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Comment by ivan_gammel | Hacker News Reader

You won’t sell this idea in Europe. Here the price tag for anything is the full amount you pay - including all commissions and taxes. People use debit cards, the paid amount is immediately deducted from bank account. If customers are forced to calculate how much they actually will spend on each transaction, they will instantly switch back to cash.

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The price tag in Europe already has at least one exception in some countries like Germany: bottles and cans subject to the deposit system usually have the deposit added on top of the listed price. Of course, one can recover the deposit by returning the bottle or can to a suitable store, but at the point of sale it is usually added on top of the listed. (The price listing often acknowledges this addition explicitly, with text like "zzgl. 0,25€ Pfand".)

But yeah, I guess that doesn't differ by payment method, so it wouldn't affect the choice of payment method. And it's not a percentage, so it's easier mental math.

Yes, deposit is different: it is fixed absolute amount on a single specific product, it is refundable, so in the end your expense will be the price without it. Also it is much higher than any transaction costs. Transaction fees on the other side do require some calculation effort and you have to remember the percentage.

But a) those prices are straightforward, 0.08, 0.15 and 0.25 are the options depending on the type of bottle, b) as you said, you get the money back, and most importantly c) the deposit money is included on the price sticker.

In Denmark, the additional fees charged for foreign (non-EU I think) or corporate cards are passed on to the customer.

The price says 100DKK, but they pay 101.50DKK or whatever it is.

That's probably not the card fees, but the currency exchange.

No, that’s the card fee. At point of sale you usually choose which side does the currency exchange (you choose on the terminal if you want to pay in home or local currency)

Here's a sticker from a self checkout at a large supermarket (Føtex): https://imgur.com/a/w9sg1ey

It says (roughly) "Payment cards without fee: All Danish and foreign debit cards"

"Payment cards with fee: 0.9375% Danish issued; 1.75% foreign issued."

Wow, so that's even worse. Then you can only avoid this fee using ATM cards or cash.

Very few people pay the fee, most people pay with a debit card or cash.

People trying to get air miles, cashback or similar have to pay the cost of that.

Visa electron/maestro are they debit cards now? Back in the day they were only for ATMs and very few businesses.

Don't most people have the normal visa/mc debit cards there?

Yup. Visa Electron and Maestro are quite normal debit cards. I have one of those as well. Apart from renting cars you can pay for just about anything with it. Maestro has an ATM withdrawal fee even when you use it in the emitting bank's ATMs, which is a reason why I avoid it like the plague.

> Back in the day they were only for ATMs and very few businesses.

That was pretty much specific to German-speaking countries (or at least they were the only one, where I noticed that). Elsewhere, there was no such thing as ATM-only card (or even ATM-only PIN).

> Visa electron/maestro

Don't even exist in many places anymore. e.g. in the EU country where I live both were replaced ~8 or so years ago by Visa/Mastercard Debit (since they removed embossed characters the only way to distinguish them is the word 'debit' written in a tiny font.

Maestro is literally starting to wind down this year, supposedly they've decided to switch everyone towards Debit Mastercard products.

I assume there's gradually less and less appeal for a card that isn't as broadly accepted, and if it encourages more fee generation, all's the better.

Curious what the justification is for 0.9375% (very precise number), given the report 0.3% interchange fee cap in EU noted in this thread? The vendor can charge you more than it costs them to accept the card?

I'm not sure. I don't have a personal credit card to check.

I know there are extra fees for business/corporate credit cards, and these are specifically excluded from the EU cap. (The cap was for consumer protection, so business transactions aren't regulated.)

Foreign (non-EU) fees are also not part of the EU cap, as there's no way to control those.

It could be poor wording on the sticker, or it might be including the other fees. The 0.3% is just Visa/MasterCard's fee, there's also the fee from the card processor — HN is familiar with Stripe, but there are many companies offering this.

Danish banks already have ridiculous comissions for wire transfers to other EU countries. Like 8€ for a 1500 DKK transfer.

That’s not the case on the US (tax is added after the fact) and there hasn’t been a massive switch to cash. Convenience is a powerful thing.

Consumer behavior in different countries is different and depends on many factors - culture, mindset, local customs and habits, structure of taxes and regulations etc. American system will not be convenient for Germans, for example (I personally do not understand how it can be convenient).

