The United States has the world’s most lucrative credit card market, and that’s largely due to high interchange fees combined with very high credit card acceptance. Over the years there have been a lot of efforts to change the status quo and lower interchange fees, through both government bills and lawsuits.
Along those lines, Visa and Mastercard have just reached a settlement with merchants, which could have some major implications for consumers, and could impact the credit card rewards that we earn. A couple of days ago I first covered how a settlement was close to becoming a reality, but this has now been finalized, so we have all the details.
In this post:
Interchange fees could decrease, in addition to new restrictions
Visa and Mastercard have just reached a $38 billion settlement that puts an end to a 20-year legal dispute with merchants. This lowers the credit card fees that stores pay, and gives them more power regarding which types of cards they can accept.
Under the terms of the settlement, Visa and Mastercard will lower interchange fees (often between 2% and 2.5%) by an average of around 0.1% over the next five years. But the even bigger point here is that rules will be loosened, which require merchants that accept one of a network’s credit cards to accept all of them.
In other words, a merchant that accepts one type of Visa will no longer have to accept all kinds of Visas, given the different types of fees that they come with. Credit card acceptance will be divided into several categories, including rewards credit cards, credit cards with no rewards programs, and commercial cards. The rates for cards with no rewards program will be capped at 1.25% for eight years, a more than 25% reduction in fees.
This means some stores could refuse to accept cards with higher interchange fees, while accepting ones with lower interchange fees. Furthermore, this deal increasingly allows for surcharging, the practice of merchants being allowed to charge consumers extra when they pay by credit card. Specifically, merchants can add a fee of up to 3% for paying with credit cards.
This entire case dates back to 2005, when merchants sued Visa, Mastercard, and large banks, alleging that they were engaged in anticompetitive behavior with regards to interchange fees and credit card acceptance terms.
How big of an impact will this settlement have on consumers?
It goes without saying that generous credit card welcome bonuses and rewards structures are largely funded by how lucrative it is for banks when we spend on their cards, thanks to high interchange fees.
A 0.1% reduction in interchange fees over several years will be material for the payment processors and banks, but probably won’t be a total game changer. I think the much bigger issue involves credit card acceptance across the Visa and Mastercard networks.
Just as an example, a Visa Infinite product will typically have higher interchange fees than a more basic product. Of course those cards typically offer the most rewards and consumer protection, so those are the products that many of us use.
Merchants will now have a lot more flexibility to only accept the lowest cost types of credit cards, or even to add surcharges for more expensive types of cards. The question is, will they actually do so? Merchants don’t accept credit cards out of the kindness of their hearts, but instead, they do so because it’s good for business (and on some level there’s a cost to accepting cash, but that’s a different issue).
If merchants could easily avoid people paying with more costly card types, I’m sure they would. That being said, would merchants face declining sales, and would it catch on enough for it to be the norm rather than the exception?
We’ll see how this plays out. Keep in mind that (separately) for the past few years, we’ve seen a push for new credit card legislation, in the form of the Credit Card Competition Act. This would mandate that merchants can route payments through an unaffiliated network, and this would apply to Visa or Mastercard credit cards issued by banks with more than $100 billion in assets. In other words, Visa and Mastercard would no longer have the same power when it comes to merchant fees.
So far nothing has passed on that front (and I can’t imagine it will in the current political climate), but it’s always something that’s on the table. One other thing to keep in mind is that nowadays, US airline profits are largely derived from lucrative co-brand credit card agreements, and those are largely subsidizing our airfare. So any changes to the richness of credit card rewards could also have implications for airlines.
Bottom line
Visa and Mastercard have reached a settlement on a case that dates back to 2005. With this, we’ll see interchange fees lowered by around 0.1% over the next five years. The much bigger point is that merchants can choose which Visa and Mastercard products they want to accept. So they could start to reject the more premium Visa and Mastercard products, which have higher interchange fees (but which also offer better perks). Furthermore, merchants will increasingly have the ability to charge up to a 3% fee for paying by credit card.
This all has the potential to greatly impact the credit card landscape. If a significant number of merchants stopped accepting premium products (like Visa Infinite or World Elite Mastercard) or added credit card surcharges, it would obviously create a real problem for cardmembers.
What do you make of this Visa and Mastercard settlement?
