Could be better from a consumer viewpoint

Posted Jul 28, 2009 20:16 UTC (Tue) by jreiser (subscriber, #11027)
Parent article: Linux Foundation launches affinity credit card

The card Issuer hides some things, such as the Cardholder Agreement. It is not available where it should be at the beginning of the sign-up process (see https://secure7.umb.com/extraarc/FormDisclosure.aspx) Also, the rewards collected by Linux Foundation cost the merchant, who raises prices for everyone accordingly (approx. 1% or more.) Please use the card only for travel and lodging at Linux conferences!

Could be better from a consumer viewpoint

Posted Jul 28, 2009 21:10 UTC (Tue) by drag (guest, #31333) [Link] (15 responses)

> Also, the rewards collected by Linux Foundation cost the merchant, who raises prices for everyone accordingly (approx. 1% or more.)

Well it's all coming from your pocket one way or the other. It's not like signing up for a credit card means that all of a sudden the credit card company is going to send free money to the Linux foundation or anything like that. It all comes from somewere.

Plus I doubt it's above and beyond the normal amount a credit card provider charges for normal credit cards. It's just a cost of doing business for merchaints.. if they don't want to pay the credit card fees (and rise their prices accordingly) then they just stop accepting credit cards.

(Offtopic) credit card charges

Posted Jul 28, 2009 21:15 UTC (Tue) by corbet (editor, #1) [Link] (13 responses)

FYI, there is a separate line item on LWN's credit card bill which corresponds to the extra charge that we have to pay when customers use "affinity" cards. The merchant doesn't eat the whole cost, but they do get hit for part of it.

In general, the credit card industry is less nice on its merchant-facing side than it is on its customer-facing side, believe it or not. But "don't accept credit cards" is not always an option, so one approaches it with the same sort of resignation and patience one adopts for ones dealings with, say, the power company.

(Offtopic) credit card charges

Posted Jul 28, 2009 21:24 UTC (Tue) by drag (guest, #31333) [Link] (5 responses)

> But "don't accept credit cards" is not always an option, so one approaches it with the same sort of resignation and patience one adopts for ones dealings with, say, the power company.

It's always a option. Usually it's not a very good one sinc often denying access to credit cards means denying access to lots of potential business.

:)

(Offtopic) credit card charges

Posted Jul 28, 2009 21:38 UTC (Tue) by jordanb (guest, #45668) [Link] (4 responses)

You score on the pedant-o-meter: 17

Bravo, sir. Bravo.

(Offtopic) credit card charges

Posted Jul 28, 2009 23:34 UTC (Tue) by Trelane (subscriber, #56877) [Link] (3 responses)

"You" should be "Your" in the above sentence.

Do I get a higher score now? :)

(Offtopic) credit card charges

Posted Jul 29, 2009 1:24 UTC (Wed) by SEMW (guest, #52697) [Link] (2 responses)

It's interpretable both ways: "You[r] score on the pedant-o-meter [is] 17", or "You score [the following] on the pedant-o-meter: 17".

Since it seems to me that "the following" is more likely to be discarded as grammatical filler than "is", I think jordonb was probably going for the latter; so "You" would have been correct.

On which note I think I win :)

(Offtopic) credit card charges

Posted Jul 29, 2009 2:24 UTC (Wed) by jordanb (guest, #45668) [Link]

Yeah, I'll go with that.

(Offtopic) credit card charges

Posted Jul 29, 2009 17:31 UTC (Wed) by Trelane (subscriber, #56877) [Link]

Bravo. I bow to your superior pedantry. ;)

(Offtopic) credit card charges

Posted Jul 28, 2009 22:49 UTC (Tue) by jgg (subscriber, #55211) [Link] (5 responses)

The offensive part of this is that the charge changes depending on what card is used (your fancy Gold Card with super-extra-features charges the merchant more), the merchant can't know what it is up front, the card holder can't know what it is upfront, and the merchant agreements prohibit charging an over-and-above fee for credit card transactions.

IMHO, the whole practice should be banned. If there must be a charge to use a card then the card holder should pay it directly, not the merchant. The card holder is the only person in this system who has any choice of what card (and thus what fee) to use.

(Offtopic) credit card charges

Posted Jul 28, 2009 23:19 UTC (Tue) by tialaramex (subscriber, #21167) [Link] (1 responses)

Because people aren't rational actors the "user pays" model doesn't work. People are happier paying $99.99 with a credit card charge built into the price than $99 and a $0.95 charge. The visible $0.95 charge bugs them despite the cost saving.

You may think of the credit card as a service to the user, but it's also a service to the merchant. People can steal cash, the bank often charges you to deposit it (yes really, if you're a business), and your customers never have any with them, which makes impulse buys unlikely, plus when they do have money it's never the right change, meaning further services needed from a bank. So for these reasons it makes sense for a merchant to want to pay for credit card transactions (though of course they'd rather pay less)

In the UK a peculiar tax loophole caused huge businesses to separate their credit card handling function into a wholly owned subsidiary which charges the parent business a small fee for the service. This service charge is tax free, but the consumer pays the same price (as a cash customer), so more of the consumer's money goes to the business rather than the tax man. Since these huge businesses had also negotiated favourably low charges from card companies they thus profited slightly overall from customers using cards.

