The lunch crowd had just passed as Rob Elder, owner of Satay Bistro on Fourth Street in Coeur d’Alene, took a sip from his glass of water and shook his head.

“I couldn’t believe it,” he said after a hard swallow. “My first reaction was, ‘I can’t believe they’re saying this about someone who’s trying to be transparent and trying to save people some money in our own community.’”

Elder said he was stunned by a Jan. 2 Consumer Gal column in The Press, which critiqued the upscale restaurant after the popular local columnist expressed concern over a “non-cash adjustment” on her bill.

“Now it made sense why the table next to ours pulled out a wad of cash to pay their bill,” wrote the Consumer Gal, Terri Dickerson. “Seemed kind of strange, but they must have been aware of this policy change while we were not. It seemed funny to us that after 30 years of conditioning consumers to pay by debit or credit card and not cash, now we would be expected to carry around large sums of cash ... While the waitperson called it a cash discount, the reality is it was a credit card fee surcharge. If this were truly a discount then the bill would have been reduced for the cash-paying patrons to reflect their cash purchase so they would not be subject to paying the credit card processing fees.”

The article sparked a brief backlash on social media, as Elder tried to explain the 3.5-percent fee on all debit and credit card transactions at Satay, but made little headway.

“That is the biggest bunch of hooey I’ve ever read,” John Ely wrote in response. “Nothing significant has changed regarding credit cards. These practices have been going on for decades. So have food price fluctuations etc. The rest of the food industry is not separating out the CC cost, they build it into the price. Some knothead at Satay had a panic attack and just had to make ‘adjustments’ before he could change the menus.”

But what is the fee that has patron and owner stressed? The Press decided to follow up on the Consumer Gal column with a closer look.

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The Durbin Amendment

Ely was right about at least one thing: The practice of charging more for credit card transactions has, indeed, gone on for decades. Before 1958, merchants had to run their own customers’ credit before agreeing to sell a higher-priced item like jewelry or furniture. Those merchants would often charge patrons for the cost of that credit check. In 1958, however, the advent of the revolving credit line made the task obsolete.

The most recent provision that allowed one price for cash customers and another price for credit or debit customers came with the Durbin Amendment, a section of the Dodd-Frank Wall Street Reform and Consumer Act, which passed in an omnibus package in 2010. The provision stipulated that, as of July 21, 2011, merchants can impose a $10 minimum on credit card transactions and offer cash discounts at the register for cash and debit purchases, a law previously banned by Visa and Mastercard merchant agreements. (Neither Visa nor Mastercard responded to requests for comment on this story.)

You might remember seeing a swath of gas stations suddenly advertise a “cash price” for gas but charge a different price for credit and debit card purchases back in the summer of 2011. The Durbin Amendment gave birth to that trend.

It’s a trend not everybody is ready to follow.

“I would never do it,” said Denise Schmidt, owner of Schmidty’s Burgers on Fourth Street in downtown Coeur d’Alene. “It just seems like an added hassle [for] the customer. Everybody pays with debit cards or credit cards these days. We do some cash business, but it’s just more convenient for the customer.”

Schmidty’s was one of 14 locally owned restaurants visited for this story prior to the interview with Elder at Satay. Every other manager or owner said they do not charge extra for debit or credit card purchases. Rather, they all said the fee is baked into the menu price.

“It’s just the cost of doing business,” Schmidt said. “It’s no different than allowing for the cost of napkins or ketchup.”

Trusting the process

That said, the fees restaurants pay are not always the same. Credit card processors — the companies that manage both customer security and fee distribution — do not charge universally equal fees, resulting in merchants to go shopping, and for processors to go recruiting.

“I’m currently with Beyond right now,” Schmidt said of the processing service she uses. “They end up charging about 3 percent of my transactions. After their fees, it’s really about 4 percent. But they were willing to pay my contract termination fees [with a previous service] for me to switch. And they’ve been really good so far.”

Elder uses Advantage Merchant Systems to manage his company’s credit and debit card purchases. Kim Brown, a representative for Advantage, said companies like Satay and owners like Elder should be heralded for their honesty.

“Every year, Visa raises their rates,” she said. “As a result, you see other restaurants raise their prices and pass the cost along to everybody.”

That tactic, Brown added, serves as a double-hit to cash-paying customers who would then pay for not only a credit card user, but for the rewards that user receives from credit card companies in the form of airline miles and cash-back rewards.

“Why should every customer have to secretly pay for somebody else’s frequent flyer miles? Why should the restaurant have to pay for a customer to fly to Mexico? ... This wasn’t always an available option, but it is now, and he’s giving his customers a choice with a cash discount.”

That fair share, Elder admitted, doesn’t always seem fair to everyone.

“If Satay makes a million dollars in a year through credit card purchases, I’d be paying $35,000 for the cost of running those credit cards,” he said. “I couldn’t possibly pay that. I didn’t make $35,000 last year. I took money out of my savings just to make payroll. I can’t pay that extra amount.”

Which is why Elder decided to list the prices on Satay’s menu as “cash discount” prices. He’s not alone: At least four other locally owned restaurants in Kootenai County offer similar cash discounts to customers. But he took transparency a step further: Aside from the sign hanging on the front lobby and the menus clearly labeling its prices as “cash discounts,” he has offered both a business card explaining his decision and a note with his personal cell number at the front of Satay.

“If you want to talk to me about this,” he said, “just call me. We can sit down and talk this out. I just don’t think it’s right to penalize every customer by hiding these fees in the prices, which — I promise you — is what everybody else is doing.”

“Surcharging is when the merchant gets the fee money,” Brown added. “That isn’t happening here. Mr. Elder doesn’t get a penny of that money of those fees. It all goes to the credit card companies and our processing service. By using a service, he’s just losing drastically less money by doing it this way.”

A bad aftertaste

Of those 14 Coeur d’Alene, Post Falls and Hayden restaurant owners and managers, 10 proactively admitted their prices take the cost of doing business into consideration, covering credit and debit card purchases while also (in most but not all cases) making a profit.

“As long as you do your menu pricing right,” Schmidt said, “the customer won’t have a problem with the cost of the meal. The customer shouldn’t have to be burdened with additional fees.”

But Elder contends the customer is already burdened with higher prices, whether he or she knows it or not.

“Why would I want my business to make money for credit card companies off cash-paying customers?” he asked. “When I hear that a customer is upset about this — and we’ve had a few come and talk to me about it — what I always think is, ‘You’re pretty upset about this. How do you think I feel? We’ve both been paying for this for quite some time, and it needs to stop.’”

The Consumer Gal column and the ensuing backlash left both Elder and Brown reeling.

“The thing that really got me about that [column] was that Rob’s not hiding the cost of anything to his customers,” Brown said. “Quite the opposite: He’s being honest with his customers. And [The Consumer Gal] says she’s a consumer advocate? Why aren’t you advocating for this cash discount he’s offering?”

“I just hope — I always hope — a customer wants to partner with us when they come in,” Elder said. “I want my customers to enjoy a great meal and great service, and I want them to know our hearts are in our guests. I’m just asking you to cover the costs, however you decide to pay for it.”