You Can't Buy a Coke With Your Debit Card Anymore: Yet More Unintended Consequences of Fee Regulation

In 2010, Congress passed legislation—Dodd-Frank!—to protect us defenseless customers and small-time merchants from "swipe fees," the surchange banks and processing companies impose every time you use your debit card to buy stuff. That legislation ordered the Federal Reserve to set a cap on those fees, which it did in June. And now:

•You may have to pay cash for a cup of coffee or pack of gum.

In the past, card processing networks such as Visa and MasterCard, which set debit card fees and process them on behalf of financial institutions, gave retailers a discount on fees for small transactions, usually of less than $10. Once the cap on debit card fees took effect, though, those discounts were eliminated. Retailers who previously paid as little as 4 cents on a debit card transaction found themselves hit with a 21-cent fee, says Alex Matjanec, co-founder of MyBankTracker.com.

"A customer buying a can of soda on a debit card is costing me more today than it did before the legislation," says Ari Haseotes, president of Cumberland Farms, which operates almost 600 gas and convenience stores in 11 states across the Northeast and in Florida.

Some retailers have raised prices to cover the higher fees, while others stopped accepting debit cards for small purchases, Matjanec says.

Lots more on the totally predictable unintended consequences  of financial regulation.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • WTF||

    RC'z law: Foreseeable consequences are not unintended.

  • R C Dean||

    No, no, no.

    That's an Iron Law.

    RC'z Law has to do with typos in blog comments.

  • ||

    Episiarch's Law: other Laws will be mis-attributed, inevitably.

  • fried wylie||

    Sugarpisidean's Law: links to typo filled pages explaining misattributed laws will always be broken.

  • Tulpa the White||

    That's already been named as Stigler's Law (though it was discovered by Thomas Merton).

  • WTF||

    I think maybe I just demonstrated some law in that case, but I'm not sure what it is.

  • WTF||

    Epi's law!

  • Tulpa the White||

    More like straw than iron, since it doesn't even make sense when you think about it.

    You still haven't directly answered my question about whether George Bush intended for thousands of innocent Afghan and Iraqi civilians to die in airstrikes... which seems like a slam dunk if we accept your so-called Iron Law.

    I understand the point you're trying to make, but it's more like "foreseeable consequences matter even if unintended".

  • R C Dean||

    Yes, Tulpa. We know you don't like it.

    But its about accountability. If a result is foreseeable, you own it. Saying it was "unintentional" is an attempt to dodge accountability for it.

    And, as we have discussed ad nauseum, you are responsible for the both the foreseeable consequences of your actions. If you intend to take an action, and you know it will result in a given result, I don't see how you can say you didn't intend the result.

  • That Guy Who Says Things||

    If you intend to take an action, and you know it will result in a given result, I don't see how you can say you didn't intend the result.

    Suppose you intentionally perform an action knowing that it could result in a given outcome but that you do not intend that outcome...would you say that you are responsible if said outcome does in fact result?

  • ||

    I would say he intended it, yes. Not necessarily in a nefarious way but in the sense that the civilian casualties were acceptable eggs for his omelet.

  • Mo' $parky||

    Those of us who use our debit cards as our main purchasing method say "Thanks alot assholes." Guess I'll have to go back to withdrawing wads of cash to carry around.

  • R C Dean||

    Well, those wads of cash mark you as a drug dealer. Or a terrorist. I forget which.

  • Mo' $parky||

    More likely to mark me as an easy target for anyone that needs some quick cash. So yeah, anything the police feel like at the time.

  • Death Rock and Skull||

    Keep your money in your boots, and your knife in your pocket.

  • Death Rock and Skull||

    Gun- always shoulder holster.

  • some guy||

    I thought drug dealers were terrorists...

  • Lord Humungus||

    but how many terrorists are drug dealers? Here is a simple Venn diagram to figure out this dilemma...

