MasterCard No Fee Cash Back and Costco Purchases | Page 3 | Credit card reward programs | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
MasterCard No Fee Cash Back and Costco Purchases
June 26, 2020
8:24 pm
Loonie
Member
Members
Forum Posts: 6195
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

Things could change with so many businesses now being in trouble, especially in the travel industry. We may like the extra rewards but it's hard to justify gouging the merchants in these difficult times. Corporate heads mat get the hint.

June 27, 2020
11:40 am
Norman1
Member
Members
Forum Posts: 3223
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Well, the merchants seem to be equally self-serving. I don't see any merchants offering me a discount for paying by debit instead of by credit card.

It is interesting to note that the reporter interviewing a complaining merchant never asks the tough question: Why not offer a discount for paying by debit instead of by credit card?

I suspect that the reporter knows he or she would be asked to leave the store.

June 27, 2020
11:52 am
GICinvestor
Member
Members
Forum Posts: 605
Member Since:
April 26, 2019
sp_UserOfflineSmall Offline

I believe there is a merchant charge when accepting a debit charge. But you may recall that gas stations in Canada used to have a cash price and a credit price. And we have yet to see merchants kicking back a fee to us customers for using a cash back card. As I have no doubt the Rogers 1.5% cash back card takes more from the merchant than a no frills Mastercard. As we come more cashless it will cost us more.

June 27, 2020
12:06 pm
Londonguy
Member
Members
Forum Posts: 401
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

Norman1 said
Well, the merchants seem to be equally self-serving. I don't see any merchants offering me a discount for paying by debit instead of by credit card.

It is interesting to note that the reporter interviewing a complaining merchant never asks the tough question: Why not offer a discount for paying by debit instead of by credit card?

I suspect that the reporter knows he or she would be asked to leave the store.  

Charging extra to use a CC has always been a violation of the issuer's merchant agreements. Offering a discount for cash/debit instead (to achieve the same overall net result) is just a different way to dress up the baby, but it works as long as a business frames their pricing policies properly. A good example is how US gas stations overtly price their fuel differently depending on how you intend to pay for it.

Here's a recent blurb on this very subject. It's US-centric but the same legalities apply up here -- https://www.cardfellow.com/blog/cash-discount-eliminate-processing-fees/

June 27, 2020
4:55 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3539
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Winnie said
Tangerine MC at Costco always 0.5%, even when I purchased only groceries.  

This is why 0.5% on all other purchases is problematic, and why I refuse to use my Tangerine Money-Back Credit Card anymore. There's always sneaky little merchant categorizations and changes that can happen from time to time. Plus, it's a pain in the butt trying to manage credit card spending across multiple cards.

I will likely be going with the Invis Cash Back MasterCard (2% grocery, 1% everything else, with no caps or tiers) from Collabria Financial Services as my new go-to credit card, with Scotiabank SCENE Visa as a backup. May add Home Trust Preferred Visa as a backup for my USD domain name purchases from gandi.net and Cloudflare.

Cheers,
Doug

June 27, 2020
7:43 pm
Londonguy
Member
Members
Forum Posts: 401
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

Doug said

May add Home Trust Preferred Visa as a backup for my USD domain name purchases from gandi.net and Cloudflare.

Cheers,
Doug  

FYI there are no longer any rewards earned on US purchases using the Home Trust Preferred VISA -- they still don't charge a foreign transaction fee, but there's no 1% reward on those purchase amounts anymore. I still have the card in my sock drawer but that was a killer change for me.

As an alternative, the basic no-fee Brim MC has no foreign transaction fees and continues to earn 1% in cash rewards on US purchases (2% on Amazon spending in either the US or Canada)

June 27, 2020
8:24 pm
Norman1
Member
Members
Forum Posts: 3223
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

GICinvestor said
I believe there is a merchant charge when accepting a debit charge. But you may recall that gas stations in Canada used to have a cash price and a credit price. And we have yet to see merchants kicking back a fee to us customers for using a cash back card. As I have no doubt the Rogers 1.5% cash back card takes more from the merchant than a no frills Mastercard. As we come more cashless it will cost us more.

There is a fee for Interac debit. But, it is something like a flat 50¢ per transaction. It is not a percentage of the transaction amount like a credit card transaction.