Like probably most people here, I have quite a few credit cards of the travel and perks variety. However, I only have them because of the perceived benefits that I receive from the cards. Once those perceived benefits turn out to be no benefit at all, well then, that's the expiration date of those cards. I'm financially independent and can easily lead my life just using a debit card or paying cash.
The other...
Like probably most people here, I have quite a few credit cards of the travel and perks variety. However, I only have them because of the perceived benefits that I receive from the cards. Once those perceived benefits turn out to be no benefit at all, well then, that's the expiration date of those cards. I'm financially independent and can easily lead my life just using a debit card or paying cash.
The other thing to remember is that if people stop using credit cards, merchants are going to feel that. Why? Because credit cards allow people to buy things they don't need with money they don't have at their immediate disposal. I know from personal experience that my spending habits would change completely if I had to conduct all of my transactions using a debit card, cash, or a check. A lot of times, I pull the trigger on an expense because I rationalize how much cash back or points I'm receiving from the purchase. If those incentives are gone, well, at least for me, so's the purchase.
This will be a mess. Merchants will not be able to tell the difference and I wonder how detailed this could be. Whether you have the Preferred Card or Reserve card it says Chase Visa on the receipt for example.
If a business can’t afford the fees to process credit cards, they shouldn’t be in business. I absolutely despise businesses that charge a credit card fee. Greedy scum in the extreme, and cheep or incompetent at best.
You pass the charge on to be, I’ll take my business elsewhere to a competent company that doesn’t need credit card fees to survive.
"Corporations want to extract more value from customers, don't have a plan on how to do it", News at 11.
For me this effect which business I patronize. Merchant “A” charges a 3% fee I have to pay and Merchant “B” does not. I will use Merchant “B” every single time and Merchant “A” Wil, get none of my business. Guide frankly everything going on these days is designed to screw the consumer. I for one am getting tired of being screwed by big business and our government. My solution? Make thing myself, barter and...
For me this effect which business I patronize. Merchant “A” charges a 3% fee I have to pay and Merchant “B” does not. I will use Merchant “B” every single time and Merchant “A” Wil, get none of my business. Guide frankly everything going on these days is designed to screw the consumer. I for one am getting tired of being screwed by big business and our government. My solution? Make thing myself, barter and trade with other individuals and avoid large business with policies that negatively effect my wallet.
I wish it was that simple for me but it seems like all the restaurants and bars where I live have all started charging the 3%.
It's going to look at this article my first thought is they're still going to take all the cards that they've been taking, they're just going to make more money off of me now. So when it comes to restaurants, a lot of times I pay cash now unless card is doing 5% at restaurants,
I hate to say it, but the way to get around that, at least in restaurants, is to take three percent off a normal tip. So, if you normally leave 20 percent, then just leave 17 percent. Another thing to do is to just leave the tip based off the actual cost of the food and not with the tax included.
There are many ignorant comments here.
1. Amex is the most expensive card for merchants to take, though its closer in cost now than historically (see below).
2. V/MC got the public (and merchants) hooked with lucrative rewards and low interchange fees. Both of these have increased significantly over time, fueling customer demand for these cards while increasingly punishing the merchants who ultimately pay foe all of these awards through higher and higher interchange...
There are many ignorant comments here.
1. Amex is the most expensive card for merchants to take, though its closer in cost now than historically (see below).
2. V/MC got the public (and merchants) hooked with lucrative rewards and low interchange fees. Both of these have increased significantly over time, fueling customer demand for these cards while increasingly punishing the merchants who ultimately pay foe all of these awards through higher and higher interchange fees, compressing margins for businesses.
3. Businesses know consumers do not like to see surcharges (or discounts for cash for that matter).
That is the truth of how we got here and why this is at a near boiling point.
Merchants have always been able to charge an extra 3% for cc merchant fees... they simply embed it into their prices. My restaurant clients do this frequently. Some states have rules about what can or can not be listed separately on receipts. So this 3% upcharge option is not new.
Funny thing is a lot of these stores have their own rewards cards that they get kickback off of anyways. What will more likely happen is, oh shopping at walmart better use your Walmart Master Card or yoy pay an extra 2%. No Frills/Loblaw? Better have a PC Master Card. Canadian Tire, same.
