3 ms·

> the only credit cards where interchange is 2-3% are those that pay 1-2% in cash back or reward points/miles What percentage of credit cards in the U.S. and C

> the only credit cards where interchange is 2-3% are those that pay 1-2% in cash back or reward points/miles What percentage of credit cards in the U.S. and Canada pay 1-2% in cash back or have reward points/miles? If the answer is most credit cards, then it seems to follow that merchants are being charged 2-3% for most transactions. Or am I missing something here? Furthermore, I don't believe that merchants are allowed to pick and choose which credit cards they'll accept based on the fees. That is, if a merchant says that they take Mastercard, they have to take any brand of Mastercard. They can't refuse a Mastercard that gives cash back (and how could they even tell at the time of the transaction anyway?).

gtk40 10y ago
There are different types of card that have different fees, like Visa Signature or MasterCard World. These usually have rewards. However, it seems like most credit cards I've seen (at least in the tier I've considered) have 1% CB or equivalent at the least, even without being Signature or World.
krrrh 10y ago
There were class action lawsuits in both Canada and the US over the anti-competitive nature of the agreements merchants had to enter into. I can't remember all the details, but in the US merchants rights to charge consumers higher prices or fees for using rewards cards was confirmed. But I've never seen a merchant actually doing this online.
- MaulingMonkey 10y ago
  I believe either VISA or MasterCard - likely both - have rules against charging any additional fees when paying with their cards as a merchant, with the implicit threat of them pulling their services and leaving you unable to process cards if you don't follow said rules. The typical workaround, which isn't against their rules, is to offer a discount for paying in cash - I can't recall the last gas station I saw that didn't do this (for gas at least), and a number of restaurants also offer cash discounts.
  - amenod 10y ago
    The reason for offering a discount for paying in cash is probably that most clients would get angry if merchants tried to charge them more for using a credit card while they are always happy when they get a discount for paying in cash. I think the credit card processors are smart enough to realise that this is happening, so if they wanted & could do anything about it, they would probably write their terms differently (cca. "prices for payments in cash and with cards must be equal").
    - oneeyedpigeon 10y ago
      Plenty of places demand a minimum payment for credit card transactions, with an additional fee in lieu of that.
    - oli5679 10y ago
      In the UK, a majority of bars and corner shops will have a 50p charge for card use below a certain threshold or even refuse to take payment.
      - wrboyce 10y ago
        They do, but they shouldn't. Both MasterCard and VISA explicitly prohibit this practice in their terms.
      - jdavis703 10y ago
        In the past I've just offered hesitant merchants 50 cents extra. Probably only works when the merchant also owns the business though.
  - ensignavenger 10y ago
    That used to be the case, but as stated by the above poster, it is no longer the case due to a lawsuit a few years ago.
  - rodgerd 10y ago
    If they do, they aren't enforcing it at all in new Zealand, where a 2% surchage for credit cards is fast becoming the norm.
- bradleyjg 10y ago
  Before there was the class action, the US Justice Department sued. Visa and MasterCard settled.[1] The settlement required those companies to allow merchants to "steer" customers to less expensive cards with with discounts and incentives. Not that this agreement didn't override state laws which prohibit that practice. AMEX choose to go to trial, lost, and the case is currently on appeal at the Second Circuit (the judgment stayed).[2] The class action lawsuit was settled in principle back in 2012 and approved by the district court in 2013, but was thrown out recently by the Second Circuit.[3] It would have been the largest class action settlement in history, but many large merchants objected to being bound by a settlement that they had no part in negotiating. [1] http://www.lexology.com/library/detail.aspx?g=a2722e0c-e0a6-448d-8052-43082d1c4ef4 http://www.lexology.com/library/detail.aspx?g=a2722e0c-e0a6-... [2] http://www.reuters.com/article/us-american-express-antitrust-idUSKBN0U12DO20151218 http://www.reuters.com/article/us-american-express-antitrust... [3]http://www.wsj.com/articles/visa-mastercard-class-action-settlement-rejected-by-u-s-court-1467300658 http://www.wsj.com/articles/visa-mastercard-class-action-set...
- nickodell 10y ago
  >US merchants rights to charge consumers higher prices or fees for using rewards cards was confirmed. This is illegal in ten states: http://www.creditcards.com/credit-card-news/credit-card-convenience-fees-cost-surcharges-1280.php http://www.creditcards.com/credit-card-news/credit-card-conv...