Yes, a MasterCard World Elite charge can cost more. It is around 50 bps more for merchants that are have flow through of the interchange. Issuer would receive something like 1.56% for their World Elite MasterCard charge in contrast to the 0.92% for their regular MasterCard charge.

June 27, 2020
9:22 pm
Loonie
Member
Members
Forum Posts: 6195
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

My recollection is that, quite some years ago,, when merchants were getting into the habit of charging more for the use of credit cards, a law was passed to make it illegal to have two different prices on that basis. I am not sure if this law has changed, but I assume it still exists and is reflected in modern practices.
I believe this principle makes sense. If a merchant doesn't want to accept credit cards because of the fees, then they can refuse them; it's their choice. And that's why so many refuse Am.ex. If the hoteliers and airlines got together and presented a united front, they could get Amex to cooperate. Who knows?, they might actually do it in present circumstances.
Somebody has to pay more so that Amex cardholders can get higher rewards. Right now, it's the guy who uses MC or Visa. You can find excuses, but I don't really think it's fair.

I wouldn't assume the legalities are the same in Canada as in US unless you happen to be an expert in comparative law. Further, many consumer protection laws vary across Canada.

June 27, 2020
10:19 pm
Norman1
Member
Members
Forum Posts: 3223
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

I think those were the anti-surcharging laws that some states in the US have.

Multiple prices are still allowed. But, the price at checkout could not be higher than the shelf price or shelf prices for the item. Either the merchant (a) has three shelf prices (AMEX price, Visa/MasterCard price, and cash price) or (b) has the AMEX price as the shelf price and applies different discounts at checkout for Visa, MasterCard, or cash.

There's no problem if the price at checkout is lower than the shelf price.

June 27, 2020
10:52 pm
Loonie
Member
Members
Forum Posts: 6195
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

I have never once seen separate pricing for these various methods of payment. I waas once told about something like this in a restaurant, in Ottawa a couple of years ago but the owner said that customers were so offended by the system of variable pricing that he had decided to stop taking Amex.
If there were different prices posted for different cards, people would soon start choosing the cheaper method of payment except if they were on expense accounts. This would drive out the higher-priced methods. And that's probably why I've never seen it.

I don't know what the law in the US is or was but I do remember a Canadian law, which I described earlier.

June 28, 2020
10:46 am
Norman1
Member
Members
Forum Posts: 3223
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Loonie said

If there were different prices posted for different cards, people would soon start choosing the cheaper method of payment except if they were on expense accounts. This would drive out the higher-priced methods. And that's probably why I've never seen it.

That is the idea: To sensitize the customer to the higher cost of their premium credit card or AMEX card.

But, then the merchants likely had an epiphany: Don't bother with the work and expense of three shelf prices. Make the highest price, the AMEX price, the shelf price and pocket the higher profit, as not everyone pays by AMEX! sf-surprised The consumer would never know.

With the point-of-sale technology today, it is would be quite easy to implement a 1% discount for those who pay by Visa or MasterCard and a 3% discount for those who pay by cash or Interac debit.

I actually saw that at Shell gas stations some months ago. AIR MILES, Bank of Montreal, and Shell had a promotion. When one preauthorizes with a BMO AIR MILES MasterCard at the pump, the pump prices drop by a few cents per litre!

June 28, 2020
12:57 pm
Loonie
Member
Members
Forum Posts: 6195
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

There was or is a similar deal at Esso.

Still, I can't imagine merchants sitting there calculating surcharges for credit cards in order to establish their standard price. The price will be based on costs and profit margins, whatever they think the customer will put up with. The cost of all credit cards will be rolled into overall costs. And that's why some of them dimply don't accept Amex after they examine the Expenses side of their budget.

June 28, 2020
9:11 pm
Norman1
Member
Members
Forum Posts: 3223
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Some merchants do, especially the smaller ones where the credit card costs take a significant part of their profit margin.

That's how one merchant discovered that card issuers started to game the interchange rules for premium cards,

The merchant started seeing significant month-to-month growth in the credit card commissions without significant increase in sales! His acquirer said that it was from the increasing proportion of premium cards he was accepting.

He was surprised. He worked the checkout a lot himself and didn't notice any customers using one of those premium gold or platinum cards. I think he watched for those distinct premium cards the next few weeks and found that they did not make up a significant part of his sales. Yet, the commissions told a different story.

