Point of Sale, or POS, is a common term used in business. It refers to both the checkout register used for an electronic financial transaction and the store at which the transaction occurs. It can also refer to the software used in an electronic cash register. Read on to find out more about POS fees.
Any time you use an ATM or debit card, you run the risk of being charged a point of sale fee. The place where you’ve done business may be charged as much as $0.65 by the issuing agency each time you swipe your card. They may pass all or part of that fee onto the customer and may not tell you they’ve done so.
If the store doesn’t tell you it’s charging a fee, you may not even realize that you’ve been charged. Be sure to look at your cash register receipt, especially if you’re visiting a new store and are unaware of their policy concerning POS fees. You may even want to ask if they charge a fee for swiping your card before you choose that payment option.
To avoid paying POS fees, swipe your card for payment as usual. However, instead of pressing the debit button, select the credit button to complete your transaction. This tip works only if you have a debit card with either a Visa or MasterCard logo. Rather than being processed as a debit card, the POS terminal will process the transaction as a credit card and thus avoid the fee. Be prepared to sign a receipt when choosing this option.
Banks really prefer users to select the credit card transaction because the issuer charges the retailer a portion of the total sale which could be considerably more than the $0.65 they may charge for a debit transaction.
It pays to be aware of the practices of industries you frequent. Hotel or automobile rental reservations paid with a debit card will normally have as much as a $500 block put on their account to ensure the money is available to cover the cost of the rental. The further out your reservation, the longer the hotel holds that money in limbo until your entire transaction is completed. Experts recommend using a credit card to make reservations and then paying with the room with a debit card to avoid this block.
You can also expect to receive a temporary block on your account at places such as gas stations. This can be dangerous because you may not be aware of this practice. If you make a $25 purchase at the pump, they may charge a blocking fee of up to $150 until the transaction clears; most often the blocking fee is $50. When you consider how often your account may have less than $200 in it, this could cause overdrafts if you go to another business afterward and try to purchase something. To avoid this blocking fee, which is charged when you swipe your card at the pump, you can take a few extra minutes to walk into the store and pay for the gas as a credit card transaction which avoids any fees, not just the blocking fee.
There’s no reason you should ever have to pay POS fees, but you may not have known how to avoid them. With this information, you may be able to avoid those fees by choosing to use your debit card as a credit card. Remember to look at your receipts to see if POS fees have been charged and then make note of that business for future reference.
Filed under: Personal Finance