Another wolf in sheep's clothing - "Visa Extras"

To bastardize a saying, "Some men are born to cynicism, others have cynicism thrust upon them"...

Okay, I don't know how you are born to cynicism, but you can certainly grow into it, or have it thrust upon you. I don't have a collection of "Tab's Rules" but if I did, Tab's Rule #14.23901 would be that very few companies do things out of the goodness of their own hearts. Any time a company goes to promote a change from the norm - overpromote it actually - as something you should do or sign up for, invariably there's something in it for them. Now it might be a win-win situation, or it might not. But it's nice to know the reason behind their sudden change in heart.

So, I mention this more for concern for my local business brethren than any great love for the financial well-being of, say, Wal-artfay. I have a debit card. It also works as a credit card (in my case, a Visa). I visit my local grocery store - not supermarket, but little corner store - where I'm on a first-name basis with the owner, and if I use my card, I run it as a debit card. Same for when I get my hair cut, my oil changed, whatever. Difference to me? Nothing. But to the business owner (and I used to be a credit card merchant myself, so I know how this works) if it's run as a debit card, it is just a deposit into their account (caveat: may vary depending on the processor you use, but in my experience they all work this way). If it's run as a credit card, though, it incurs the credit card fee, which can be anywhere from 1% to 2.5% (or more, if you have a really sucky processing deal). You know, for Sam, who runs the little corner store, 2% of a $8 sale (or even $30 sale) is a good chunk of his profit. So I run it as a debit - it doesn't matter to me, and Sam doesn't get nailed for the credit card percentage, which I assume is a big deal for him.

Last week, I lost my wallet. I've since concluded that it's truly lost, and have begun the process of replacing what was in it - fortunately not much - my debit card, driver's license, AAA card, and insurance cards - little else. No cash. Probably an unchecked lottery ticket worth $40 million, but I'll never know.

Anyway, I got my replacement debit card today, also a Visa, and was given a little brochure on signing up for "Visa Extras", whereby every use earns me points - toward probably $50 coupons on restricted air tickets after 5 years of use or something, I assume. Anyway, the dubious "points" that I earn aside, all I need to do to earn me these points is not just use the card - heck, I do that already. No, what I need to do is change my little habit and make sure that I run it as a "credit card" (not debit card) whenever I use it. That's the only little change in my behavior I need to make, and for that I get a world of "rewards". Heck, why not?

Except.

If you've read this far, you've already beaten me to the punchline. What has happened is that the banks, and Visa, have figured out that when people use debit cards AS debit cards, they don't make any money. The local corner store doesn't lose any money, but they don't care about that. Now... imagine a cartoon panel with an executive dreaming a thought balloon "Now just how could I get those pesky consumers to use their cards as credit cards but not debit cards... ?"

The ironic other thing is that besides rewards, the other thing they offer is "loss protection", like if you got a bad bit of merchandise and as a debit card you don't get that automatic credit card protection. The irony is that for big purchases, say online, you're just asked for your card number and it's treated like a credit card anyway. The debit card is for the smaller things, like a tank of gas or a cart of groceries. If you buy a TV at a chain store, it'd make a difference, but usually a receipt will work and you could use it as a credit then anyway.

So, Visa makes it sound nice to you, you figure what the heck, it's little business owner that gets screwed while Visa has finally figured out how to get their percentage of your loaf of bread and gallon of milk, offering you dubious protection at best, asking you to do little more than "swipe and sign" and it's the local businessperson who is screwed in the process.

Basically, they've figured out how to run the vacuum between the sofa cushions for change.

I have a small business and almost every purchase is a credit card purchase - almost no cash and a relative handful of checks. Every so often I look closely at the merchant statement and have discovered that I get screwed royally when people use their rewards cards. I'm paying for their friggin' rewards. The discount rate bumps up from 2.7 percent to well over 3 percent with the rewards cards. And since all of my charges are "remote," there is no swiping, and so I lose there as well. The consumer doesn't care, and, really, why should they? The real shame of it is that they probably don't realize it. They think they're doing good by shopping with you, when in fact they are costing you more money than they think. And, small as the percentages are, they do add up. And what am I going to say to a customer? Are you a qual, mid-qual, or non-qual, using a rewards card or a debit card or a corporate card.

I remember seeing something about this and it was defeated, I believe. Businesses are not allowed to give you the discount.

that it's costing the merchant more money -- because THEY get those *extras*. You know the typical American *fuck you, I got mine* attitude. It's the *shiny object* form of marketing to self-involved, selfish stupid people.

I loathe the credit card companies as much as I hate the health insurance companies...

Fucking parasites.

They REALLY want you to pull funds from your checking account (which costs them nothing, or next to it) rather than pull the funds from a credit card (which costs them 2 or 3%)...

What SUCKS is that the recipient of the funds pays the same fee either way. So if PayPal's various methods have you pulling from your checking account (or PayPal balance, which is ALWAYS the first funding source tapped) they get to double dip, somewhat.

So, I make it a point to ALWAYS pay for PayPal purchases with my credit card as funding source.

Fight the power.

I have the option of running debit or credit, but I get charged a flat $.65 per transaction on debit regardless of the amount, whether it is $.10 or $10,000. Conversely, I get charged $.35 plus an average of about 1.7% of the purchase if it is run as credit. The crossover point for my business I have calculated to be about $23. If the sale amount is less, I am generally better off if it is run as credit but over that amount, I am much better off with debit. This is further complicated by the different rates I am charged if it is a corporate card or some sort of perks card. The free plane tickets are not free, they are paid by small retailers like me, the big box stores negotiate their way out of this bullshit because of the volume they have.

Commercials encouraging the purchases of a pack of gum with plastic and portraying cash and checks as an old fashioned, out of date way to pay for things really pisses me off.

My tinfoil hat sensibilities tell me that it is yet another way for big business to keep their foot on the throats of us independents.

but it's less than half the credit card fee and most merchants are glad to pay it because it avoids things like bounced checks.

I was wondering when Visa would start getting greedy. I knew they didn't take the debit card business over out of the goodness of their hearts in the first place.