they weren't going to do anything with minimums, but they were looking hard at offering a discount for cash.
I suspect that's how it will play out in a lot of places. No minimum for the card, but cash will get a discount. Most likely that "discount" will be the same price you are paying now- with the small-ticket items being marked up enough to cover the processing fees.
That 0.90 snickers will be $1.00, discounted back to 0.90 if you pay cash.
I don't think it will play out that way, especially for the small merchants. These transactions are still mostly cash, they would not want to raise all prices and play with the discount, it would be to much of a hassle and would upset most customers. I think they are happy just having the option of the minimum if they need it. I think they will be required to use a fixed percentage as discount, in the neighborhood of 2%. The fixed swipe fee makes is difficult to address with a cash discount because your candy bar would be around a 10% discount. I think the minimum issue plays out in one of these two ways. 1) Much as it has, with some stores having minimums, although more may now, it won't be an explosion of minimums. 2) An accommodation between merchants and the CC industry. They could reduce the swipe fee for the merchant, this could promote the use of cards for low value transactions. It has already been done with larger corporations. Also possible is a reduced swipe fee for only the small transactions. This keeps the profits on most transactions, but would do away with the minimum issue completely. To me this makes sense from the CC industry's perspective. Everyone is going on this being an issue between the merchant and consumer, this is really an issue between the merchants and CC industry, we are just in the middle. The best answer really lies between those two.
As for the other merchants on the fake discount, it will happen at some places, for a few reasons I don't think it will happen at most places, but there will be other times to discuss this aspect of it.
Late night diner/college hangout, split checks, it'll happen all the time.
Strange that merchants who never considered cash discounts before are talking about them now. I suspect they'll talk a good game, delay implementation, then forget about it once the debate has faded from the news
Around me these types of places already have the minimums. I know college students have cards, but they also have cash, so I guess they adapt, but mostly have already. It is cumbersome to divide a meal using cards, it is done but I think you are over playing the impact this will have.
As to the discount: It was technically allowed, but it was extremely cumbersome to implement. This law now takes that away and makes it practical. This is one of the things they were fighting for. It wouldn't have been listed in the new rules if they could already do it. They will not forget about it, it is something they fought hard for. They view this as a way to keep in check the rising fees for CC transactions. Over the last decade the fees have close to doubled. They want to put some pricing pressure on the banks, one huge problems is there was none, when this happens prices are higher than they would normally be.
Time will tell. It appears to be a hot button issue for both the merchant and the customer. Each believing the other party should back down on the matter.
The merchant should just take a card for less than $10 vs the customer should just pay cash for under $10.
Some policies/issues/laws just never get resolution or compromise with some sort of testing or protest..
I disagree that it is a hot button issue between the merchant and customer. Most customers don't think about it much, and those that hit the issue understand when they are told, it is a minor inconvenience at best. I think you are right about how things get resolved, I believe the new rules will help resolve the issue, it might not be right away, but the banks want us to use the cards for these transactions and they don't cost anything extra, they will decide to maximize revenue under the rules the way they exists.
Edited by frank22, 21 July 2010 - 10:11 AM.