In Australia merchants have the ability to automatically apply a surcharge based on the card that is scanned. Ask them to accept all kinds of cards without any cost to them and means that cashiers don't need to check which type of card is being used. I imagine a similar functionality could be used to stop certain cards being accepted by the machine, it would simply say that the transaction didn't go through
How will Merchants post which Master Cards they take? So I go to buy something and the say they don't take that master card - then I say - I won't take the product. All or none - like some business don't take AmEx, but how would they present which MC they take.
A new restaurant opened a few weeks ago near my home and I was anxious to try it. Upon checking out with my credit card I saw they added 3% because I charged my bill. with a credit card. I rarely carry more than thirty or forty dollars in cash. They have the right to do that and I have the right to never return which I choose to do. I was dining out elsewhere...
A new restaurant opened a few weeks ago near my home and I was anxious to try it. Upon checking out with my credit card I saw they added 3% because I charged my bill. with a credit card. I rarely carry more than thirty or forty dollars in cash. They have the right to do that and I have the right to never return which I choose to do. I was dining out elsewhere tonite and decided to look at the menu online. They were upfront about adding 2.9% to my credit card bill which prompted me to dine elsewhere. I discussions about this with other people they tell me they tip less when this happens but I refuse to penalize the wait staff earning a living. Neither of there restaurants were inexpensive.
Does this signal the end of cash back cards? Who in their right mind would pay 3% extra to get back 1-2%? At least with points you can convince yourself that it is worth it for that future high value redemption
Also doesn't visa automatically give you a "premium" signature card over a regular card if you have good credit? Do we now have to ask to be downgraded to avoid paying extra?
It’s basically a game of chicken. Will merchants charge those extra fees for premium cards, and customers either pay it or not use the card? Or, will merchants charge those extra fees for premium cards and customers simply choose a different business that does accept the premium cards with no fee?
I used to work at Chase and we viewed the interchange fee as the economic cost of cash. That 2% fee is similar to the cost of handling cash (e.g., needing a safe, needing an armored truck, body guards, alarm system, employee theft, miscounting, etc). With all the issues with cash, Chase viewed the interchange fee to be more than reasonable for the merchant. And I agree.
This doesn't cover Amex right? So surely the fact they exist and merchants choose to accept them sort of implies that this won't change much? Or am I missing something?
Im in Canada and most stores here refuse Amex outright because of the charges. But that is completely different than only allowing select types. A lot of people here have MC/V that are tied to our banks and various stores, be very interesting to see how that plays out. I could see a lot of people switching banks if stores started refusing their cards. Also, is every store going to have to post a list...
Im in Canada and most stores here refuse Amex outright because of the charges. But that is completely different than only allowing select types. A lot of people here have MC/V that are tied to our banks and various stores, be very interesting to see how that plays out. I could see a lot of people switching banks if stores started refusing their cards. Also, is every store going to have to post a list at every register stating which ones they accept and dont? Seems annoying. This seems like such a noghtmare
After spending couple of weeks in India, credit and debit cards just feel so old school. Their digital payment system is just insanely good. Of course it means bye to bye to rewards, but it is so seamless and easy to use and best part is I don't need to carry my wallet or even card clip.
Have you ever heard of Apple Pay?
And Zelle, Venmo, Cash App, etc
Yup…all of them and used them. UPI is absolutely better than anyone of them. Let alone user experience and no need for an intermediary, the biggest difference is UPI is real time unlike all those apps.
The people replying on your post have clearly never traveled to India. The entire network and experience is different than all alternatives listed.
All those saying "merchants won't be able to tell which kind of card you are using" are probably wrong - almost certainly, the merchants agreed to this settlement because they'd have a way to access this information. It might take a while for POS devices to be programmed, but the era of "we charge 2% extra if you pay with a rewards card" is coming. It won't be all merchants, but I suspect that many...
All those saying "merchants won't be able to tell which kind of card you are using" are probably wrong - almost certainly, the merchants agreed to this settlement because they'd have a way to access this information. It might take a while for POS devices to be programmed, but the era of "we charge 2% extra if you pay with a rewards card" is coming. It won't be all merchants, but I suspect that many will impose a surcharge, especially in retail sectors where competition is heavily based on price. If competition is based on attracting wealthy customers who are less price sensitive, then merchants will be less likely to do it.
