General Question

Perchik's avatar

Why can I buy a 2$ cup of coffee with my Visa card, but not pay for my college tuition?

Asked by Perchik (4982points) November 5th, 2007

My campus has recently decided to disallow visa card because of it’s “high fees”. Why can I buy a cup of coffee with my card, without the barista complaining of high fees? Why might my campus have adopted this policy, and how might I go about researching/changing it?

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16 Answers

tekn0lust's avatar

Maybe your institution is anti consumer debt, unlikely but possible. Maybe they just wish not to pass along the fees to you in the form of increased tuition, again probably unlikely.

Merchants negotiate those fees on an regular basis. Maybe they have negotiated exclusivity with one of the other credit forms. I know merchants on both sides of the fence. Probably since your $2 cup of coffee has such a high profit margin, the coffeeshop is willing to give up a portion of that profit in convenience to you.

Great gig huh? Credit Card companies make money off you for lending it and merchants for accepting it!

robhaya's avatar

When you charge something to a credit card, the merchant (Starbucks or the business you are buying something from) must pay a transaction fee for processing the payment with the bank and that fee can vary, depending on the number of transactions the merchant processes or negotiated with the bank. The reason you are able to charge two dollars on your Visa for a cup of coffee, is that Starbucks (assuming this is where you have bought your coffee) has negotiated a low processing fee with their bank to process the payments based on the amount volume Starbucks does on a daily and monthly basis. Your college on the other hand probably does not have a low processing fee with their bank that handles Visa cards and its too costly for them to process such a high payment. Also, the bank will only process x amount of dollars on the negotiated rate up to a certain dollar amount say $5000 for example @ 2.3%, than anything over $5000 dollars is a 5% over the initial $5000. assuming your tuition is $10,000. So your College would have to pay 2.3% to process the $5000 and 5% on the other $5000. That’s a lot of fees that eat away at the schools bottom line and not cost effective for them to do business that way.

This is why you can’t charge the purchase of a new car on your credit card, it costs the dealership too much money to process the payment. I wanted to do that when I bought a new car last year to earn airline miles and the dealership explained to me about the processing fees up to x amount of dollars, etc. Processing fees are another reason why some stores only accept certain credit cards and not others (like AMEX or Dinners Club), the processing fees are higher.

I hope this helps.


Perchik's avatar

Well I should have mentioned it’s a visa debit card, but I don’t think that matters.

I understand what you’re saying but I’m curious to know why they would accept mastercard, american express, etc. Virtually all the major cards except for Visa.

robhaya's avatar

It might have to do with the processing fee for Visa or the school had a lot problems with bad Visa card transactions and the bank no longer will process the payments for the school. All I can offer you are educated guesses as to why your school will not accept Visa cards. Your best bet is to talk someone at your schools bursars office to find out why they accept all the other major credit cards except Visa for a definitive answer.


archer's avatar

off topic:

anyone else notice this odd, and increasingly seen, placement of the dollar sign after the amount?

?where is this coming from

Perchik's avatar


Well I’ve written letters and talked to various people. The response I keep getting is the extremely vague “processing fees” answer, but no one seems to have numbers to prove that.

@archer I think it comes from how we speak. “So that’s a large coffee for here? That’ll be two dollars” -> two dollars -> 2$

Mangus's avatar

I don’t have any hard info, but I’ve always suspected that prohibition goes deeper than that. I associate it with the fact that you can’t put student loans on a bankruptcy filing, or otherwise get out of them. There’s some larger economic rationale that says “access to education, a product that influences class mobility, has to be more circumscribed than access to other goods and services.”

On the other hand, maybe the logic is as simple as: Any education payment, even if by itself small, is part of a very large cost. Most very-high-cost loans are associated with securable assets, cars, houses etc. that the lender can get back if you default. Once you buy that education, they can’t get their money back if you default. Which also explains the no bankruptcy rules. I can’t think of any other extremely high-cost service you can get on credit…healthcare?

archer's avatar

off topic:

@perchik, but we’ve always spoken it this way. if this were a written reflection of a change in speech, your explanation would make perfect sense. as it is, it makes imperfect sense.

Perchik's avatar

@archer, I think it may have to do with the influx of internet users. When writing, speed is not an issue, however when typing to a chat, speed is an issue. Instead of putting $2.00, it’s easier to put 2$

archer's avatar

off topic:


@perchik, i just did an experiment based on your theory. the result was that both of the above were entered at equal speed.

Perchik's avatar

Good point, I think however that in my case it’s how I think.

When i’m thinking while typing I think “two dollars” therefore it comes out of my hands as 2$ . It is an interesting point though. I’d be interested in more input from other people on this one.

sndfreQ's avatar

@perchik @archer
Perhaps a byproduct of txt msg phenomenon? Not an avid text messager myself but maybe in all the clunkiness of T9 and having to press numbers repeatedly to get various letters or other characters, perhaps the thought-to-text process is changed? It’s an interesting question…

ironhiway's avatar

Retailers except credit cards because a study was done and on average a person using a credit card will spend 25% more when using a card than when paying cash. Your school is only going to get their tuition so they either have to charge more or not take cars that keep to much of the tuition. The reason banks created the visa debit card was because they were not making money when people used their ATM cards.

GeauxTigers's avatar

Is it just Visa or all credit cards?

tramnineteen's avatar

Coffee shop has to accept credit cards to stay in business, your school doesn’t. There are fees for anyone who accepts credit cards and a few places decide it isn’t worth it.

NewZen's avatar

I’d love a two dollar cuppa right now. Is it any good? Arabica beans?

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