It turned out that Visa and MasterCard used to have vague rules about what a premium card was. Essentially, it allowed card issuers to self-declare premium cards. Just add extra extended warranty coverage on purchases and that ordinary BMO MasterCard is a premium card!

That's why the merchant didn't realize he had been accepting so many premium cards all that time!

June 28, 2020
9:55 pm
Loonie
Member
Members
Forum Posts: 6195
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

I remember that problem coming to light, perhaps five years ago or so. Some sort of squabble ensued but I don't recall the outcome except that a lot of merchants accepted fewer cards.

June 29, 2020
7:20 am
Norman1
Member
Members
Forum Posts: 3223
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Yes, there certainly was a squabble.

Merchants complained to the federal government. Federal government threatened legislation. Visa Canada and MasterCard Canada each agreed separately to certain voluntary commitments.

I think MasterCard Canada agreed that any card that wasn't branded as a World or World Elite card would no longer be a "premium" card for interchange fee purposes. As well, MasterCard issuers could no longer issue those "premium" cards to just anyone. There had to be significant spending or cardholder requirements so that issuers could not upgrade all cardholders to a World or World Elite card.

June 29, 2020
12:34 pm
Londonguy
Member
Members
Forum Posts: 401
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

Norman1 said
Yes, there certainly was a squabble.

Merchants complained to the federal government. Federal government threatened legislation. Visa Canada and MasterCard Canada each agreed separately to certain voluntary commitments.

I think MasterCard Canada agreed that any card that wasn't branded as a World or World Elite card would no longer be a "premium" card for interchange fee purposes. As well, MasterCard issuers could no longer issue those "premium" cards to just anyone. There had to be significant spending or cardholder requirements so that issuers could not upgrade all cardholders to a World or World Elite card.  

True story. The minimum qualifying income threshold for a WE MasterCard in Canada is currently $80K no matter who the issuing FI is, no exceptions (which is why a percentage of applicants lie try to about their income)

June 29, 2020
4:30 pm
Loonie
Member
Members
Forum Posts: 6195
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

@Norman1: Yes, that sounds right. And, as a result, some merchants refused thenceforth to accept the World Elite cards. Some that I know stopped taking credit cards altogether.

@Londonguy: Unless it has changed very recently, some issuers do allow, in lieu of high income, that applicants with a verified history of CC expenditures and solid credit rating can qualify. I think the minimum is $2000/month. I recall that Rogers was doing this. It only makes sense as some, especially retirees, may have lower incomes but disproportionate spending as they use their savings and are not paying rent or mortgage.
Further, the 80K minimum is for single applicants. Family income minimum is different, I think 120K, and could conceivably include what your kids earn if in household.

For anyone whose income is marginal by these criteria, don't forget to include your TFSA income.. Just because it's not taxed doesn't mean it's not income; in fact it's worth more!

June 29, 2020
5:45 pm
Norman1
Member
Members
Forum Posts: 3223
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Merchants did want the right to refuse premium cards. But, they were not successful. It is still all MasterCard credit cards or no MasterCard credit cards.

However, merchants did obtain the right to accept either the debit cards of a network or the credit cards of the network without having to accept both. Under Element #4, a merchant could accept MasterCard credit cards without being forced to accept the MasterCard debit cards. The MasterCard debit cards had higher costs than the Interac debit cards.

Element #5 makes it explicit that discounts are allowed.

Code of Conduct for the Credit and Debit Card Industry in Canada has the elements of the voluntary code in detail.

June 29, 2020
5:53 pm
Norman1
Member
Members
Forum Posts: 3223
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Loonie said

Further, the 80K minimum is for single applicants. Family income minimum is different, I think 120K, and could conceivably include what your kids earn if in household.

The World Elite MasterCard now requires either $80,000 minimum income for the applicant or $150,000 minimum income for the applicant's household.

National Bank will issue a World Elite MasterCard also to those with $400,000 of investable assets. sf-smile

June 29, 2020
6:54 pm
Loonie
Member
Members
Forum Posts: 6195
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

Perhaps I'm missing something, but why would anyone want the National Bank World Elite card?

No permission to create posts

Please write your comments in the forum.