Credit card payment v.s. cash/wire transfer

[dandoboy]

I know that several online vendors and even B&M retailers will offer you a discount on your purchase if you pay by cash or with an Interac or direct money transfer. Now I know that this is because vendors are charged a percentage of their sale by the credit card company for using their credit service.

My question is this: What is the typical/average fee or percentage that a vendor must pay a credit card company for using their service?

 

[strmrdr]

varies depending on a lot of things.
2% to 5% is common.

 

[thelittleguy]

I don't know for a fact if this is the case...but I would assume that rather than getting an actual "discount" when you pay with cash, you are simply not paying the vendors credit card fee...if you choose to pay with a CC, you end up paying the vendors CC fee for your transaction.

 

[diamondsbylauren]

Companies accepting credit cards over the phone pay the higher rates of commission.
MasterCard Visa range from 1.8-2.5%
American Express is a whopper at 3.5%

In the event of a refund, the credit card companies keep their take

 

[perry]

Most of the internet vendors offering such discounts are only discounting you their average credit card fee. Bottom line: they get paid the same amount of $ for the diamond. You get to choose if you want to pay the credit card company thier fee or not. So is the CC companies abiltity to get your money back if their is a problem worth the fee or not. Most of the better diamond vendors take care of problems promptly - and even this forum self regulates that.

Perry

 

[freaknyea]

Perry could you elaborate? I am a little confused

 

[perry]

Here is how it works:

Note that the following uses hypothetical prices:

Let us say that you are looking at a diamond that list for:

$5155, or $5000 wire transfer (or other cash method)

You don''t have the money in the bank so you charge it on your credit card: $5155.

Let us say that in this example the credit card company charges 3%.

So the credit card company charges the diamond vendor 3% of $5155 - which equals $155 (rounded to nearest dollar), takes the $155 and sends $5000 to the diamond vendor (this is how most credit card companies earn most of their money - on these % fees).

You will note that in this case, that the credit card companies paid the diamond vendor $5000. Note that this is the same value that they listed for wire transfer. They want $5000 for the diamond, and structure their "credit card" prices accordingly.

The credit card companies have two advantages:

1) They allow you to buy things you cannot otherwise afford on unsecured credit.

2) They offer help negotiating "bad deals" or other customer services.

The good internet diamond vendors don''t do bad deals, offer money back guarantees, and take care of problems - that is why they are good internet vendors.

Vendors who participate on this forum - are also policed by this forum (they can''t handle much bad experiences or people will stear people away from them). Vendors who advertise on this forum are subject to the forum moderator''s intervention - and loss of advertising and other things if their are problems that are not quickly solved.

One example of this is that a couple of months ago a vendor who violated forum policies had every post ever written about them on this forum stripped from this forum and all the archives. Today you cannot find a single reference to them on this forum.

If you are looking for a good internet vendor - follow the post and see who are recomemded; or at least do a search for them to see what has been said about them. It does not include everyone out there - but it does include a surprising number of them. If you cannot find references to one you are looking at - I would question why? I would personally consider it a bad sign if their company is not new and you cannot find any references to them here.


Perry

 

[pearcrazy]

Perry is just saying that companies just tack on the average of what Amex or VISA charge them. On a $1000 diamond you''ll pay about 22 dollars extra (2.2%) or $1022 for the diamond using a credit card. Pay by cash and it will cost you a flat $1000. But here''s the rub-- a wire transfer costs the vendor nothing but YOU will be charged by your bank for such a transaction. When I inquired about a wire transfer at my bank I was told it would cost me about $30 in fees. So the best way to go just depends on how much you''re spending. If you can wait 7-10 for a personal check to clear then you''ll pay nothing but you won''t get your diamond shipped until it does. A cashiers check clears faster but most banks charge about $5 to draw it up. You''ll have to wait about 5 days to get the diamond shipped. For the last diamond purchase I made, I spent $600 for some sidestones. I was better off paying the credit charge upcharge of $13.50 than paying the bank''s fee.

There is some security for nervous buyers in paying the extra percentage and knowing the credit card company can help you if there is a dispute.

