There seems to be a lot of confusion over whether or not stores can charge for credit card payment processing. Many stores do charge additional amounts to people who pay using plastic, and some stores offer discounts to people paying in cash. Is this legal? Are these practices normal?
To begin with you must know that credit card payment processing is not free to the stores like accepting cash payments is. If a store is going to accept debit payments or credit payments they have to have the equipment to complete the transactions. They must also sign up with a company that helps them to process the transactions. The store generally does not have to pay for the equipment if they sign a service contract with the company that provides it. The store does however have to pay a percentage of each sale to the company that provides them the equipment. Now you see why the stores often charge extra to those people who use plastic instead of cash.
Credit card payment processing also means that the store will wait as long as thirty days to receive the actual payment for the items purchased. A cash transaction puts money into the bank account of the store owner immediately and a check means they will have their money in seven to ten days. The merchants that offer to give people paying with cash a discount are simply rewarding the customers that allow them to receive their money immediately.
Most of your financial institutions charge the stores if they accept debit payments for merchandise totaling less than five dollars. So it is very common to see signs in stores telling debit card customers that they must spend at least five dollars to use their debit cards as a payment method. We can understand that the store owner does not want to have to pay a charge to get our business so on average people do not object to these charges.
You have likely noticed that a lot of times when you go to pay with plastic you are told there will be a one to five dollar convenience charge added to your purchase total. The transactions that involve the accounts that support plastic do cost the store a one percent, or more, of the total amount. If the store is going to have to pay to allow you to use the cards then they are going to find a way to increase their prices or otherwise recoup the amounts they have to pay.
If you believe that you have been overcharged because of credit card payment processing practices at a store you can report this fact to the attorney general of your state, and to the financial institution that issues your cards to you. There is a limit on what merchants can charge to people who are using these types of accounts and anytime you think a merchant is overcharging it is your duty to call and make a report.