High-end restaurants, probably no surcharge - but McDonalds? Probably. High-end home boutiques, probably no surcharge, but Target and Walmart? Probably.
Many high end and even just regular restaurants are already charging a 2 to 3% surcharge on credit cards. In my experience so far it’s the smaller “high end” businesses that ARE already charging an extra 3% on credit cards. It’s gotten to the point I ask when entering a business if no sign is posted. If they charge extra I thank them for their time and turn around and walk out.
With these...
Many high end and even just regular restaurants are already charging a 2 to 3% surcharge on credit cards. In my experience so far it’s the smaller “high end” businesses that ARE already charging an extra 3% on credit cards. It’s gotten to the point I ask when entering a business if no sign is posted. If they charge extra I thank them for their time and turn around and walk out.
With these new rules, I’m thinking that if I can’t pay cash (real cash, which BTW, costs he business over 3% of their profit to process) fine.
We consumers have been nothing but screwed over the past year. I’m sick of it and will fight back.
I am in Phuket right now. Every different place has a different criteria for using credit cards. Some have a criteria of minimum expenditure to use a credit card without surcharge, others just charge you a surcharge for using credit card no matter how much you spend any other some that can will take your credit card no matter how much you spend. I’ve been here just three days and already. I noticed my behavior...
I am in Phuket right now. Every different place has a different criteria for using credit cards. Some have a criteria of minimum expenditure to use a credit card without surcharge, others just charge you a surcharge for using credit card no matter how much you spend any other some that can will take your credit card no matter how much you spend. I’ve been here just three days and already. I noticed my behavior has been massively modified. I no longer just placed my card hoping it’ll be accepted, I first ask. And I’m using a lot of physical cash.
This sounds like something that will happen stateside. Maybe this is an excuse for the powers that be to move towards a digital currency. But if they don’t, then paper cash is making a comeback.
I can't imagine the confusion this will cause if businesses accept some types of visa and not others. Most customers aren't going to know/pay attention. And will employees know enough to enforce it? "Oh, we take Visa but not that Visa."
Can POS devices/ merchant accounts be programmed to recognize the card type and interchange fees to not process?
And what happens at a restaurant when you go to pay at the end and the...
I can't imagine the confusion this will cause if businesses accept some types of visa and not others. Most customers aren't going to know/pay attention. And will employees know enough to enforce it? "Oh, we take Visa but not that Visa."
Can POS devices/ merchant accounts be programmed to recognize the card type and interchange fees to not process?
And what happens at a restaurant when you go to pay at the end and the only card you have is one they dont accept? It says Visa on the door. I have a Visa, what's the issue?
The merchant can impose extra fees for reward cards. That's a totally different dynamic than simply refusing to accept rewards cards. As soon as enough merchants start imposing surcharges, most of us in the points/miles game will probably find ourselves adding a non-rewards card to our wallet. I suspect that most ordinary consumers already have one anyway, and it will be easy for them to simply pull that one out when the sign says "extra...
The merchant can impose extra fees for reward cards. That's a totally different dynamic than simply refusing to accept rewards cards. As soon as enough merchants start imposing surcharges, most of us in the points/miles game will probably find ourselves adding a non-rewards card to our wallet. I suspect that most ordinary consumers already have one anyway, and it will be easy for them to simply pull that one out when the sign says "extra 2% fee charged if your credit card is a rewards card."
Given the huge number of credit cards available, I question how merchants will be able to differentiate between "no fee" and "premium" cards. It would be a constant training exercise to help cashiers to recognize the cards and effectively communicate to customers why or why not they will accept a card.
I don't see much changing on the side of merchants unless acceptance can be completely automated.
Isn't the ability to surcharge a matter of state law, not Visa/MC permission? Some states have laws where you cannot surcharge, but you can offer a cash discount.
Other than for large merchants, isn't this going to primarily benefit the middleman payment processors? For a small business, you're at the mercy of the Square's of the world and their pricing anyway.
Bottom line... none of this is revolutionary and rewards cards are not going anywhere....
Isn't the ability to surcharge a matter of state law, not Visa/MC permission? Some states have laws where you cannot surcharge, but you can offer a cash discount.
