Would YOU Pay Extra Fees to Use Chip-Enabled Cards?

A Michigan business owner moves costs on to his customers, we ask you if service fees are an acceptable trade-off for the move to chip readers
Published
Alan Byrne
BY:
Associate Editor
Chip Reader

At what price comes security? As the troubled rollout of chip-enabled card readers reaches its 1-year mark, a Michigan business owner is asking his customers that very question. If they want to use Roger Foutch's new card readers, they'll be paying a 3.75% service fee.

As we documented back in May, the onboarding of the new card technology — touted as being more secure than the old swipe method — has hit its fair share of problems. We cited Credit.com's numbers that indicated each new reader could cost businesses as much as $500. Foutch claims the software updates, which allow him to offset card processing fees from the business onto the customers, cost him thousands of dollars.

SEE ALSO: Why Stores Still Won't Accept Your Chip Card (and What You Can Do to Pay Safely)

Although this story is unique to a small area in Michigan, we wanted to get readers' thoughts on this. Would you be willing to pay a small fee for the security and convenience of paying with chip cards? Would you rather stores just skipped chip-and-PIN and simply adopted alternative payment methods like Apple Pay and Google Pay? Sound off in the comments below!

Related DealNews Blog Posts:
Alan Byrne
Associate Editor

Alan Byrne is actually quite busy watching Frasier, finding jokes to steal for his next blog. His areas of expertise are video games and "assorted nonsense."
DealNews may be compensated by companies mentioned in this article. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).

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33 comments
vad1
The entire chip-card roll-out has been a mess -- and it's now a year past the "deadline" and there are still many stores that do not accept chips. Even worse, it takes twice (or more) longer to complete a transaction with a chip card and even longer since we have to ask if the chip reader works or use it after we swipe the card.

And, there is no way I would ever pay extra to use any credit card. It's both a PITA and a risk for a merchant to deal with cash, so, if anything, I'd expect a discount for using a card!
October 28, 2016
Gamebeaross
Until chip cards start requiring a pin all the time, they're sort of pointless. They don't offer significantly more security.

For that matter, a swipe reader with a pin would be more secure than a chip card.

Also, if that guy is paying 3.75% in fees, he's a moron. Even I only pay 2.75% using Square and it's generally much lower for actual retailers who process more than a rare credit card.

As for paying the fee. No. I probably wouldn't do business with the guy just because of that fee.

Anyways, his approach is wrong. He should be offering discounts for cash, even though cash actually is more work to deal with and increases your chances of being held up.
October 28, 2016
jgrimoldy
Why on earth should I pay this fee?

If this reduces fraud, the banks should pay it. It's their benefit, not mine. Or give me back my non-chip card. I really don't care about the added security for the bank.
October 27, 2016
wetpaint
Consumers paying the fee is absurd. If the credit card companies want chips in the cards, let them deal with the fee.
I pay cash whenever I can.
October 27, 2016
cinci_bri
NO WAY !!!! 2 months after receiving my new chip card from my bank there was fraud detected on it and transactions made to my account that I didn't make. They traced back to a place I used the chip card. I had to wait and get another chip card. So far there is no sign it's anymore secure than the old ones.
October 27, 2016
loosecannon
PAY EXTRA? No way, they should pay users for the added inconvience of using a chip card.
October 27, 2016
pkdesign
There is no way I'd pay more to use a chip enabled card. First of all, like other commenters have posted, once you get the card you can't even use it as a swipe card anymore (if the vendor has a chip reader.) I would certainly never go back to that vendor if I was asked to pay extra for an industry imposed change.
October 27, 2016
HeyTiger
We're already all paying a premium in the form of higher prices at vendors who accept credit cards. The idea of keeping the banks safe from fraud at my expense is laughable. They can figure out how to do it for no extra cost or they can eat the fraudulent charges. I think most of us couldn't care less which they choose.
October 27, 2016
etowey
I'm not paying more to use them, they should never have rolled them out without a functional platform in place. They add 30 seconds to a minute to every transaction, and it's annoying as hell. Charging the merchant extra for the privledge of paying a processor to prosses transactions is just as obnoxious as the merchant trying to charge the consumer to take their money.
October 27, 2016
winwho
No, because it provides me no more protection. There is still "Zero Liability" on fraudulent charges (major cc companies)
October 27, 2016
PythonX
No way! Not paying any added fees. As the lil guy we get gouged enough.
October 27, 2016
vinaytampa
@jeffreyd00: You know Apple got sued for the same thing when they raised prices of books so the publishers can still make money and Apple gets their cut also.
October 27, 2016
pottsgw
"But are customers willing to pay? Those ABC12 talked to were split, but Foutch says anyone who doesn't want a fee...can always pay cash." ... or in reality they will tip less. The servers are the ones who are going to pay for the owner's douchebaggery.
October 27, 2016
Justin Kalm
This reminds me of a restaurant near me that adds a 2% service fee to all bills to help compensate the kitchen staff. Why not just raise your prices instead? Dining out shouldn't be like air travel, with all its fees and surcharges.
October 27, 2016
jeffreyd00
They are framing the conversation in a bad way. He should instead charge the extra 4% on his menu and then give a cash discount. Regardless, that 3rd party company is making a hefty profit for zero risk.
October 26, 2016
TheAmerican
Chips cards are way slow when processing a payment in US vs Europe - I used my chip card during my summer travel in Europe and processing at the chip readers was taking split second unlike in US where it takes good 20-30 seconds.
October 26, 2016
BWRye
My bank didn't offer me a choice about a chip card. They sent a card containing a chip and informed me my old card had been invalidated. The merchant's card reader is but one of the many costs of running a business. I don't have either Apple Pay or Google Pay (whatever they are). I would do business in another store rather than pay a premium for the merchant's new card reader.
October 26, 2016
Walt G
Hell NO! It's the price of doing business. After he reclaims the initial fee he'll keep charging the fee.
October 26, 2016
Scott911
it's violating his agreement with his processor.

