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This is a good thing. Currently the credit card companies can basically charge whatever fees they like because (1) the customers who choose a card don't see the

by gst 14y ago

This is a good thing. Currently the credit card companies can basically charge whatever fees they like because (1) the customers who choose a card don't see the merchant fees (2) most shops can't afford to not offer credit card payments. By making the fees explicit to the customers ("you pay $1 extra for Visa/Mastercard / $2 extra for Amex / debit card is free") many customers will choose what's cheapest for them, forcing the credit card companies to compete in the area of merchant fees.

dantheman 14y ago
Credit cards and merchants should be able to have any arrangement that they want. A credit card that has no customer fees seems like a nice one to have. From this article, I assume this will not be possible.
- gst 14y ago
  As far as I understand the situation, in the past credit card surcharges were prohibited by law. So credit card companies and merchants will have more freedom in regards to their arrangements now. Credit card companies can still have a contract with a merchant that says that surcharges are forbidden (Amex does that according to the article), but otherwise there's no law anymore that prevents merchants from adding the surcharge.
  - dangrossman 14y ago
    The situation is the exact opposite. Previously, Visa and MasterCard prohibited merchants from charging more for credit than cash. It was a term required in all merchant account agreements with member banks of those networks. In the federal court settlement, Visa and MasterCard agreed to drop that clause from their contracts. There was no federal law prohibiting surcharges, and you can't eliminate laws through court settlements.
dangrossman 14y ago
It's really not going to change much. Visa and MasterCard rates are already almost identical, and American Express will continue getting away with higher fees because of the higher net worth and spending power of its customer base. I sell business services and most of my credit customers pay with Amex cards. They typically have higher credit approval barriers and annual fees, which their customers gladly pay for the raft of benefits the other issuers don't offer (extended warranties on all purchases, accidental damage coverage, rental insurance, travel insurance, roadside assistance, etc). Price is not the only dimension a card issuer can compete on. Further, aside from Amex and Discover, the card issuers have no control over merchant fees. Chase can't issue a Visa card with lower merchant fees than Wells Fargo because neither bank sets the fees, Visa does.

by gst 14y ago

dantheman 14y ago

Credit cards and merchants should be able to have any arrangement that they want. A credit card that has no customer fees seems like a nice one to have. From this article, I assume this will not be possible.

gst 14y ago
As far as I understand the situation, in the past credit card surcharges were prohibited by law. So credit card companies and merchants will have more freedom in regards to their arrangements now. Credit card companies can still have a contract with a merchant that says that surcharges are forbidden (Amex does that according to the article), but otherwise there's no law anymore that prevents merchants from adding the surcharge.
- dangrossman 14y ago
  The situation is the exact opposite. Previously, Visa and MasterCard prohibited merchants from charging more for credit than cash. It was a term required in all merchant account agreements with member banks of those networks. In the federal court settlement, Visa and MasterCard agreed to drop that clause from their contracts. There was no federal law prohibiting surcharges, and you can't eliminate laws through court settlements.

dangrossman 14y ago

It's really not going to change much. Visa and MasterCard rates are already almost identical, and American Express will continue getting away with higher fees because of the higher net worth and spending power of its customer base. I sell business services and most of my credit customers pay with Amex cards. They typically have higher credit approval barriers and annual fees, which their customers gladly pay for the raft of benefits the other issuers don't offer (extended warranties on all purchases, accidental damage coverage, rental insurance, travel insurance, roadside assistance, etc). Price is not the only dimension a card issuer can compete on. Further, aside from Amex and Discover, the card issuers have no control over merchant fees. Chase can't issue a Visa card with lower merchant fees than Wells Fargo because neither bank sets the fees, Visa does.