 

[perry]

Pear crazy:

Interesting. I don''t believe that I paid anywhere near that for a wire transfer. I am thinkning on the line of "free" or perhaps $5.00. I think the policy was that you got one free - or very low cost one - each year, but there would be other charges that kicked in for routine use.

I suggest that anyone check with their financial institition on what wire transfer fees are. I suspect that they are all over the board.

Perry

 

[Shay37]

Date: 9/25/2005 7:17:36 PM
Author: perry
Pear crazy:

Interesting. I don''t believe that I paid anywhere near that for a wire transfer. I am thinkning on the line of ''free'' or perhaps $5.00. I think the policy was that you got one free - or very low cost one - each year, but there would be other charges that kicked in for routine use.

I suggest that anyone check with their financial institition on what wire transfer fees are. I suspect that they are all over the board.

Perry

I have to agree. I have a credit union (I don''t know if that''s the dif), and I wired my money to WF last week. It cost me $10. I thought that was very reasonable.

Shay

 

[pearcrazy]

In my case the majority of the fee was coming from the secondary bank. I was wiring the money into the merchant''s bank account. He used Citibank. They charged $25 dollars. My bank charged $10 dollars. Hence the $35 dollar fee. That wire transfer was for @ $3000 so I could have been charged a percentage of the total.

 

[YoungPapa]

Perry/Shay37,

You guys have very reasonable banks. We''ve had customers call and tell us that the bank wanted as much as $50 for domestic transfers and as high as $70 for international transfers. Also, on the vendor side the wire transfer isn''t always free. We moved from our "old bank" three years ago because they charged us a $10 fee for every inbound wire. This adds up to tens of thousands of dollars over time. Our "new bank" provides inbound wire services for free.

Also, on the credit card issue, vendors often get charged the credit card fee regardless of whether or not the sale "sticks". This means if someone buys a $10,000 diamond on a credit card, then does a return, the vendor gets left holding the bag for the 2.2% (or whatever) of the amount of the original sale. It''s one more reason vendors prefer wire transfers!

 

[diamondsbylauren]

Date: 9/25/2005 6:43:29 PM
Author: pearcrazy
Perry is just saying that companies just tack on the average of what Amex or VISA charge them. On a $1000 diamond you''ll pay about 22 dollars extra (2.2%) or $1022 for the diamond using a credit card. Pay by cash and it will cost you a flat $1000. But here''s the rub-- a wire transfer costs the vendor nothing but YOU will be charged by your bank for such a transaction. When I inquired about a wire transfer at my bank I was told it would cost me about $30 in fees. So the best way to go just depends on how much you''re spending. If you can wait 7-10 for a personal check to clear then you''ll pay nothing but you won''t get your diamond shipped until it does. A cashiers check clears faster but most banks charge about $5 to draw it up. You''ll have to wait about 5 days to get the diamond shipped. For the last diamond purchase I made, I spent $600 for some sidestones. I was better off paying the credit charge upcharge of $13.50 than paying the bank''s fee.

There is some security for nervous buyers in paying the extra percentage and knowing the credit card company can help you if there is a dispute.

Perry- It''s not always 2.2%- some sellers offer larger ( or smaller ) "cash" discounts.
I agree- on a $600 purchase there''s no question , using a credit card is convenient, quick and safe.

On larger purchases, many sellers of diamonds and jewelry might certainly do better than 2.2% discount for a wire transfer purchase. Say you could get 3- or 4 -or even 5% off a 30K purchase for paying by wire- that comes to $1500 you might be able to save.
But then again, spend $30,000 on your Amex and you can probably get two free tickets to Las Vegas , or wherever.

Also- It definitely does cost money to accept wire transfers- We pay ( I think) $30 per incoming wire.

 

[jadeleaves]

Hmm .. my bank charges AUD$28 for a wire transfer.

Then again, I don''t have the luxury of being able to pick my payment method because most vendors (in the US) will only accept wire transfers for overseas purchases.

But then again, spend $30,000 on your Amex and you can probably get two free tickets to Las Vegas , or wherever.

Darn, there goes my free tickets to vegas