[OT] Credit card fees Re: [plug] Where to buy computer bits in Perth

[Harry McNally]

On 22 Feb 2003 08:40:36 +0800 William Kenworthy <billk at iinet.net.au> wrote:

> And if anyone from Austins is listening: if I can find a supplier that
> that does not charge too much extra (advertised price + visa fee) I take
> that - there seems something "slimy" about the practice.

As a customer, I don't find anything slimy about the practice at all, Bill.

For quite some time the ACCC has investigated the fee structure banks
charge each other to cover the cost of handling each others credit card
transactions. It was a pretty cosy arrangement.

If you think about the howls of protest that the population went through
about a 10% GST, the banks have been charging 1.2% to 5% in merchant fees
(depending on the merchants ability to negotiate) for _years_ since
everyone found credit cards "gosh so convenient" at least thats what the
ads said. If the merchant spreads that fee (cost) over all customers then
the cash customer is paying for CC customers and the banks skim their own
tax on all goods.

Now, if I pay cash, I'm not subsidising a credit card user. If I use a 
credit card, I'm being charged a surcharge which means I pay the bank
for the credit card "convenience" or service.

I've studied all this for quite a while well before the ACCC started
publicising their investigation although they have been looking at
credit card fees a lot longer than that. This was based on ideas for
Internet marketing of products and how the credit card costs need to be
factored in. 

BRW did a lot of articles about this and suggested merchants should
negotiate better deals from their bank so I'd be standing at the florist
(surprise!) or the grocer or the hardware and I'd say "If it's not a rude
question, how much is your merchant fees because I'm interested in what I'm
likely to pay". Ok, here is the shocker, MANY OF THEM DIDN'T KNOW! They
just get the merchant report and see the cost at the bottom in fees.

Suppose you are adding 10% to your cost of goods as a profit margin and
you lose 5% in credit card transaction fees. If you can _halve_ the
merchant fees you have just increased your profitability by 30%.
That is money straight to the bottom line; money that feeds you.

Computer parts have got to be the most cut throat sort of operation out
there and I'm glad I'm not doing it but the lean survive by trimming
their costs. If I'm buying big ticket items from anyone I ask for a price
for cash :-) If I get a blank look or there is no fee structure for
credit card use, perhaps I'm in the wrong shop and I need to look around. 

A different story is the petrol station I go to. He is part of a large
group of independent fuel retailers that have a co-operative to negotiate
for a good deal with the banks and he did let me know. It's a pretty good
rate. My thoughts about busines is that most petrol stations will not
charge a surcharge because he doesn't want to haggle with a customer
who's just filled his car with petrol but we'll have to see.

Don't know how loudly credit card users will howl and the effect this will
have on retailing but at least the arguments are public. Of course the
banks have "spun" tooth and nail telling us it'll be the end of the
world as we know it yadda yadda gloom doom. I'm very sympathetic..

A hidden tax on all retail transactions. Now _that_ was slimy.

cu
Harry

-- 
linux.conf.au 2003		The Australian Linux Technical Conference
http://linux.conf.au/		22-25 January 2003 in Perth, Western Australia
It was huge.			Adelaide next year. I'm going.

Are you a computer angel?	http://www.ca.asn.au/