WOW...alot of misinformation and assumptions here by people.
I am a Cozumel dive shop operator and am intimately familiar with taxes, cc acceptance policies, etc. particularly as a foreigner as they watch us the closest. I'll try to clear up some of these myths.
howarde:
Legally - as far as MC/Visa, AMEX and Discover goes (with their "law" not really law, but as fas as CC acceptance policy which all merchants must sign before they can accept cards)... merchants (payees) are NOT allowed to charge any fees to the customer (payer) for using a credit card. It is a clear violation of CC acceptance policy, and if you complained to the card issuer, the merchant could lose acceptance privileges. Pay Pal also charges the payee a fee since they are a 3rd party accepter, and they are allowed to pass along the acceptance fees.
As a merchant, you have to pay the fees, as a "cost of doing business" - most merchants pay 1.5 - 3.5% on credit cards, and additionally most pay a 10-30 cent per transaction flat fee.
- Remember, this is Mexico, the "laws" you refer to are US laws, not Mexican laws. CC acceptance policies here are regulated by Mexican banking laws, not US banking laws.
- I specifically asked my bank if it was legal and/or common practice here for merchants to pass on the fees when I signed up to accept cc's. He said, YES, it is legal and many merchants do it to defray the excessive costs. The merchant fees here are anywhere from 5% to 7%, plus a transaction fee, plus a monthly fee to have the machine. In the US, these fees would be considered usurious, but here they are legal and "accepted." Small businesses cannot afford to absorb these costs. So most will charge more for cc use, but they will tell you up front (or at least they should). CC acceptance is a courtesy and a convenience and no one is obligated to accept cc's. So the other alternative is that they simply don't accept cc's and if you want to dive, you pay cash.
- Paypal is becoming more well known here. I have been accepting paypal for four years and it works out great!
MikeM_scu:
Visa and Master charging 3% fees if used abroad. AMEX is charging 2%, but not as widely accepted. I prefer to pay cash in Mexico, since you can always negotiate a better deal when they see greenback. Never heard of shop requiring advanced deposit, sound like shady opp. 15% credit card usage fee is rediculas. Remember: all mexican business trying to recover from last season Wilma, all prices are gone up. May surcharges are part of the plan. I'm using cash in Mexico, just make sure you have small bills. Normally I have at least $100 in $1, $200 in $5 and the rest in $10s and
$20s
Actually, most shops DO require a deposit to secure your space, particularly the smaller more personalized ones. Why would that make anyone "shady?" They are reserving/guaranteeing a spot for you on a boat that only has a certain number of seats. It's no different than making a hotel reservation, an airline reservation, a liveaboard reservation, etc. Once that spot is reserved for you, it cannot be sold to anyone else. If you no show, you are not only causing them to lose projected income, but they don't have the opportunity to put someone in your place. Most likely, they have turned away several people since they reserved your space for you. Furthermore, they have gone through time, effort and expense to have the boat ready, the crew available, refreshments, tanks, fuel, etc. Additionally, one or two people can often mean the difference in sending one boat vs. two out...or one DM vs. 2 DM's. A deposit helps cover those expenses and lost income if you no show or cancel without sufficient notice. Before calling a shop shady because they require a deposit, check out the cancellation policies and refund policies. I think you'll find most are very fair and inline with others.
Your other option is not to make reservations and just take your chances that they will have availability for you and everyone in your group on the days and times you desire when you show up. I don't advise this unless you are not selective about who you dive with.
Just to give you another example, if you were to book a livaboard trip, you would be required to pay several hundred dollars as a NON-REFUNDABLE deposit. The entire trip has to be paid 60 days prior to departure. That is standard operating procedure.
Actually, 15% is what that merchant is most likely paying to accept your credit card. He was probably offering a 10% cash discount to begin with which covers the sales tax. If you pay by credit card, he is charging you the sales tax of 10%, plus the cc merchant fees.
When I send a quote to a potential customer for example, I include the tax. If I chose to give them a discount later, that's my call. Paying cash doesn't automatically give you a better deal.
We (MX business owners) pay 10% sales tax, 5% luxury tax for certain activities, hotels pay a 2% lodging tax, the banks charge 5% to 7% for the credit card fee, plus a transaction fee. He has the right to charge a premium if you want to pay by credit card, as long as he has stated payment options and policies up front. The the payment method is your choice from there.
I don't know of any price increases because of Wilma. Just as in any other year, most business increase their prices by a few percent to keep up with inflation and increasing costs of materials, supplies, etc. Any prudent business owner has to do this and keep an eye on the bottom line or there won't be a bottom line. Despite popular beliefe, this is not a "get rich" business and there is alot more to it than buying tanks, gas and a boat and diving everyday.
jerryg:
Legal or not. If you are in playa del carmen or cozumel you WILL pay 5-15% more if you use a charge card. From what i gleamrd on this last trip, some of "discount" comes from the merchants ability to conceal income. Again, not legal, but a common practice in the US ask any waiter or any other worker who accepts payments "under the table".
It has nothing to do with concealing income. We have to pay taxes and report our income regardless of payment method. I don't know how it works in Cancun, but since we are in a marine park, we have to purchase marine park tickets for each diver for each day. At the end of the month/year, we better be able to account for all of those divers and the income from them.
It is no different here than a cash business in the states...except as I stated above. Waiters and bartenders/etc. in the US are the ones paying the least amount of taxes and their tips are easily hidden. I put myself through college in the restaurant business, so I am familiar with how that works too. However, as I stated above, our divers are tracked by the marine park, which has to be reported to the government, and if you don't report enough at the end of the year, penalties are outrageous.
hdtran:
You're absolutely right. A merchant should not charge a surcharge for accepting a credit card. However, they are allowed to offer a discount for cash. Perhaps this was a poorly translated "discount for cash" incentive!
Of course, many Mexican businesses prefer cash, and may wish to offer a "greater than 3%" discount for your using cash.
The other option is that they don't have to take your cc at all, and they wouldn't be alone. Many, many, many businesses do not accept credit cards here for that very reason.
I was just making the point that it is standard operating procedure and decided to go further and explain the WHY behind it for the benefit of anyone who didn't understand that policy.
