Fund Your Utopia Without Me.™

27 January 2013

Before You Say "Charge It!" Read This...

You're About To Find Out Exactly How DoddFrankenstein from the Black Lagoon Works

I meant to write about this yesterday, but forgot. As you may know, credit card companies charge businesses a percentage of each sale as a transaction fee.  In other words, if you charge a purchase, the credit card company charges the business up to 4%.

For decades, it has been against Federal law for a business to charge a customer more for using a credit card than if she pays in cash/cheque. As of either yesterday, this is no longer the case. DoddFrankenstein, which Democrats pushed as protection for consumers (“working Americans,” “the middle class,” etc.) from the big, old, evil banksters & “Wall Street” made it legal for businesses to add a transaction fee of up 4% on each sale when a credit card is used.  Thus, the person who charges a purchase can pay more for a good or service than someone paying with cash or a cheque.  This transaction fee may be charged on debit card purchases depending upon the contract and if it the sale is processed by Visa.

This fee may also apply to transactions on American Express cards, as well. Most AE cards) are different from other credit cards in that the minimum payment is the entire balance.  These types of cards are considered short-term credit facilities. Traditionally, AE has been used as more of a convenience than other credit cards, but it has charged businesses the highest percentage. I’m not sure if what the exact percentages on cards in recent years as I do not use either credit cards or American Express, but people should be aware that they could pay an additional 4% on an AE purchase even though they pay the card off every month while Visa/MC users could be charged a lower transaction fee even though those cards are credit revolving/rollovers.

I have no problem with businesses passing on their costs to consumers. Obviously, they can’t stay in business if they are unable to be profitable, but the government and MSM have been grossly negligent in failing to make the American public aware of this new change in the law.  Many Americans will not even realise the change until they get their credit card statements.

Anyhoo, people should be aware of all of this so that they aren't in for a rude awakening at the end of the month.  They should also understand that charge cards should not be used for convenience purposes only, if they can used alternative methods of payment.  The additional charges can add up quickly and, if you can afford to pay in cash, then obviously there is no reason to pay more for a good or service.

Of importance for businesses,  IF AND WHEN the media decides to cover this and goes ballistic, they will not blame Democrats and the monstrosity known - "affectionately" - as the DoddFrankenstein from the Black Lagoon law. They will blame Wall Street, banks and “corporations” (as though every corporation is a multinational). Instead of telling people the truth that it is a fee that has, heretofore, been placed on the seller and is now being passed onto their customers, they will undoubtedly lead the charge to demand that the “evil corporations” “eat” the cost. Of course, this transaction fee has been assessed on ALL businesses for decades.  There is no difference in the amount of the fee whether the purchase is from Exxon or Mum-n-Pops’ Market. So, what will probably happen is that small businesses will be forced to eat the fee at a cost of lower profits, less expansion, fewer employees and decreased employee benefits.

I also fully expect the Perpetual Victims and Grievance Committee to go into high gear screaming “Racism!” and “That’s discrimination!” because poorer people use credit cards more often than the wealthy. While I can pay cash for a $100 whatever, someone with less money might be charged $104 (plus the interest on the card). You can see where this is going…

What happens in the future relative to any changes in how this transaction fee will be charged and who will pay it is  unknown.  An outcry may lead to a repeal of the law, but at this point all that we can be assured of is that, if a business so chooses, it can charge those using credit/charge cards up to 4% for the same good or service than it does those that pay with cash and some debit cards.  

I wanted all of you to be prepared and please pass this information on to your friends and family.  There is no reason to spend extra money if you can avoid it.


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