Thursday, April 26, 2018

How much should I pay for convenience?

The other day I was hot and thirsty and my lips were chapped.

So I went into a convenience store to buy a beverage and some chapstick. I didn't have any cash on me, so I figured my purchase would be close to a $5 card minimum, if they had one. I don't mind paying meeting those minimums, as I know it costs money for merchants to accept credit cards. I recently got one of those little stick-on pockets for my cell phone case, and now I basically carry just my phone, my ID, and my credit card. I don't carry a wallet anymore, and rarely have cash on me.

Instead, I stumbled into a conversation with the clerk and another customer about a relatively new Minnesota statute that allows any store that accepts electronic payments to charge a fee equal to their costs, typically expressed as a percent of the purchase, as long as the customer is notified before the transaction. In this case, it was 3.69% and there was a large oval sticker on the counter where I placed my items. This statute has been in effect since last year, but this store was just implementing it and it was a popular topic of conversation.

Now, I've said I didn't mind paying a $5 minimum, but this fee gave me pause. It's pretty rare that I "need" to make a purchase that is below $5 with a credit card. (I say "need" because I didn't need to make this purchase - I can't think of any truly necessary purchases that fall into this category.) But it's rare, so it doesn't feel like I'm paying that much more over time for those few transactions where I'm buying something else to get over $5.

We have a good credit card that provides travel rewards, and I use it for almost all my purchases. Even so, the rewards percentage is only about 1% for non-travel purchases - well below the 3.69% fee the store was passing on to me. Which means that suddenly, paying with a credit card is more expensive, literally. It's effectively a cash discount. And if a lot of places start passing that fee along, it'd be pretty noticeable.

Is it going to change my buying behavior? I think it might. I'm certainly going to pay attention and start carrying an "emergency twenty" on me like I used to, to avoid paying more than necessary. The statute is clear that it applies to credit, debit, and other electronic payments, so I'm also going to watch to see whether it shows up on payment systems that use apps - there are a couple of places where I will pay with LevelUp or a proprietary app that works like a loyalty card. And what about online bill pay? It seems like that might be affected too. I'd have to figure out if the fee would be cheaper than a stamp, I guess.

It also makes me rethink how useful my travel rewards credit card is. For the 18 months I've had it, it's paid for itself - it offers travel reimbursements up to a few hundred dollars, covered the TSA Pre-Check and Global Entry fees for Peanut and myself, provides access to travel lounges in airports around the world, and in addition to the 1% on all purchases, gives 3% on travel expenses. I travel about once a month for work, and we went on a vacation last year that was paid for with those points. I'm on track to get a vacation every 12-18 months if I use the card for everything, but this means I'm paying more for that vacation or taking longer to get it. Is it worth it then?

Do you think a pass-through fee for credit card use would change your buying behavior?

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