Funny about Money

Did you see Kara’s comment on yesterday’s post about the cash/debit/credit chestnut? Among several issues, she touches on the hot button of AMEX’s outrageous fees.

Well…I don’t know if she’s prescient or if she just works for The New York Times, but presto-digito! This very morning up pops a report that ought to get the attention of us consumers: a group of businesses are on the verge of winning a class action asking that American Express allow them to pass transaction fees along to their customers. They also appear to be winning against the other two major credit card issuers.

What this will mean for you and me is higher prices at the cash register if we choose to buy with a credit card. In the AMEX action, American Express proposes an agreement that will let merchants soak customers for the transaction fees as long as the same amount is levied on other credit and charge card users. Since American Express has the highest transaction fees in the industry, that means you will pay a premium price to use your Mastercard or Visa. Unless, of course, AMEX chooses to lower its transaction fees. Either way, it’s going to cost more to buy things with a charge card.

That brings us, then, to the next question:

If you had to pay for the privilege of buying things on a credit card, would you continue (assuming you’re in this habit) to buy every little thing on the card and then pay it off at the end of the month? Or would you move to cash or debit card?

Presumably, that lovely kickback American Express shares with its customers each year would be eaten up by the transaction fees, especially if, as I do, you charged virtually everything and hardly ever used cash. In the absence of that benefit, AMEX looks a lot less attractive.

You do need it to buy gas at Costco…or so it seems. In fact, you can go into the store and buy a cash card, which works just fine at Costco’s gas pumps. And presumably, in the coming brave new world of credit-card surcharges, it will work without dinging you an extra little gouge.

Personally, I empathize with the business owners. It’s ridiculous that they should have to support a huge, outrageously profitable industry so that their customers can enjoy the perceived convenience of paying with plastic. And as a matter of fact, when my clients decide to remit payment to me through PayPal, I do add the PayPal transaction fee to their bill. PayPal is more convenient for me, too — depositing paper checks is a damn nuisance. But not so much that I want to pay extra for that convenience.

Still, clients don’t seem to mind. Many actually seem to expect to cover the PayPal fees.

So…where do I come down on this? Squarely on both sides of the fence!

If a court ruled that I could charge clients for credit-card transactions, my order for a Square would be winging its way toward that worthy vendor as we scribble.

On the other hand, you can bet I’d pay for a lot more things in cash. In fact, I’d probably use cash for everything but large-ticket items and products that might need to be returned. And even a large-ticket item can be paid for with a check, if you have the cash in your account. Travel reservations, I assume, could be made with a debit card. And one thing you do have to say for cash: it makes life a lot harder for hackers.

How about yourself? When merchants can pass credit-card transaction fees along to you, will that change your choice of payment method?