Other than for large merchants, isn't this going to primarily benefit the middleman payment processors? For a small business, you're at the mercy of the Square's of the world and their pricing anyway.
Bottom line... none of this is revolutionary and rewards cards are not going anywhere. Gas stations have had different prices for credit and cash for a long time. All this is really doing is institutionalizing the 3% surcharge that many merchants are already putting on all credit card bills regardless of the interchange fee charged. And even with that 3% charge, folks are still charging away, especially the folks at the upper end of the net worth spectrum who think of the 3% as yet another tax and swipe/tap and move on with their day.
Some businesses already take matters in their own hands, at least in some way, and I wonder if it's something happening in the USA too. For example, at Toronto Eaton Centre's food court, tons of restaurant have their POS machines covered in 'NO AMEX' signs even when those establishments are listed on the 'take amex' website. It feels like being in an anti-Amex food court to be honest. I've personally never argued with staff about...
Some businesses already take matters in their own hands, at least in some way, and I wonder if it's something happening in the USA too. For example, at Toronto Eaton Centre's food court, tons of restaurant have their POS machines covered in 'NO AMEX' signs even when those establishments are listed on the 'take amex' website. It feels like being in an anti-Amex food court to be honest. I've personally never argued with staff about it and just pay with a different card. Reporting them through the 'take amex' website is useless too as nothing happens. If anything, I've only noticed more and more 'NO AMEX' signs popping up everywhere over time.
Seems to me this is just another way to screw the consumer. Business wanted credit card transactions. They bring in more business. Now, rather than just raising prices to cover the cost of doing business in 2025 they try to nickel and dime with surcharges, service charges and convenience fees.
While the average American whines about things like the ACA they are dying a death by a thousand cuts by businesses small and large....
Seems to me this is just another way to screw the consumer. Business wanted credit card transactions. They bring in more business. Now, rather than just raising prices to cover the cost of doing business in 2025 they try to nickel and dime with surcharges, service charges and convenience fees.
While the average American whines about things like the ACA they are dying a death by a thousand cuts by businesses small and large. This is as bad as ATM surcharges just to access my own money.
Until government stops existing for the benefit of businesses while screwing everyday Americans nothing is going to change. For me…refuse my credit card and I’ll just leave my merchandise on the counter and walk out. If I’m at a restaurant, you better tell me you won’t take my card before I order because I don’t carry chase and I sure as sh!t am not going to haul my a@@ to the ATM to feed your greed.
I know for a fact that the US has extremely high interchange fees compared to other developed countries, but what statistics are you referencing when you state the US has “very high credit card acceptance”? Compared to where?
It should be interesting to see how Capital One deals with this. They’re one of the largest issuers of credit cards and they’ve bought Discover. They’re currently moving their debit cards to Discover, and much of their credit card business is sure to follow. (I hope and suspect that Venture X will stay with Visa, at least unless Discover becomes more of an international brand.) Will they change the V/MC game of charging higher merchant fees for rewards cards?
Discover, started by Sears in 1986, never has and likely never will be a major player. Visa/MasterCard rule the roost.
Commentators who hurl their derogatory remarks against small businesses demonstrate they have never read bank statements issued by credit card processors. Just like Ben remarked that banks subsidize our miles and points hobby a few months back. No businesses are charities. Merchants bear the costs and losses, such as charge back disputes, of accepting credit cards.
Online and brick and mortar businesses will charge 3-4% extra for accepting cc, regardless the types of cc. Merchants...
Commentators who hurl their derogatory remarks against small businesses demonstrate they have never read bank statements issued by credit card processors. Just like Ben remarked that banks subsidize our miles and points hobby a few months back. No businesses are charities. Merchants bear the costs and losses, such as charge back disputes, of accepting credit cards.
Online and brick and mortar businesses will charge 3-4% extra for accepting cc, regardless the types of cc. Merchants will require customers to prepay before processing the orders so they will not eat the foods you order but refuse to pay.
Small businesses will fail before big businesses crater due to high tariff now-- meaning small businesses unlikely gouge customers because they neither benefit from executive compensation packages nor being bailed out at taxpayers' expense. Running a business in this country and in this environment is not sitting on oil reserve because of lawsuits, frivolous complaints, derogatory reviews, regulations, healthcare costs, etc... Banks have been riding high for as long as Biden has been in politics because of his influence, longevity and hometown. Now they have to adjust to the new environment. Until Americans abolish social security, unemployment insurance and other safety benefits, I do not believe they understand what socialism is. Unless they are super hypocrites.
