How Visa, Using Card Fees, Dominates a Market

From the NY Times:

Every day, millions of Americans stand at store checkout counters and make a seemingly random decision: after swiping their debit card, they choose whether to punch in a code, or to sign their name.

It is a pointless distinction to most consumers, since the price is the same either way. But behind the scenes, billions of dollars are at stake.

When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.

The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines. Wal-Mart and Home Depot steer customers to use a PIN, the debit card norm outside the United States.

Harrah’s Shines Light on “Resort Fee”

Gold Plated Door on hidden fees that some Vegas resorts have been tacking on to your bill.

As the economy worsened last year, Vegas resorts dropped room rates to unprecedented levels in order to keep their hotels full. But those advertised rates were simultaneously undermined at some properties by something called a “resort fee.” These mandatory fees (essentially therefore part of the cost of the room) have become increasingly prevalent in Vegas.

Maybe, public awareness, and common sense will soon reverses this trend. So, Harrah’s press release offers not only good news that Harrah’s is not using these bogus charges, but the announcement also raises the question of which of their competitors are charging a “resort fee”? For now, to get an answer call any hotel in Vegas you are considering staying at to ask about “resort fees.”

So, what is the resort fee? A “resort fee” is a backdoor charge that covers things as silly as being able to make a toll free or local phone calls from your room or a free newspaper in the morning. Essentially a smorgasbord of random stuff thrown together in order to charge this fee that you are forced to pay for every day you stay at the hotel. Remember this charge is added to what you are already paying for the room. The only difference, between this fee and your room rate: you may not know you are paying this added cost for your room until check-in. That is what happened to me. The “resort fee” is meant to be sneaky.