This week, Belmont Station introduced two-tier pricing on its bottled beers: customers paying cash will pay about 4% less than those using credit cards. There was a small amount of anguish about this on Twitter, and the Bulls & Brew blog published a rebuke, but 4% truly reflects the costs that third-party card processors charge to small merchants like Belmont Station -- basically a 50-cent charge per transaction, plus 3% of the total transaction. Two-tier pricing seems like a fair solution to me: let the customer decide whether the fee is worth the convenience.
Part of the initial reaction to Belmont's move was along the lines of "The most expensive bottle shop in town is raising its prices?" To counter that impression, the Station's latest email newsletter -- titled "WE REDUCED PRICES ON HUNDREDS OF BEERS!" -- tries to spin things the other direction:
We've reduced the everyday prices on hundreds of beers. 95% of our six packs and large single bottles (22 ounce, 750ml, etc.) now cost less.
Effective this Monday, November 2, the biggest discounts will go to CASH customers.
Sorry guys, but I'm not buying that. As luck would have it, I can do a quick fact check on this, since I recently collected a few 6-pack and bomber prices for the PBPI. The average price of the 6-packs in my survey did indeed fall from $9 to $8.67 at Belmont Station, and the bomber average dropped from $5.21 to $5.07. That's the cash price, and the reductions are 3.67% and 2.67% respectively. So credit-card customers are not -- on average -- seeing lower prices.
Furthermore, I would be surprised if 95% of the prices were reduced, since in my small survey, only four of the six 6-packs decreased in price, and only three of the six bombers are cheaper. The other prices stayed the same. So, either I'm a really good shot with my beer picks, or the price reductions fell disproportionately on the 950 special-occasion beers on the shelves, not the 50 biggest movers.
One more problem: customers paying with a debit card pay the same higher price as credit-card customers. My admittedly shallow understanding of the problem is that there is not a percentage fee on debit card transactions, just a 50-cent charge. On a $5 purchase, 50 cents is already 10% of the transaction, but at least there isn't the added percentage there is with credit cards. Maybe the 4% averages out, but it seems like debit cards should be treated more kindly than credit cards. [Update: In the comments below, Chris from Belmont Station clarifies that debit cards are now charged a percentage as well; Kevin points out that nowadays debit is only cheaper to process than credit above about $25. So, I was wrong to think that debit should get off lighter than credit.]
Despite Belmont Station's clumsy attempt to cheapwash their new policy, I like their approach of passing the savings on to the customer. Although I've gotten used to the convenience of paying with a credit card, I've recently started paying with cash at local establishments. Do your local merchants and publicans a favor: use cash when you can.