Why can't you buy movie tickets wih a credit card?

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Terence and I went to see Jackass Number 2 (not bad by the way) and for the second time in a row, a chain theater refused to take a credit card--they only take cash they say. Now, I've certainly seen merchants that didn't take cash before, but they're usually small ones, not big, capital-intensive businesses like movie theaters. So, what's going on?

Some theories:

Transaction costs
The usual reason that merchants resist taking credit cards is the transaction fee that merchants have to pay on every credit card transaction. Some fraction of this fee is often fixed, which penalizes small transactions--and even though $10 for a movie ticket feels pretty extortionate, it's a fairly small transaction as these things go. I don't give this theory much credence: lots of other merchants which deal primarily in small transactions (fast food restaurants, for instance) take credit cards. I don't see any reason to think movie theaters are any different.

Chargebacks
Another possibility here is that the theaters are concerned about chargebacks by dissatisfied customers. Obviously, this is going to be more of a problem with movies (which are, after all, often unsatisfactory) than fast food. I don't consider this plausible for two reasons. First, I don't expect the credit card company would actually permit you to charge back a movie ticket provided you actually watched the movie--and since this is a card present transaction, it would be pretty hard to claim that it was fraud. Second, you can already buy movie tickets with a credit card through Fandango, so wouldn't they have the same chargeback problem?

Price Discrimination
My suspicion is that the real reason to forbid credit card purchases is to allow for price discrimination. Fandango and Movietickets both levy a surcharge, which would be much harder to do if people were buying in person (the credit card associations prohibit credit card surcharges, although you can provide a "cash discount", but in any case it would be socially quite difficult.) Limiting the use of credit cards to ticketing-at-home services like Fandango allows for marget segmentation.

The drawback with this theory is that I don't know what kind of financial arrangements the movie theaters have with the ticketing services, so I don't know whether this actually allows them to effectively charge more for credit cards. However, I do know that Fandango is owned by AMC and Regal, so they at least are collecting the money.

5 Comments

my guess is that time to process the transaction is a big part of the reason they wouldn't want to take credit cards.

I'd think that mostly the theater wants to make sure you have cash to spend at the concession stand where the theater makes most of its money and where most items are under 5$ (?)

Not sure where you are at physically, but I know that Cinemark (fairly large chain) takes credit cards for ticketing and concessions in all locations that I have been to.

I would go with transaction costs and transaction time (with idiot clerks that have issues running credit card machines).

Odd, Muvico has no problem with credit cards either. They have self-serve kiosks in the lobby that are much faster than standing in line.

I think I know which theaters you're referring to: the ones with teh obnoxious Fandango adds at the start. (Century, IIRC).

My bet is that it is price descrimination. They want to be able to "ticketmaster charge" on all the tickets, as a way of silently jacking up the price. Additionally, it wouldn't suprise me if THIS revenue is not shared with the studios for the film itself, making it particularly attractive to maximize.

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