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Hidden Charges
10/1/2008 - Ann O'Connell

As consumers, we have become dependent on plastic cards, charge and debit cards. Each time a credit card is used there are fees charged. Maybe not to the user but certainly to the business accepting the credit card as payment. This cost to the business is recovered through increased selling prices for products and services.

I am a creature of habit, I seldom have more than a few dollars in my purse but I certainly have a handful of credit and debit cards. I know that I can get 20 to 25 days use of someone else's money if I use a credit card to pay for my purchases. The merchant receives the money for my purchase (less a discount) immediately and the credit card company doesn't charge me any interest if I pay off the balance on my account when it is due. I don't think I am alone in using my credit cards to buy the things I want/need.

What does this mean to the business owner accepting my credit card? If I purchase $100 of goods from a store, that business will receive somewhere between $96.00 and $99.00 for the $100. sale to me. The rate varies depending on the number of transactions, the incentive programs offered and to a lesser extent, on how good a negotiator the store owner is.

One or two dollars doesn't sound like much but when you consider that over one half of consumers pay for their purchases with credit cards that can add up quickly. That is one of the reasons that most dollar stores (in Canada at least) refuse to accept anything but cash in payment for sales.

If you have a business that accepts credit cards as payment do you know how much you are paying in fees. Have you asked if there is a cheaper rate available? For example if you belong to certain organizations you may be entitled to a lower fee or discount rate on your merchant account. A couple of the associations that may offer a better rate are, Chambers of Commerce and Retail Merchant Associations. There may be others depending on your area.

 

 


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