  • Death Rock and Skull||

    I pay cash for petty shit. Instant verification that the transaction is legit, little or no bookkeeping for me, and why leave little trails everywhere?

  • ||

    why leave little trails everywhere?

    there are reasons..

    http://www.youtube.com/watch?v=RrBPmoIAyts

  • Scruffy Nerfherder||

    I can guarantee that forcing the use of cash for a transaction was a COMPLETELY unintentional side-effect of the legislation as far as Congress is concerned. The government does not like cash transactions, period.

  • R C Dean||

    Technically, that would be an undesired side-effect. If you knew it was going to happen, you can't say you didn't intend for it to happen.

  • some guy||

    Actually, I can see politicians thinking that they can prevent things from happening simply by wanting them not to happen.

    Foreseeable consequences are only intentional if you are a rational person.

  • LarryA||

    "It's, like, an economic law, or something? We amend laws all the time. No biggie!"

  • Tulpa the White||

    If you knew it was going to happen, you can't say you didn't intend for it to happen.

    RC's Iron Circular Logic?

  • R C Dean||

    What's circular about it?

  • Pro Libertate||

    Not that I don't agree with all of this, but I wouldn't use my debit card for transactions. Use a credit card and avoid exposing your entire checking account.

  • R C Dean||

    I've gone to this recently. Plus, I have a cash-back deal on my credit card.

    Which, needless to say, I pay down after every paycheck.

  • some guy||

    That's the way I've been going for years. 1% back didn't used to sound like much, but now that interest rates are in crapper it isn't too bad.

    The extra security of protecting your bank account is just icing on the cake.

    All those on time payments helps your credit rating a little bit as well. (This was very useful when I was young and had 'no credit').

  • Tulpa the White||

    Just wait till they pass some "consumer rights legislation" capping interest rates, late fees, etc to ridiculously low levels. Then it's back to paying $90 a year for the privilege of having a credit card even if you pay it off every month.

  • Brandon||

    And when they outlaw fees, it will be Government "credit" cards from which they withdraw your estimated taxes owed periodically, without warning or consent, and audit at random to see if you're buying too many unhealthy foods.

  • fried wylie||

    to see if you're buying too many unhealthy foods the Federally Mandated monthly quota of broccoli.

    ftfy.

  • Mo' $parky||

    I don't have any credit cards in my name and I'm hoping to keep it that way. My wife has a couple that are almost paid off then those accounts will be closed too.

    Not having credit cards makes it much easier to live within your means. There are too many shiny things out there that I don't need but would be tempted to purchase if I had a credit card.

  • Pro Libertate||

    I don't put anything on my credit card that can't be paid off at the end of the month. I just use it for electronic payments.

  • SIV||

    ^Yup^

    I wish most people would use cash for face-to-face transactions. I guess most prefer to pay more,have no privacy in travels or economic activity,come up short at "cash only" businesses and act like an asshole when they realize they are "broke", rely on the infallible certainty of an always functioning electronic banking system, pay no attention to how much things actually cost, and tacitly encourage a "cash-free" society.

  • Pro Libertate||

    I still use cash a lot, too.

  • Mo' $parky||

    I guess most prefer to pay more

    Or not buy things that cost more if you use a debit card.

    have no privacy in travels or economic activity

    Yeah, because you get that with cash.

    come up short at "cash only" businesses

    Or be able to read a sign on a door.

    act like an asshole when they realize they are "broke"

    Never had this happen so no comment.

    rely on the infallible certainty of an always functioning electronic banking system

    Because when the electronic banking system fails only people with debit cards will be having problems.

    pay no attention to how much things actually cost

    Or actually check the prices on every last thing.

    tacitly encourage a "cash-free" society

    Never done this so no comment.

  • fried wylie||

    Or be able to read a sign on a door.

    SIGNS ON DOORS ARE RACIST11111!!!11ONEONEONE

  • Zeb||

    I agree. Use cash. Electronic money is very convenient, but it is also a great way for people to monitor practically everything you do.