(Offtopic) credit card charges

Posted Jul 29, 2009 1:44 UTC (Wed) by jgg (subscriber, #55211) [Link]

People don't like an exposed charge only because they are not used to it, and errantly think it is free. As it stands there is a significant spread in percentage fee to the merchant from the lowest to highest card, and there is no reason for this other than abusive behavior by the credit card company.

Here in .ca the GST is an after the fact charge, it isn't built into the advertised price. People got used to it.

Yes there are benefits to the merchant, and yes cash costs money to process too - the point is there is a completely captive and non-competitive market here, and it is *very* lucrative to the middle men. The banks/etc have figured out they can offer a premium card to their customers to grow their market and completely pay for it by charging the merchants. Nobody can stop them.

In Canada MasterCard *raised* their charges to merchants because they were too low in relation to VISA. What you say? Its simple, the BANK is MasterCard's customer, the merchant and consumer are the PRODUCT they sell to the bank. With low merchant fees their product was not competitive.

Banning this hidden fee is the only way to get things back in order where merchants and card holders are the customers.

(Offtopic) credit card charges

Posted Jul 29, 2009 9:09 UTC (Wed) by dwmw2 (subscriber, #2063) [Link] (1 responses)

"...the merchant agreements prohibit charging an over-and-above fee for credit card transactions."

Do they? I believe it was prohibited by law in the UK for a long time, but that was changed a few years ago and now a lot of merchants do pass on the extra cost of using credit cards to the consumer; adding 2% or so to the bill if a credit card is used.

(Offtopic) credit card charges

Posted Jul 30, 2009 12:37 UTC (Thu) by nye (subscriber, #51576) [Link]

I don't own a credit card, so they might be different, but debit card charges are usually hidden by large retailers, but added to the bill by smaller retailers. Eg. using a debit card at my local pub incurs a charge of 75 pence (actually they may well not accept credit cards at all).

I suppose larger retailers can get better rates, and see greater value in charging everyone the same, whereas a smaller retailer would have to increase their prices by a large enough fraction to risk losing cash customers if they charged everyone the same.

(Offtopic) credit card charges

Posted Jul 30, 2009 22:44 UTC (Thu) by spitzak (guest, #4593) [Link]

I did not know that the charge can vary depending on the card. That sounds really unfair to me. Merchants should be able to know exactly what it is and at least refuse to accept a card if the charge is too high (likely result is the charges will all become equal pretty quickly!).

It would be nice if customers could know what percentage went to the card, but it is not going to happen, as merchants don't want it any more than card companies. If you go in with $20 in cash and a credit card and see an impulse item for $99, but it will cost you $2 more if you use your credit card, you might very well say "I'll go get the cash and come back". And the delay to do that is going to make you figure out that you did not really need the item after all and that you can save $99 by not buying it.

(Offtopic) credit card charges

Posted Jul 29, 2009 1:19 UTC (Wed) by Baylink (guest, #755) [Link]

What: and your merchant agreement actuall *doesn't prohibit you from saying so in public*? I'm shocked.

Shocked, I tell you.

How could they leave open The Verbal Hole.

Could be better from a consumer viewpoint

Posted Jul 29, 2009 1:37 UTC (Wed) by jreiser (subscriber, #11027) [Link]

Plus I doubt it's above and beyond the normal amount a credit card provider charges for normal credit cards. Wrong. My business has accepted credit cards, and payment via a Rewards card increases the "discount" that is subtracted by the bank before paying the merchant. Every month the merchant sees the amount as a separate line item on the bank statement. When the merchant credit card agreement is renewed (often yearly), then the percentage of charges via Rewards cards is a factor in setting the rates for the next year. I set my prices 4% higher because of the "plastic tax."

if it costs the merchant more...

Posted Jul 28, 2009 23:27 UTC (Tue) by dmarti (subscriber, #11625) [Link] (4 responses)

...then only use it to pay Evil companies, and use a regular (no-affinity) card to pay LWN and other small businesses you like. Right?

if it costs the merchant more...

Posted Jul 29, 2009 1:46 UTC (Wed) by jreiser (subscriber, #11027) [Link] (2 responses)

Correct; with no smiley! When the amount is over $500 at a local merchant (i.e., credit card optional and not required) then I offer to pay cash if the merchant will share the discount with me. Processing cash costs the merchant about 0.5%, processing a credit card costs around 2% (minimum.)

if it costs the merchant more...

Posted Jul 29, 2009 4:33 UTC (Wed) by lordsutch (guest, #53) [Link] (1 responses)

And, oddly enough, the merchant agreements don't prohibit businesses from offering discounts to cash, debit, or check customers. But very few businesses do, at least publicly. Gas stations seem to be the only ones that advertise it.

One "solution" for LWN payments would be to charge via PayPal, where the fee to LWN is always the same regardless of what card you use. I don't know how it compares to the "direct" merchant agreement LWN has though.

if it costs the merchant more...

Posted Jul 30, 2009 1:32 UTC (Thu) by Baylink (guest, #755) [Link]

I've never entirely understood that dodge, either...

if it costs the merchant more...

Posted Jul 30, 2009 5:25 UTC (Thu) by rriggs (guest, #11598) [Link]

Dude -- they get $50 for each activated card.

Get the card.

Buy a candy bar (and eat it -- YUM!)

Pay off the card and close the account.

Good deed done. And you get a treat. How great is that?