Credit Card Merchant Code for Sonic Corporation

[derek]

who will you be passing that on to? the end-user consumer who is already burdened enough by the most complex and asinine form of invoicing known to humankind? how about you do the right thing which is figure out how to properly absorb a cost of doing business instead of nickel and diming your revenue base to death.

That is how you absorb the cost of doing business -- factor it into the costs to provide service. It may not be a separate line item, but you know where the money will be coming from -- all of us, whether we use debit/credit/bank check/etc.

[dane]

who will you be passing that on to? the end-user consumer who is already burdened enough by the most complex and asinine form of invoicing known to humankind? how about you do the right thing which is figure out how to properly absorb a cost of doing business instead of nickel and diming your revenue base to death.

That is how you absorb the cost of doing business -- factor it into the costs to provide service. It may not be a separate line item, but you know where the money will be coming from -- all of us, whether we use debit/credit/bank check/etc.

The inefficiency is the 3% or more in fees that some of the card issuers charge. They provide a portion of this back toward the consumer as rewards, but the costs outweigh the rewards, so it's a big overhead for those card types. We're looking at adding ACH capabilities now, and toward encouraging customers to use debits cards or ACH. The overall goal is more efficiency and lower costs for members.

[derek]

The inefficiency is the 3% or more in fees that some of the card issuers charge. They provide a portion of this back toward the consumer as rewards, but the costs outweigh the rewards, so it's a big overhead for those card types. We're looking at adding ACH capabilities now, and toward encouraging customers to use debits cards or ACH. The overall goal is more efficiency and lower costs for members.

Right, I get that. My point to "infuriated" is that "absorbing the costs of business" vs "nickel and diming " (aka credit card payment fees, or a debit/ach discount) means that the overall userbase as a whole will end up paying for everybody's processing costs, vs just the users that incur the higher transaction costs. "Infuriated" probably knows this too and doesn't care, because he's one of the ones who wants to use the rewards credit card, (and who'd blame him/anyone, given that the costs to them are the same, whether using said card or debit, while giving rewards) and socializing the processing costs.

[infuriated]

Actually - derek - I send in a physical check every month. And I will continue to do this, until the billing system from the mid-90's is modernized. Waste my time, I'll be sure to waste yours.

The point I'm trying to make is ACCOUNT FOR THIS AHEAD OF TIME - e.g. factor it in during product design - don't find a sneaky way to save some money on the back-end by changing something like this WITHOUT NOTICE mid-stream and screw people that do enjoy responsibly using their rewards credit cards. That's what makes me angry.

[afish]

Dane, Your code was changed to Utilities Gas/Electric like PG&E and Sonic is clearly a telecom Utilities. I understand Gas/Electric company MCC code does carry a lower charges but that is wrong to use that code. This is a subcode under a boarder Utilities code. Anyway, can someone confirmed they have changed back the code? Last month 10/25 charges for mine was still wrong and my next bill is coming up this sat.

[afish]

Please see below what Chase said. Clearly Sonic is NOT Electric, gas, heating oil or water. I hope it was changed.

the transaction at Sonic net was categorized as
Utilities - Electric, Gas, Heating Oil, Sanitary, Water.
.

[igg]

Right, I get that. My point to "infuriated" is that "absorbing the costs of business" vs "nickel and diming " (aka credit card payment fees, or a debit/ach discount) means that the overall userbase as a whole will end up paying for everybody's processing costs, vs just the users that incur the higher transaction costs. "Infuriated" probably knows this too and doesn't care, because he's one of the ones who wants to use the rewards credit card, (and who'd blame him/anyone, given that the costs to them are the same, whether using said card or debit, while giving rewards) and socializing the processing costs.

This is how credit cards work, and in fact this is mandated by the credit card merchant agreements. Technically every 'tier' of credit card has different fees, for example if I use a premium travel card with a $400 annual fee, the merchant is charged significantly more than if I used a run of the mill card. But merchants are not allowed to discriminate based on what fees they get charged on a particular card, and they certainly are not allowed to misclassify their merchant code to save on fees or discourage premium card usage.

The inefficiency is the 3% or more in fees that some of the card issuers charge. They provide a portion of this back toward the consumer as rewards, but the costs outweigh the rewards, so it's a big overhead for those card types. We're looking at adding ACH capabilities now, and toward encouraging customers to use debits cards or ACH. The overall goal is more efficiency and lower costs for members.

The options you have then are to impose a surcharge for credit card usage, stop accepting credit cards, or accept the fees that Sonic should rightly be paying. Those first two options are accepted practices that I'm okay with even though credit card users would be worse off. Misclassifying sonic.net hurts consumers because it is misleading and opaque; it is only after signing up and getting charged that consumers see the category is not what it should be.

By the way, the cost to consumers is not negligible. Everybody complaining in this thread is almost surely trying to use the Chase Ink line of cards, which gets the equivalent of 10% cashback on internet provider companies, and that estimate is using a generous UR point valuation (it's really closer to 12-14%). That means when you try to game the credit card companies by using a wrong MCC code, my bill immediately goes up over 10%. These rewards factored into my initial budgeting, so it is a real cost increase to me and makes me regret not going with a company with less shady practices.

Also, as a sidenote, even though this debate is not really about whether Sonic.net is a telecom utility or not (because Visa MCC code 4900, which Sonic is using, explicitly prohibits telecom companies from using it, utility or not), I should note the FCC is very close to reclassifying internet providers as 'telecommunications services', so there should really be no excuse after that.

I haven't gotten my latest bill yet so I can't say if the category is still wrong (I was pleased to see the category was correct for my last charge in Oct) but if it isn't right, I encourage everyone to repeatedly report the company to Visa. They typically require a sufficient volume of reports before taking action against a merchant.
https://usa.visa.com/Forms/visa-rules.html

[afish]

Actually mine is a Chase mastercard and my October 25th charges is still wrong code. I spoke with Chase and they said they won't know until the charges come in later this week. I hope it has been fixed.

[anonymous4261]

Glad to see this thread revived a bit. I wondered why this issue hasn't garnered more attention from customers. Anyways, it would be great if someone can post back here and verify that the MCC changes have indeed occurred and are correct. I won't be billed for another 3 weeks or so, and would be curious to know beforehand.

[igg]

My recent 11/20 charge did earn the correct category bonus for my Ink Visa.

That is still only a partial resolution of this issue if their Mastercard MCC is still incorrect though, as afish has stated. Mastercard and Visa use different merchant codes.