Restaurant adding fee for use of credit card

[Dtail]

Mee too!

I do sometimes if the restaurant was not recommended by anyone.

 

[Texas Proud]

There is a term for the cost of collecting revenue but I don't recall what it is. Credit cards are actually pretty cheap. Checks, cash, mailed payments, etc. all have costs.

Yes... the cost to handle cash is a lot higher than people might think.... and there are fees for processing checks... but not anywhere near what a CC charges...

 

[ncbill]

tl;dr

local family-owned place I go to for breakfast only I pay cash since I like them a lot & don't want to pay the fee.

but I go on the "customer's choice of any breakfast plate" days so it's only $10 which includes tax & tip.

other family-owned place I visit for breakfast/dinner charges 3% for any payment method.

 

[sengsational]

I sometimes look at reviews and the menu in advance.

Me too, but only when travelling/new to me places.

 

[RetMD21]

I'm not sure why people are so steamed up about this. Credit card fees are a cost, so the only question is "who pays?" It seems logical to me that the person who benefits from using the card should be the one who pays. Same as believing that the person who wants french fries should be the one who pays for them.

From a numbers angle, that "tiny" credit card fee could easily take 25% or more of a small shop's net profit.

Another angle: My "wine guy" is sole owner and clerk at his well-curated shop. I like him and want to see him do well, so I always write him checks instead of using a card. The fees he pays (accommodating most customers) have a significant impact on his net.

Why are people are much less annoyed about cash discounts ? Aren't they essentially the same thing?

 

[Texas Proud]

Why are people are much less annoyed about cash discounts ? Aren't they essentially the same thing?

Well for me it is adding hidden fees... I hate hidden fees...

When I look at the menu and see $10 for a meal, I expect to pay $10 plus tax and tip... then the check comes and I get an added fee on top of that and I do not like it... just make the meal $10.30 and be done with it.. (hmmm, that brings up an interesting question... is that fee taxable)...

BTW, I ordered from a nice place a Friday lunch special and paid with CC not looking at the bill.. but it did seem 'higher' than I expected... when I got home I saw a fee for 'curbside delivery'!!! Really, you want to charge me $6 to bring out my food. I think I will walk in next time as I will get a bit of exercise... or maybe not go... I have not been back since but do like the food...

 

[latexman]

Caveat emptor = “let the buyer beware” has been around a long, long time!

 

[audreyh1]

We don’t eat out at home so it’s not a concern there.

We eat out plenty when traveling. I saw a few extra fees tacked to the bill here and there on this recent trip but they weren’t credit card related. We were generally in tourist areas and they expect people to use credit. The meal prices were already very high.

We probably will continue to use our regular credit cards especially overseas where we prefer to use Apple Pay. We’ll just see how this all shakes out.

 

[Route246]

Ask when you enter the restaurant and leave if they up charge for a credit card.
Let them know why you are leaving. This is the only way to change their thinking by hurting their sales.

Agree. As someone who tends to decent tips (20%+) that is just fric'n insulting to charge for a credit card. If they only knew how short-sighted that sort of thing is. I don't care how much I like the place I would tell them they lost my business on general principal, not because of the surcharge.

 

[harley]

As someone who once managed a retail store for a large well-know chain, handling cash is a big deal. It requires two people to count it, when the person with a gun comes in they go for the cash (not the credit card payments), and it tends to disappear (credit cards don't, they are "captured" by the credit card terminal). As for checks, they have bad check losses (which are greater as a percentage than disputed credit card sales). So I will have to disagree with you.

As for small businesses, I won't paint them all with the same brush, but I am sure that some like the way that cash can be left off of their taxable sales.

Many years ago (before widespread use of CCs) I was working in a restaurant. At the end of the day we (manager and I (asst manager)) would count the money and balance the register. Then we put the cash in a bank bag and walked it over to the bank and dropped in the night deposit box. One night he was robbed on the way. Lost a large sum of money. Now, it was insured, but it was a major PITA to get repaid (no real proof), and there was a large deductible in order to keep the price down. So, I would say, over and above the costs previously mentioned, there is definitely a cost to handle cash. One robbery can wipe out an awful lot of credit card charges.