  • Death Rock and Skull||

    I have many hobbies. I never even considered that I could use my credit card to pay for that shit.

  • Mo' $parky||

    Some people express their self-control by having a credit card and not using it. I express mine by not having a credit card.

  • fried wylie||

    I have many hobbies. I never even considered that I could use my credit card to pay for that shit.

    It's a brave new world in DRS's craftroom today.

  • fried wylie||

    oh, so what's first?

    warhammer/40k figures/paints, electronic components, aquarium gear/livestock, legos, books?

  • Tulpa the White||

    You realize your credit score is going to be shit in a few years if you swear off credit, right?

  • Pro Libertate||

    I'm not sure inactivity would kill your FICO score, not if you have regular income and no significant dings. Of course, how that's calculated is proprietary, so maybe I'm wrong.

    In any case, no recent credit activity (meaning years of inactivity) probably does lower your score somewhat.

  • Mo' $parky||

    Why? I have a mortgage on a house and car payments. I also have utility bills that I pay. I've had no credit cards for at least 5 years and the last time I checked my credit score is pretty high.

  • Rasilio||

    Utility bills are not considered in calculating your credit score, however the mortgage and car payments are sufficient to maintain a high score, actually not having ANY outstanding credit will in fact lower your credit score to the point where after a few years of inactivity getting a loan would become difficult.

  • Mo' $parky||

    I guess I'll start worrying about it in 30 years then.

  • GW||

    It's not a credit score, it's a debt score. And yes, if you pay off all your debts, your score will actually go to zero pretty quickly. And that's actually a good thing.

    It's funny: people today depend on credit for everything. Two generations ago, a mortgage was about the most debt anyone ever got into. They didn't finance cars, only rich people had credit cards, and people generally only paid for things out of pocket. Now, no one can imagine not having credit.

  • Charles 3E||

    Depending on how long you define "generation" this isn't true. Farmers, especially small farmers, have always depended on credit. It's not true, at least, for whatever the farm population was at whatever good old days moment you are imagining.

  • GW||

    But that could be said of virtually any small business, and that's a different manner entirely. I'm referring to personal finance.

  • goneGalt||

    Agreed that my score will decrease. But if I'm truly "swearing off" credit, why would I care?

  • Zeb||

    I was without credit cards until recently, but only because I kept making the mistake of reading the contracts. I finally sucked it up and got one. But I am very averse to borrowing money that I don't have to, so I never consider putting anything on it that I can't pay off at any time.

  • fried wylie||

    but only because I kept making the mistake of reading the contracts

    that's 'tarded.

  • Mo' $parky||

    I never consider putting anything on it that I can't pay off at any time

    To me this just seems like an unnecessary added step.

  • Zeb||

    Well, I get the bonus points thing, plus it is easier to deal with fraudulent use of the card than with a debit card, so it is good for online purchases.

  • ||

    Agree with Zeb. If you get a card like AmEx's Blue Cash, and pay it off on time every month, they're basically paying you to use their card. I get ~$400 credit on it each year from them, and don't run balances.

  • Scarcity||

    Fidelity has a card that deposits 2% cash back on all charges into a Fidelity account, no dollar limit. You can invest it with them or just cash it out. Simply using my credit card for all purchases and paying it off each month pays for the majority of an annual week in Cancun.

  • Wilt Chamberlain||

    I was enraged when I found out I could no longer use my card for purchases under $5 at my local gas station. I don't get it; the FBI thinks anyone who uses cash all the time is a criminal suspect, yet the state forces you to pay cash for small purchases. It would be weird if in the future every transaction had to be above a certain minimum. It would be a great way to stimulate the economy if everyone spent $10 every time they went to the store!

  • R C Dean||

    It would be a great way to stimulate the economy if everyone spent $10 every time they went to the store!

    Bernanke likes.