LOL
4%? No interchange rate is that high.
I think the location of the merchant will have a big impact on whether or not they choose to no longer accept higher interchange-fee cards. I don't see most corporate merchants in major cities (like LA, SFO, Miami, NYC, Boston, etc.) going in that direction, because of how many of their customers likely use those premium cards. If they implemented such a rule, they would likely lose business. However, I totally see the small merchants...
I think the location of the merchant will have a big impact on whether or not they choose to no longer accept higher interchange-fee cards. I don't see most corporate merchants in major cities (like LA, SFO, Miami, NYC, Boston, etc.) going in that direction, because of how many of their customers likely use those premium cards. If they implemented such a rule, they would likely lose business. However, I totally see the small merchants in small towns rejecting premium cards. So, the value of premium cards will (even more) heavily favor those in major metropolitan cities.
I see a lot of logic in that. I also do not expect to see large chains shy away from premium cards because, with their scale, they can absorb the higher fees so as not to risk losing business. If anything, I could see this backfiring on small businesses which we are so often told that we should frequent. They do not have the cost advantages and lower interchange fees could help their bottom line....
I see a lot of logic in that. I also do not expect to see large chains shy away from premium cards because, with their scale, they can absorb the higher fees so as not to risk losing business. If anything, I could see this backfiring on small businesses which we are so often told that we should frequent. They do not have the cost advantages and lower interchange fees could help their bottom line. Unfortunately for them, I am far more loyal to my rewards cards - in fact, I am not sure I have a single card that is not a rewards card - so they will lose my business to the big box store down the street.
Many merchants now already charge a 3 to 3.5% addition to purchases made with cards. But one place I go has approached it differently, providing a 5 % discount on cash payments which sounds a lot better than a surcharge although basically the same thing.
Smart people.
Amex is not part of this - and they manage to fund lucrative rewards with plenty of acceptance and a healthy business on their part. So without knowing more details, feels like that's a market baseline that would prevent too much rewards card user disruption.
Plenty of people only carry rewards credit cards. For them, "basic credit cards only" = "cash only". That would be huge. Also, how would staff tell? If someone plops down a German credit card, it's not going to be obvious to the minimum wage clerk what category it falls into! The result would be vast amounts of aggravation directed at the poor staff if any company was stupid enough to introduce this.
In this day and age nobody will expect a person let alone an inexperienced person to figure things out on their own. Everything will be software driven. The cashier will only see X or O on their screens.
Spec's in Texas charges more if one uses a credit card rather than a debit card.
My UK debit card gets refused by the terminal if I say it is a debit, so I have to pay as if it is a credit card.
I see a merchant like Costco accepting cash, debit, and co-brand card only. Otherwise, I see little change.
This would be a nightmare
This just seems silly. If I walk into a restaurant to pick up dinner for the family and the merchant tells me I can't use my CSR, I'm leaving and going somewhere else. Then the merchant has to "eat" the cost of the food because they were too cheap to accept a 2% cc surcharge. This doesn't seem cost-effective.
Your logic is astounding. More and restaurants are taking this approach because it is all about their profitability. CC companies keep raising merchant discount fee. These are their choices:.
Keep eating higher fees and go out of business, but that's OK with you.
Raise prices offset card increases. But that's OK with you.
Cease accepting credit cards. I'm sure that will please you.
Start accepting debit cards, with its lower fees. Bet you never thought...
Your logic is astounding. More and restaurants are taking this approach because it is all about their profitability. CC companies keep raising merchant discount fee. These are their choices:.
Keep eating higher fees and go out of business, but that's OK with you.
Raise prices offset card increases. But that's OK with you.
Cease accepting credit cards. I'm sure that will please you.
Start accepting debit cards, with its lower fees. Bet you never thought of that one.
Judging from your callus disregard of anyone's profitability, you probably don't even pay off your monthly cc charge.
And what do you even know about what's cost effective.
Come to think about it, you probably that US261 is not a goodeal for you.