> personally do not understand how it can be convenient

It can be very convenient for retailers since sales can vary in different counties let alone states:

https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat...

just try to imagine what a mess it would be if any advertisement, price sticker etc. would have to show the full price.

It wouldn't be difficult at all. Price stickers are printed/managed in store often enough. Any company that allows you to purchase online already had to deal with differing sales tax, and everything is owned by like one company right now anyway so they already have systems in place to deal with differing tax rules in different states.

But it's not just states. In California (and I guess many other places) towns in the same country can have different tax rates. Sure price stickers is not an unsolvable issue but advertising prices including tax publicaclly would be almost impossible.

> everything is owned by like one company right now anyway so they already have systems in place to deal with differing tax rules in different states.

Yeah I agree it would generally be a much higher burden for small businesses than for Amazon.

Why is calculating the price with correct tax possible but not the advertising of that price? What is the physical bottleneck?

GP has it wrong. It's entirely physically possible to advertise prices including tax, but it's illegal to do so.

I see it as a mess in the tax system being projected to customers. I do not understand the choice of taxpayers to have such system.

Well local jurisdictions are funded by sales taxes they themselves set. You live in a tourist town? Well higher sales tax results in more funding for local services and possibly lower property taxes and you could just drive to the next town if you want to save the 1-2%. What's not to like?

There’s so much wrong with this, that I don’t know where to start. So let’s start with the elephant in the room: driving to next town to buy something that is available locally is generally a red flag of market economy failure, because it is incredibly inefficient and environmentally harmful.

Then there’s an incentive to produce higher inequality: high sales tax affects mostly poor, while low property tax usually benefits rich. Poor people are usually underrepresented in democratic institutions, so it would not be surprising if inverse redistribution would be a frequent problem.

Finally, local tax as a way to fund communities is not the only alternative and relying on it would mean that some communities will never get out of financial trouble. Tourist towns are minority, after all. Other countries just keep some of the collected VAT locally and redistribute excesses from richer to poorer communities through federal transfers (German solidarity tax did exactly that, for example).

And people in Europe are usually puzzled why you’d have such a crazy system, yes.

Largely due to inertia, consumer psychology where lower sticker prices encourage more purchases even when consumers know the checkout price will be higher, and the fact that taxes can be different based on the type of item you are buying and the exact jurisdiction you are buying it. Two identical stores across the street from each other can have different tax rates if they are in different tax jurisdictions.

The stores have the info to calculate this, and do at checkout, so it's really the first two points mostly.

The two of my (American) kids who've gotten old enough to buy stuff on their own, even if it's just us sending them into a convenience store with money for something, have immediately recognized this system as idiotic, and they frequently complain about it. It's so plainly-stupid that, literally, even a child can see it.

Because sales taxes are ussually set by the local jurisdiction.

So it could 10.25% in one place, 9.75% in the next town 8.750% and 8.975% if you drive for another 15-20 minutes. Imagine if you run a business, have multiple locations and want to buy a TV/Billboard/etc. ad with the price how would that work? You'd also need to make different price stickers, won't be able to print the price on the packaging etc.

You could set one tax included price, so the actual revenue you get would vary slightly in different places. Costs already vary based on location so I don't see a huge issue there.

Of course this does change the incentives for localities setting their sales tax, and they might be inclined to set them higher if the cost isn't borne by local residents. I don't know if that's a bad thing, if that money improves local services and / or lowers other taxes.

That's because it has never been that way in the US, or at least not during my lifetime (I'm over 40). Having the fees be added on wouldn't be much different from an increase in sales tax or having your phone bill be more because the quoted prices don't include tax. Cash already has surprise totals.

Convenience isn't even a factor.

Compared to other places, where the price is what you pay (in most cases). You would be adding inconvenience and a little uncertainty to one form of payment. Americans would switch too, if this were the case.

You can show the full price and the breakdown at the same time. That’s how it works eg in the Airbnb app: I see the price host charges and the fee I pay to Airbnb. The taxi apps show their fee as well.

That doesn't work in a brick and mortar store where they wouldn't know your card's fee until you go to pay.

Also doesn't work online if you're not signed in, or if it's the first time you've visited that store and you haven't given them a card number yet.

but they would know how much tax the customer would have to pay.

Aldi already does a credit card surcharge in some countries.

The fee could be done annually from the credit card company itself. (ie: You made 300 transactions this year, that is $300).

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