Another Reason to Use Cash

A trend that has been occurring in some parts of the country for the past two years is continuing but has had a sharp increase in the past few months. Some gas stations and merchants are charging customers more when paying with credit or debit cards. Some states have passed laws to prohibit charging customers fees: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Previously processing fees for credit card and debit card transactions were paid by the merchants now the charge is being passed to customers. This is due to increased charges that merchants have to pay when processing credit and debit card transactions. However, fees for debit card purchases are lower than credit card transactions.

In order to legally charge customers for credit card and debit card processing fees gas stations and merchants have to create two separate pricing offers. This is done by offering a discount when paying with cash but a sign must be displayed that states that a higher price will be charged when paying with credit card or debit card. The increase in this practice is due to the changes implemented in the CARD Act of 2009 that stated credit card issuers can charge a discount to customers who pay with cash.

Visa and MasterCard allow merchants to offer a discount when paying with cash that is lower than the price paid for other forms of payment. Discover allows merchants to charge a fee to customers when using a credit card or debit card. American Express states that merchants cannot accept a credit card or debit card for fees over the normal price of an item.

I noticed this week that the local gas station near my office is now charging more when paying with a credit card or debit card. I visited the gas station yesterday and decided to pay with cash but usually pay with my debit card. I am glad I did because I saved $.10 per gallon saving a total of $.80 yesterday for unleaded (regular) gas. For those who buy mid-grade or premium the cost is even more and can easily cost you anywhere from $1.00 - $5.00 more when paying with credit card or debit card.

Be aware of the rules and regulations that govern businesses as well as the rules and regulations that protect consumers to ensure you are not being taken advantage of. For detailed information on the CARD Act of 2009 visit www.govtrack.us/congress/billtext.xpd?bill=h111-627.