transactions?
> As a result of a legal settlement to resolve claims brought by a group of U.S. merchants, merchants in the U.S. and U.S. territories may add a surcharge to certain credit card transactions, starting January 27, 2013. Merchants who choose to surcharge must follow consumer disclosure and other requirements agreed to as part of the settlement.
[1] https://usa.visa.com/dam/VCOM/download/merchants/surcharging...
Just because it is legal, doesn't mean they are doing it right -- and in my limited experience, they usually aren't.
In this case the contract is that 1) you tell them you're doing this and 2) that it is capped to a certain amount and 3) you are visibly doing it and the customer is properly informed.
These are all pretty reasonable contractual terms, IMHO.
No, I can't.
If you have me sign a contract that says "refurb agrees to no longer walk in exchange for $50,000", that will not be enforceable in court.
https://blog.ipleaders.in/unenforceable-contracts-what-you-n...
You said "If you want to have fun, you can report them to Visa/MC and watch that go away within a few days.", so no, if they are following the contract terms, it won't go away.
And Visa isn't able to include a blanket ban on surcharges due to changes in the law that would make such a contract illegal and unenforceable.
[1] https://www.atlantafed.org/blogs/take-on-payments/2018/04/30...
The exception to that is American Express directly issued cards and American Express merchant contracts have had such terms at least in the past. Not sure if they still do.
And hence why in developing countries only luxury and ultra-luxury establishments accept AMEX cards.
Nevertheless, partly thanks to COVID, cash usage is way down and many people seem happy to pay the standard 1.6%-ish for the convenience.
So if we're making customers pay the fees for their preferred payment method, is it also OK to charge cash customers a surcharge?
This already happens in Australia. The price is the price, until you go to pay and if the shopkeeper sees you pull out a credit card, would adjust the total to include a 1.5% surcharge (Visa or Mastercard, and you'll likely be turned away if you pull out a different card like Amex).
The problem with this is that especially since Covid, a massive percentage of in person sales are done via contactless credit card payment, sometimes even with the screen of the terminal not even in view of the cardholder. Some sellers have caught on to this and are charging _much_ more than the 1.5% -- three sushi handrolls at the store around the corner of my workplace would cost about 9 AUD to buy (already includes GST), but the shopkeeper then added a whole 1 AUD on top for surcharge. I protested and have not shopped there since, but there's still plenty of customers at that store.
More and more stores are adding 50c or 1 AUD on top to cover surcharge for items well under 10 AUD, I'm guessing because calculating 1.5% is not trivial for a lot of people, and are ripping off their customers. Calculating 2.08% in your head to make sure the shopkeeper is not pulling a sly one on you unfortunately is not something a lot of people are going to do.
That's not required in AU, btw, it's optional. It's up to the merchant.
Instead of capping prices, you could simply require any fees to be paid by the cardholder. Combine that with a standard for payment processing so that lots of companies could compete for payment processing and fees would drop really fast.
If someone is using a POS terminal like Toast or Square, it should be trivial for them to support lots of new payment companies if they're all adhering to a standard. If consumers have to pay the fee, they're going to shop around for the lowest-fee card (just as many shop around for the highest-reward card now). You wouldn't need government caps.
You could tell stores "once you accept payments with the new system, the consumer is responsible for the fees." This would drop fees really fast - even for stores that didn't upgrade their credit card machines. If Walmart, Target, CVS, etc. all update their machines quickly, I'm going to find a card with a low fee. Then when I use that card at a non-upgraded shop, they have to pay the fee, but it's a much lower fee since I had shopped around for a low fee.
The issue right now is that the person choosing the card doesn't feel any of the pain. As the article notes, Visa (Canada) charges 1.25% for a regular consumer card or 2.08% for a premium card. I will pay with a premium card since it will give me nice rewards and I don't feel the additional 0.83% that the store has to pay. If I did have to feel it, I would make different decisions.
If you're looking to change behavior, align people's incentives. Another commenter said that they're capped at 0.3% in Europe. Consumers might hate the idea of paying 0.3% additional, but I think credit card companies would drop below that cap if consumers had to pay it. I think they'd look to make it up on interest or other things. As you note, credit cards can come with 2% rewards so they're essentially giving you the whole interchange fee back already. Make consumers shop around for the lowest fee cards.
The problem is that stores need to take the cards that consumers have with little option to forgo the fees. If Bank of America had a no-fee card while Chase charged 1.5%, consumers would move to BofA if they felt the fee.