Credit Card Fees and More

By Elka Malkis, Financial Manager

I have gotten a number of questions lately from members wondering which card they should use at the Co-op. The monthly statement from our 3rd party processor lists 17 different fees for Master Card/Visa transactions. I believe that I finally have it (mostly) deciphered.

Credit card fees are divided into a per transaction fee and a discount rate, expressed as a percent of the transaction total. Here's the breakdown:

The most expensive cards for us to accept are business cards. They cost us 16 cents per transaction plus 3.99% of the transaction total (this is the discount rate).

The lowest cost cards are (usually) Check Cards (Debit cards). Some cost us 36 cents plus a .005% discount rate, some cost 16 cents plus 1.05%.

Reward cards are the second most expensive. They cost 11 cents per transaction plus 1.65%.

Other non-business, non-reward credit cards cost 6 cents per transaction plus between 1.35% and 1.39%.

Discover cards cost 3 cents per transaction plus 1.26%.

Here's an example of what these different discount rates and transaction fees mean: Your groceries cost $83.57, and you pay with a North West World Perks Visa card. The Co-op pays $1.49 to accept that transaction, and gets $82.08 for the groceries.

If you pay with a Debit card, the Co-op pays only 36 cents to accept the transaction, and gets $83.21 for the grocer ies.

Debit cards do cost us more for the smaller purchases. If your grocery purchase came to only $8.57, a debit card would cost the Co-op 36 cents. The World Perks card would cost 25 cents.

Of course, cash and checks have costs too. It costs us 14 cents for every hundred dollars deposited. It costs 15 cents for every roll of coin we get from the bank and 55 cents for every bundle of $100.00 of singles. We keep all the coins and singles we take in, but still need to buy more in order to make change for all the cash customers. Then there are the other costs of cash: the risk of theft and the time it takes to count it.

Each check costs us between 9 and 12 cents to deposit depending on which bank it is from. If no one ever gave us a forged, non-sufficient funds, fraudulent, unsigned, mis-scribed or closed account check, then that would surely be the payment of choice. Sadly, this is not the case.

The answer to the question "what is the best form of payment for me to use at the Co-op" is probably either a debit card or exact change.