3 ms·

Most of your cash back money actually comes from fees that merchants pay. In the US and especially for credit cards with cash back those fees can be quite high,

Most of your cash back money actually comes from fees that merchants pay. In the US and especially for credit cards with cash back those fees can be quite high, and unfortunately it's illegal for merchants to discriminate against credit cards with high fees.

bhelkey 4mo ago
> it's illegal for merchants to discriminate against credit cards with high fees Do you have a source for this? Often times merchants don't accept American Express because it charges higher fees [1]. [1] https://www.bankrate.com/credit-cards/business/why-american-express-isnt-universally-accepted/#why https://www.bankrate.com/credit-cards/business/why-american-...
- lxgr 4mo ago
  Those rules are about discriminating against various cards from the same brand. They have also been significantly limited in many jurisdictions by now.
- UltraSane 4mo ago
  It isn't illegal but it is against most credit card companies merchant agreements. But I do rarely see it like in some vending machines.
mercutio2 4mo ago
This used to be true. But the 2025 Interchange Fee Settlement abolished the “Honor All Cards” regime. Perhaps, I know it’s crazy, but… perhaps segmenting the market into extremely high-spending customers, normal pay-every-month-relatively-low-fees, and no-frills, was a smart move by the big issuers? My sense is that alienating big spenders (whose interchange fees tend to be in the 4% range) is just not worth it? All I can say for sure is no store I’ve ever encountered has operationalized the newfound ability to differentially reject some cards yet. I am starting to see grittier establishments offer 5% cash discounts more frequently than they used to, and I’m always happy to pay cash when they do. But when there’s no discount, why would I forgo better accounting and 3-5% back in points?
- titanomachy 4mo ago
  Costco in the US has, for as long as I’ve shopped there, only accepted visa or debit.
  - UltraSane 4mo ago
    I'm pretty sure this is because they negotiated a very good rate with Visa in exchange for being exclusive.
  - __david__ 4mo ago
    That’s only fairly recently at my Costco. For years and years it was only American Express and debit.
  - _whiteCaps_ 4mo ago
    Interesting. In Canada they only accept Mastercard in store.
  - mercutio2 4mo ago
    This is orthogonal to the Interchange Fee Settlement. The settlement allows stores to decline different *classes* of Visa cards. It was always possible to accept Visa but not MasterCard, etc. What was not previously possible was to query, before the transaction “what will the fees be” and reject cardholders presenting high-fee cards from a network you have a relationship with. That is now allowed, by consent decree. But so far no one is doing it.

bhelkey 4mo ago

> it's illegal for merchants to discriminate against credit cards with high fees Do you have a source for this? Often times merchants don't accept American Express because it charges higher fees [1]. [1] https://www.bankrate.com/credit-cards/business/why-american-express-isnt-universally-accepted/#why https://www.bankrate.com/credit-cards/business/why-american-...

lxgr 4mo ago
Those rules are about discriminating against various cards from the same brand. They have also been significantly limited in many jurisdictions by now.
UltraSane 4mo ago
It isn't illegal but it is against most credit card companies merchant agreements. But I do rarely see it like in some vending machines.

mercutio2 4mo ago

This used to be true. But the 2025 Interchange Fee Settlement abolished the “Honor All Cards” regime. Perhaps, I know it’s crazy, but… perhaps segmenting the market into extremely high-spending customers, normal pay-every-month-relatively-low-fees, and no-frills, was a smart move by the big issuers? My sense is that alienating big spenders (whose interchange fees tend to be in the 4% range) is just not worth it? All I can say for sure is no store I’ve ever encountered has operationalized the newfound ability to differentially reject some cards yet. I am starting to see grittier establishments offer 5% cash discounts more frequently than they used to, and I’m always happy to pay cash when they do. But when there’s no discount, why would I forgo better accounting and 3-5% back in points?

titanomachy 4mo ago
Costco in the US has, for as long as I’ve shopped there, only accepted visa or debit.
- UltraSane 4mo ago
  I'm pretty sure this is because they negotiated a very good rate with Visa in exchange for being exclusive.
- __david__ 4mo ago
  That’s only fairly recently at my Costco. For years and years it was only American Express and debit.
- _whiteCaps_ 4mo ago
  Interesting. In Canada they only accept Mastercard in store.
- mercutio2 4mo ago
  This is orthogonal to the Interchange Fee Settlement. The settlement allows stores to decline different *classes* of Visa cards. It was always possible to accept Visa but not MasterCard, etc. What was not previously possible was to query, before the transaction “what will the fees be” and reject cardholders presenting high-fee cards from a network you have a relationship with. That is now allowed, by consent decree. But so far no one is doing it.