similarly. posting a sign saying there's a $10 minimum charge to use a credit card is a violation too.
October 26, 2016
skittles
No I would not pay. I would prefer they use alternative payments.
October 26, 2016
mrmet15
As edudleson1 said,, this is tax deductable for the business and I don't know if that's true but if it is, he is double dipping which is illegal and he should be fined/brought up on charges for that
October 26, 2016
mrmet15
I WOULD NOT pay extra for using the chip reader. From reading the other comments, this might be illegal on several fronts;

1. With the state. Does Michgian allow merchants to do this?
2. Credit card issuers: Does this violate his agreement with MC/Visa/AMEX etc.?

Personally I think this is illegal and a shitty thing to do. Unless this vendor had something I needed to buy that noone else had I would shop elsewhere.

Customers should report this merchant to their local chamber of commerce, the BBB and even the credit card companies as they will know if he can legally do this or not.
October 26, 2016
vinaytampa
I'd go to that store with a cart full of 100 items and then leave them at the register upon finding about the fee. He can have fun restocking. I'd do that gain and again on different days and at different registers if he has more than one.
October 26, 2016
edudleson1
Don't forget also that his expense for upgrading is tax deductible. He's a criminal for gouging his customers.
October 26, 2016
jcelt1967
I am pretty sure the business owner's Visa/MC/Amex contract will have a stipulation saying he cannot do this. Just like a minimum $ credit card amount is not allowed (but sometimes ignored by some smaller retailers - usually restaurants).
October 26, 2016
xFLiP227x
I sure as hell wouldn't shop there. The chip is meant as an added layer of "security." The business owner is just being greedy; trying to get over on his customers. If he raised the price on some of the items in-store, that's one thing...but to charge additional for the use of a more secure method of payment, that's just robbery.
October 26, 2016
Critical Consumer
I suppose the shopowner can do whatever he wants (though I wonder if he is violating his terms of service with the credit card company by charging a surpolus) - but I sure as hell wouldn't pay it.
October 26, 2016
Corvair
No Way
If they charge extra for card use I will go elsewhere
October 26, 2016
dundee28
Absolutely NOT !,
October 26, 2016
nimer
some business charge you a credit card fee regardless if chip or not, but either way, No. In fact, unless I really like the product, for me a business charging extra for a product is on my black list. You have to be careful also cause some businesses do thinks like that so that you pay cash to save money. Hate to put it this way, but there has been cases were businesses under report their sales to the IRS; much easier to do with cash since there is no paper trail.

Use Credit card my friends, everyone benefits.
October 26, 2016
boilers
business owner should be able to do whatever they want to do.
I would likely not use that as my sole, nor major decision point.
October 26, 2016
ski522
He can do whatever he wants, the shopper is free not to shop there...let capitalism work. Personally, I'd leave my stuff at the register and walk out if I was going to get charged for using a security chip card.
October 26, 2016
chocolatedeath
IMO, no. The upgrade cost are a one time fixed cost and to actually use them does not cost the owner anymore than it does to just swipe as in the past. So, if he is going to lower the cost once the overage has been covered then fine. If not, he is just taxing his customers in a new way. He could also just raise some of his prices on certain popular items for a few months to offset the cost if needed. Overall I dont believe its a good idea.
October 26, 2016