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Pay More To Pay With Plastic? I Think Not.

I recently had dinner with a few friends at a Turkish restaurant in Philadelphia.

While trying to decipher what exactly what kebab I was ordering, I noticed an odd statement on the menu:

“Credit card processing fees that we have to pay, will be your discount when you pay by CASH! , therefore the prices that we have posted here are reduced CASH prices. (10% will be added to your bill, if you prefer to pay by VISA or MasterCard.)”

I’ve been waiting to see merchants start offering cash discounts, but surcharges?

While retailers can cut your bill for paying in cash, they can’t add to it if you use plastic.

Stores and restaurants pay credit cards an “interchange fee” every time customers charge a purchase, which usually costs the retailer about 2% of every transaction.

“The merchant can offer an incentive for the consumer to pay with cash– thus avoiding the interchange fee — but is not allowed to pass that fee along to the customer,” says Gail Cunningham, spokesperson for National Foundation for Credit Counseling.

This wasn’t the case until October of this year.

That’s when Visa and MasterCard reached an anti-trust settlement with the Justice Department over their previous policies, which forbid retailers from offering customers discounts if they paid by cash, check, or even credit cards that have a lower interchange fee.

(American Express was part of the suit but has refused to settle.)

But while retailers are noww allowed to offer a cash discount, they can’t add a surcharge to bills when customers pay with a credit card.

That’s still a violation of their agreements with Visa and MasterCard.

The fact that the restaurant I went to tried to add a 10% surcharge, when the interchange fee is about 2%, is pretty outrageous.

If a restaurant springs something like this on you, you don’t have a lot of options.

You can, as Cunningham suggests, take the diplomatic route by telling them they’re in the wrong and hope for free dessert.

But they probably know that – and don’t care.

You’ll either have to pay the surcharge or do what we did and scrape together enough cash to pay the bill.

After you leave you can call the credit card companies and report the surcharge.

You can also decide not to go back.

This restaurant also charges a corking fee on Friday and Saturday nights.

It fee-ed us right out of there.

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