Who wound you up sunshine? Either way, try to use complete sentences that people can actually understand.
How is the P&L of a business my concern? It's a business arrangement. They are selling me something and I am paying a price that reflects the value of that something. Do you expect me to pay more than the value I receive because the cost structure of the business is such that it is higher than the value of what they are providing and the customer willingness-to-pay? If their business cannot get that equation...
How is the P&L of a business my concern? It's a business arrangement. They are selling me something and I am paying a price that reflects the value of that something. Do you expect me to pay more than the value I receive because the cost structure of the business is such that it is higher than the value of what they are providing and the customer willingness-to-pay? If their business cannot get that equation right and provide value a lower cost than the price they charge, that suggests that their business is not economic and, in a free market system, likely won't continue to exist. It boils down to simple economics.
Disgusting greedy American businesses up to no good again! Constantly trying to nickle and dime customers, even though they're already making a killing compared to prices is other countries. How to get rich quick? Start a business in America! Small businesses aren't the ones that need help -- it's the consumers they're ripping off, charging 100x what they paid pennies for because it was made oversees. This is why I don't tip, and don't buy...
Disgusting greedy American businesses up to no good again! Constantly trying to nickle and dime customers, even though they're already making a killing compared to prices is other countries. How to get rich quick? Start a business in America! Small businesses aren't the ones that need help -- it's the consumers they're ripping off, charging 100x what they paid pennies for because it was made oversees. This is why I don't tip, and don't buy things from any merchant with a credit card surcharge!
Who wound you up sunshine?
Choice is always good, so this settlement would be very be welcomed.
Give consumers a choice: pay with a run of the mill credit card and there's no fee, pay with a rewards card and there's a 1% (or whatever) fee to cover the higher interchange cost.
Ending socialism (forced subsidies) is the right thing to do.
Limiting the interchange fee IS limiting consumer options which IS socialism, you nitwit. Same thing will happen as with debit cards due to the government-imposed 25 cent fee limit.
No need to call people names, Paul.
And government regulation is not the same as socialism. There's a huge difference.
@Paul, you seem to be the nitwit trying to draw a parallel between socialism and a legal settlement negotiated between two businesses. Maybe you should go back to and retake civics to learn about what socialism is and the different types that exist.
Then it will be butts in seats to gain miles, as it was before loyalty spending on cards. The sky didn't fall then, I suspect it won't now either.
Just a new normal.
Visa and Mastercard have long been planning for interchange fees to go to zero or close to it.
Restaurants and merchants will never waste their time checking a credit card to see if it's Infinite or whatever. They'll simply do what merchant's have been doing as of late. Put a 3% surcharge on each bill, regardless of amount, for use of a credit card while also refusing cash. Simple solution.
Now whether the consumer...
Visa and Mastercard have long been planning for interchange fees to go to zero or close to it.
Restaurants and merchants will never waste their time checking a credit card to see if it's Infinite or whatever. They'll simply do what merchant's have been doing as of late. Put a 3% surcharge on each bill, regardless of amount, for use of a credit card while also refusing cash. Simple solution.
Now whether the consumer tips less because of that surcharge, is their business.
@Alonzo
This is patently false. Neither Visa nor Mastercard has ever planned for interchange fees to go to zero or close to. It is a billion $$ cash cow and they have fought any such claim at all cost.
Not to mention the obvious - if they have ever wanted to do it - they could - just as easily as they raise interchange fees continually.
They've been looking into diversifying their revenue stream for over a decade. Much like brokerage firms charged for trading stocks. Now they all charge zero. How did all the brokerage firms not only survive, but get bigger?
Visa and MA ain't dumb, they knew this day would eventually come.
Yes, Visa and Mastercard have sought to eliminate interchange fees, their main source of revenue what sustains and supports the whole credit card industry.
Another dumb comment from alonzy. Tip less? More like NOT tip at all, which should be the status quo and IS the status quo in most countries, like Japan (and the service is great).
@Jim first crash out of the day after that first sip of matcha?
If merchants start telling me which card I can or cannot use, that will impact which merchants I choose to patronize.
I think the more important part of this is not well defined. How many merchants are going to start restricting what specific cards you can use?
it seems like a lot to have employees track using an AMEX gold at a restaurant - oh sorry you can use a platinum card but not a gold. The gold earns too many reward points.
