HIAWATHA, Iowa (KCRG) – More businesses are charging fees when customers use credit cards, but debit card transactions are treated differently under payment network rules.
According to Pew Research from 2022, more than 40% of people in the U.S. make no cash purchases in a given week.
Marie Chalhoub, owner of Oscar’s in Hiawatha, said she sees the shift to cashless payments daily.
“People use credit cards a lot,” she said. “At least 85% credit cards, maybe 15% cash.”
However, with credit transactions come credit card fees.
“That small percentage payment, it guarantees to the merchant that they’re going to receive payment from your bank,” said Dan Kramer, Executive Vice President for SHAZAM Financial Services.
Debit cards, however, pull money directly from bank accounts like cash.
Kramer said almost every debit card is issued by either Mastercard or Visa, and businesses cannot charge fees for those debit card transactions.
“Visa and Mastercard have very specific rules,” Kramer said.
Kramer said the systems retailers use to process cards are responsible for ensuring retailers follow those rules.
“And they have fees and penalties in place to oversee that because the merchant runs the risk of having their license for processing the Mastercard Visa revoked,” Kramer said.
Kramer said customers who spot a debit card fee should ask the business to remove it. If the business refuses, he said customers should call their bank and dispute the charges.
Chalhoub said she does not pass credit card fees onto her customers.
“We pride ourselves on being a family restaurant. That means a lot more to me than a processing fee,” Chalhoub said.
But she said she does feel the impact of those fees.
“It’s frustrating,” she said. “It takes out of your bottom line.”
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