Buppy's Buffet in Bryan is usually a busy place during the lunch hour. The problem is that more and more people are paying with plastic.
“We've had a 300% increase over the past 15 years of what it costs in fees of processing for credit cards,” said Buppy Simank, owner of Buppy’s Catering.
The increase in processing fee costs is also true for debit card transactions.
“We don't have a big profit margin for each customer…” explained Simank.
Simank says credit card companies charge his business up to 75 cents every time a card is swiped. Debit cards have become the most-used form of payment, which means it's also the most expensive form of payment for many business owners.
That's why dozens of businesses in the Brazos Valley have started passing along the cost of debit card transactions to the customers who use them. The establishments that have adopted the new program have a small black sign posted near the front door or the register that explains the fee.
The service charge is usually around 49 cents every time customers pay, but it adds up.
Customers at Muldoon’s Coffee House in College Station have mixed feelings about the fees.
“I'll just pay with cash if they're charging more for debit,” said Omid Shiraz.
“I mean, it's only a few more cents than using a credit card,” said Laci Humphreys.
“It's not necessarily fair, but it’s part of business,” said Chase Tompkins.
Experts say the service charges are a result of a class-action settlement between credit card companies, like Visa and MasterCard, and merchants across the country. The agreement went into effect at the end of January 2013, and it says that businesses are allowed to add a surcharge on credit card transactions. However, Texas is one of 10 states that is exempt from the settlement agreement.
“In the state of Texas, it’s supposed to be banned to use on debit cards. In fact, you're not supposed to be using it on debit cards across the country,” said Bill McGuire, President of the Better Business Bureau.
However, Charlie Benbow, owner of Brazos Valley Merchant Services, says the settlement allows the service charge program.
“Part of the settlement also says that a business owner or company has the right to incorporate a discount program,” said Benbow.
Benbow says the debit card fee is an incentive for people to use other forms of payment, because the service fee is automatically negated for cash and credit card users.
The office of Consumer Credit Commissioner in Austin says state law prohibits any additional fees on credit card transactions. A bill, currently in the legislature, would also prohibit fees for debit cards, but it's not law yet.
“I would have to go up across the board in price if I didn't implement this new system,” said Buppy Simank.
Business owners, like Buppy, say they like the debit card service fee system, because it gives the customer the choice. People can either pay for the convenience of using their debit cards, or they can save everyone money by paying with cash or credit.
The Texas Attorney General says government entities are allowed to extra charge credit card fees.
If you think you're being charged unfairly, the Better Business Bureau recommends you notify the office of the attorney general.