I'm with many of the others here. I wouldn't mind paying a higher price for using the card as long as it's clearly shown ahead of time. I agree that CC users should pay for the convenience, or cash users should pay the price minus the CC fee amount. But I will never return to a place that tries to sneak extra costs in, whether CC fees, worker insurance, or whatever. And since minimum wages have increased so significantly, perhaps a 5% or whatever tip is all that's needed to maintain a similar income level. I'm a pretty generous tipper (having worked in the field), but I really hate feeling taken advantage of.

 

[frank05]

The fee can be a wash if you use a cash back cc.

 

[Badger]

With so many fast food restaurants changing to kiosks where you have to use a CC it seems to me that they are going to benefit in a few different ways from reducing paychecks and benefits (once the capital expense is paid off) to charging a fee for using a CC that customers will have no alternative.

 

[folivier]

My earlier post here I forgot to say that the additional tip would have been based on the total including tax and the 20% tip. Uh, no.

 

[audreyh1]

It may be rocky for a while, but I expect at some point most chain and higher-end restaurants will go the simpler route and not charge extra for CC use. The smaller restaurants that have lots of cash paying customers anyway will be the ones that keep CC fees.

 

[Texas Proud]

That leads to an interesting question... do they charge the 3% on the tip also

 

[GenXguy]

That leads to an interesting question... do they charge the 3% on the tip also

I would expect so if it's done with the CC.

 

[thod]

Some have added that there is also a cost to handling cash payment (the counting, transporting, etc)

I would like to point out that once a business has decided to accept cash and assume those costs, they are sort of fixed costs. The counting and handling process does not get more expensive depending on how much cash was counted/collected.

Whereas the credit card fees do rise with sales as they are usually percentage based.

So unless a business goes cashless, then there is not really an additional cost to accepting cash.

 

[Texas Proud]

Handling cash is expensive... and it is variable to the business as the bank charges based on what you get...

I did a quick look at found a number of articles on it... I am a bit surprised how expensive it really is... however, I do not know the total cost of a CC purchase... it is not just the CC fee, but also charges from you bank...

Some copy of info:

A widely shared stat from IHL Group suggests the average retailer spends 9.1% of the value of their cash transactions counting, recounting, auditing and depositing cash. How is your business managing these costs?

https://www.plainscapital.com/blog/the-cost-of-accepting-cash/

The idea that accepting cash is cheap is actually a myth. While some business owners might think the 3 percent fee for processing credit cards is a burden, research from IHL Group shows that cash handling costs many retailers between 4.7 and 15.3 percent.

 

[Jimonlimon]

I believe that most restaurants that prefer cash or only accept cash are cheating on their taxes and/or laundering money.

 

[Surewhitey]

Kind of refreshing here in Europe. I like tipping with cash and not on the credit card. May make me carry cash back home when I get home...

 

[OldShooter]

I believe that most restaurants that prefer cash or only accept cash are cheating on their taxes and/or laundering money.

And what actual facts cause you to believe this?

 

[sanfanciscotreat]

And what actual facts cause you to believe this?

Resturant owners I have known open admitted to me that they pocketed $100 cash every night.

 

[MichaelB]

For someone using a card with 2% cash back

A restaurant meal, including gratuity, totaling $100, really only costs $98 after the cash back.
If the business adds a 3% CC fee, the net cost to the consumer is $100.94 ($103 minus 2%). So the real cost to the consumer is 0.94% on the total price of the meal. It’s not insignificant, but also not egregious.

This situation is the result of the 2% cash back consumers receive for CC purchases. It’s an unearned discount paid by business, and the CC surcharge is business looking for a way to ameliorate.

 

[Gumby]

And what actual facts cause you to believe this?

I don't think it is fair to say most small businesses that deal in cash evade taxes, but they seem to do it at higher rates than other businesses because it is easier to accomplish. The IRS has in the past conducted studies on tax compliance and found that individuals/proprietors under-report business sourced income at a rate of about 50%, because there is substantially less monitoring and reporting in place for that income.

This Stanford Law Review article has a good synopsis of the issues.

https://law.stanford.edu/wp-content/uploads/sites/default/files/publication/259083/doc/slspublic/Morse%20Bankman%20Karlinsky%2020StanLPolyRev37.pdf

And I would add that it is known as money "laundering" because the mob used to use laundromats, which have historically been cash only businesses, to hide their illegal income.

 

[Car-Guy]

Resturant owners I have known open admitted to me that they pocketed $100 cash every night.

I expect a lot of the waiters/waitress prefer cash tips, for that reason.