gtk40 10y ago

There are different types of card that have different fees, like Visa Signature or MasterCard World. These usually have rewards. However, it seems like most credit cards I've seen (at least in the tier I've considered) have 1% CB or equivalent at the least, even without being Signature or World.

krrrh 10y ago

There were class action lawsuits in both Canada and the US over the anti-competitive nature of the agreements merchants had to enter into. I can't remember all the details, but in the US merchants rights to charge consumers higher prices or fees for using rewards cards was confirmed. But I've never seen a merchant actually doing this online.

MaulingMonkey 10y ago
I believe either VISA or MasterCard - likely both - have rules against charging any additional fees when paying with their cards as a merchant, with the implicit threat of them pulling their services and leaving you unable to process cards if you don't follow said rules. The typical workaround, which isn't against their rules, is to offer a discount for paying in cash - I can't recall the last gas station I saw that didn't do this (for gas at least), and a number of restaurants also offer cash discounts.
- amenod 10y ago
  The reason for offering a discount for paying in cash is probably that most clients would get angry if merchants tried to charge them more for using a credit card while they are always happy when they get a discount for paying in cash. I think the credit card processors are smart enough to realise that this is happening, so if they wanted & could do anything about it, they would probably write their terms differently (cca. "prices for payments in cash and with cards must be equal").
  - oneeyedpigeon 10y ago
    Plenty of places demand a minimum payment for credit card transactions, with an additional fee in lieu of that.
  - oli5679 10y ago
    In the UK, a majority of bars and corner shops will have a 50p charge for card use below a certain threshold or even refuse to take payment.
    - wrboyce 10y ago
      They do, but they shouldn't. Both MasterCard and VISA explicitly prohibit this practice in their terms.
    - jdavis703 10y ago
      In the past I've just offered hesitant merchants 50 cents extra. Probably only works when the merchant also owns the business though.
- ensignavenger 10y ago
  That used to be the case, but as stated by the above poster, it is no longer the case due to a lawsuit a few years ago.
- rodgerd 10y ago
  If they do, they aren't enforcing it at all in new Zealand, where a 2% surchage for credit cards is fast becoming the norm.
bradleyjg 10y ago
Before there was the class action, the US Justice Department sued. Visa and MasterCard settled.[1] The settlement required those companies to allow merchants to "steer" customers to less expensive cards with with discounts and incentives. Not that this agreement didn't override state laws which prohibit that practice. AMEX choose to go to trial, lost, and the case is currently on appeal at the Second Circuit (the judgment stayed).[2] The class action lawsuit was settled in principle back in 2012 and approved by the district court in 2013, but was thrown out recently by the Second Circuit.[3] It would have been the largest class action settlement in history, but many large merchants objected to being bound by a settlement that they had no part in negotiating. [1] http://www.lexology.com/library/detail.aspx?g=a2722e0c-e0a6-448d-8052-43082d1c4ef4 http://www.lexology.com/library/detail.aspx?g=a2722e0c-e0a6-... [2] http://www.reuters.com/article/us-american-express-antitrust-idUSKBN0U12DO20151218 http://www.reuters.com/article/us-american-express-antitrust... [3]http://www.wsj.com/articles/visa-mastercard-class-action-settlement-rejected-by-u-s-court-1467300658 http://www.wsj.com/articles/visa-mastercard-class-action-set...
nickodell 10y ago
>US merchants rights to charge consumers higher prices or fees for using rewards cards was confirmed. This is illegal in ten states: http://www.creditcards.com/credit-card-news/credit-card-convenience-fees-cost-surcharges-1280.php http://www.creditcards.com/credit-card-news/credit-card-conv...