Yes. it would be complicated because you do not know that interchange for amex gold and plat are not diff. It is much more complicated
Stop whining about credit card fees. Think they are too high? Put a sign on your window store or website: “We don’t accept credit cards. Cash, check or debit only”. This is a free market. No one is forcing anyone to use or accept credit cards.
There's a fee for debit too.
Processing checks also cost money.
Best to take cash only.
Don't worry your cash is very safe in the cookie jar.
And how much do you pay the armored car that picks up your cash, and how much do you lose to employee theft or robbery?
Amen! Let's stop all the whiners.
These merchants whine and whine and whine - if you don't like the fees, don't take the cards! Cry me a river that Walmart has to sacrifice a tiny bit of margin.
‘Could’ is doing a lot of work here.
Many of us who enjoy our points and miles are so quick to clutch pearls and suggest the sky is falling as soon as any accountability or regulation is discussed within this space.
“0.01%” oh no! It’s over! Sell everything! Al Pacino in House of Gucci: “DEAD!!”
Friends, consumer protections are not the end of our hobby. We need to end the excessive corporate greed, one way or another.
“Boof.”
Yes, let’s put a cap on corporate greed. After capping credit card interchange fees, let’s cap annual fees too; let’s say to a maximum of zero. While we are at it, let’s cap hotel rates, airline fares and car rental prices too, as we know greed runs amok in those industries as well. I suggest a price cap of $5 for all of them. Thereafter, let’s move on to taming corporate greed in housing. No...
Yes, let’s put a cap on corporate greed. After capping credit card interchange fees, let’s cap annual fees too; let’s say to a maximum of zero. While we are at it, let’s cap hotel rates, airline fares and car rental prices too, as we know greed runs amok in those industries as well. I suggest a price cap of $5 for all of them. Thereafter, let’s move on to taming corporate greed in housing. No house can be sold for more than $10K and no rent can bee more than $100 a month. Those caps will teach those greedy developers and landlords. Car makers and dealerships are super greedy too. No car can cost more than $1K. A gallon of gas? Capped at $0.10.
No thanks, Regis. We want data-driven, common sense regulations, not hyperbole or a strawman, like you attempted above.
A good first step. The level of interchange fees in the U.S. is outrageous and is ten times what it is in other areas like Europe - all costs ultimately passed on to the consumer.
Hey Peter, if "all costs ultimately passed on to the consumer" then why would merchants complain.
Or all these merchants are just greedy Americans wanting 1% more sales unlike modest European?
@Pedro This is called greed by the merchants. There has been extensive study when the debit card interchange fees were capped that most merchants did not pass on any savings to the consumers. The consumers would be the ones ending up with less rewards and perks. And in major cities in the U.S. there are businesses that already require consumers pay a surcharge for using their credit cards or have two separate pricing, one for...
@Pedro This is called greed by the merchants. There has been extensive study when the debit card interchange fees were capped that most merchants did not pass on any savings to the consumers. The consumers would be the ones ending up with less rewards and perks. And in major cities in the U.S. there are businesses that already require consumers pay a surcharge for using their credit cards or have two separate pricing, one for paying by card and one for paying by cash. Of course, paying by cash would be less. And yes merchants greed by tacking on 18 percent tip whether the service was good or bad and in some instances that 18 percent tip was based on the total bill and not the subtotal.
Stanley, they can't add a 18 percent tip onto your bill unless it's removable. Otherwise, it's no longer a tip. They can add a "service charge" to all bills, and that's not removable. Restaurants prefer not to do that, because to the extent that goes to pay server wages, they pay FICA, unemployment and workers compensation taxes/insurance on that.
@World Traveler. Yes. I guess I should have made my point more clearly. Required should have been written as ‘required’ in that if I want to go back to that restaurant and not have ‘terrible’ service or the servers doing something to my food I would end up paying that 18 percent tip every time.
Employers pay FICA/Medicare & UI on tips as well. The major difference between service charge (restaurant income) and tips (employee income) is that employers can claim the a tip tax credit on tips only. But there are circumstances where the tip tax credit is less favorable than just taking the full tax expense.
Interestingly, there are more & more restaurants going to service charge instead of tips.