  • Scruffy Nerfherder||

    It would be weird if in the future every transaction had to be above a certain minimum.

    The Fed is working on that problem right now.

  • Doctor Whom||

    Minimum transactions are de facto the case in Zimbabwe, where they use greenbacks but can't get their hands on US coins. So here's yet another sign of the direction in which we're headed.

  • Death Rock and Skull||

    Getting rid of sales tax would greatly reduce the practicalness of fractions of dollars, especially pennies.

  • robc||

    Im pro-cash.

    I use credit/debit cards more than I like, I really think using cash almost all the time would be the better way to go, in general.

    Obviously, for things like internet purchases, credit cards are better.

  • Death Rock and Skull||

    Word.

  • Peter L||

    Obviously, for things like internet purchases, BitCoins are better.

  • fried wylie||

    I'm still waiting for the skype addon that lets me shove physical objects, like food or cash, through the mic.

  • Mo' $parky||

    Online retailers just need 3D printers. You can email them a scanned copy of your money and they can print it out.

  • fried wylie||

    HewlettBernake HoloJet5M.

  • Rich||

    Until these legislating clowns face greater consequences for their "faux pas" than being voted out, we can count on this kind of stuff.

  • Death Rock and Skull||

    "It is interstate commerce so it is okay!"

    -Tulpa

  • Michael||

    You may have to pay cash for a cup of coffee or pack of gum.

    I hear that the Fed is already printing extra to meet the anticipated demand.

    Also, enjoy some off-topic shenanigans - the USPS bans shipment of lithium ion batteries:

    http://www.engadget.com/2012/0.....ttery-ban/

  • fried wylie||

    the USPS bans shipment of lithium ion batteries

    Like I'd wait on those slowfucks to bring my precious battery packs anyway.

  • Brandon||

    That'll make them more competitive with the UPS and Fedex!

  • Killazontherun||

    I ran into this problem at the liquor store a few months back, and assumed the depressingly stereotypical lady (government owned enterprise) didn't know what the hell she was talking about. Probably right on that score, but I wonder if it was related to this matter. The ABC store didn't even have a proper swipe register.

    I haven't been back to any liquor store since then, and have invested all my recreational drinking money on craft brews from private establishments. Not ready to say I'm giving up branded liquor entirely (still get hooch from a hobbyist), but I'm damn close to it.

  • Tulpa the White||

    Thing is, accepting cash has a cost too, as modern credit card systems are significantly faster than a cashier making change. Factor in the fact that fewer cash transactions means less incentive for robbery, less opportunity for employees to steal, and I'd wager that as long as the fees don't get TOO high, most stores would prefer plastic over cash.

  • Zeb||

    This may well be true. I'd be interested to see what woudl happen if stores were allowed to charge a fee for people using credit cards. Would they voluntarily absorb the cost of the swipe fees?

  • ||

    Everything is going according to plan. Next step: price controls.

  • fried wylie||

    "Everything is proceeding as I have foreseen", get your fucking quotes right, you sorry excuse of a Palpatine Impersonator.

  • ||

    Damn it, I was originally going to say that. Gotta go with my gut next time.

  • fried wylie||

    Gotta go with my gut next time.

    FUCKING DUH?! Have you been paying any attention at all in your Sith Academy classes? It's like you don't understand the darkside of the force AT ALL.

  • ||

    Oh yeah? I have a Star Wars desk calendar, and I'm looking at Hayden Christensen's sweaty chest right now.

  • Pi Guy||

    This is really starting to have a Palpatinish glow to it...

  • Zeb||

    People don't carry cash? Weird.

  • Pi Guy||

    As long as drugs, gambling, and prostitution are illegal, there will always be a need for cash.

    As the economy goes Titanicward, more and more black markets will emerge to fill the need for economies that people can participate in.

    Brothers gotta eat!

  • Rhinonamous||

    I know the card company agreements used to specifically prohibited minimum charge requirements. Any idea if they still do?

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement