Shoppers Love Rewards Credit Cards. Retailers Hate Them.:
Large merchants including Amazon.com Inc., Target Corp. and Home Depot Inc. are pushing for the right to reject some rewards credit cards, which typically carry higher fees for merchants. They are likely to opt out of a roughly $6.2 billion settlement Visa Inc., Mastercard Inc. and several large banks recently reached with merchants and continue to make their case in court, according to people familiar with the matter.
The retailers are trying to end the card networks' "honor all cards" rule, which requires merchants that accept Visa- or Mastercard-branded credit cards to take all of them. If merchants could pick and choose among Visa or Mastercard credit cards, those with the highest merchant fees -- and most generous rewards -- likely would be on the chopping block.
The stakes are high all around. Rewards credit cards such as JPMorgan Chase & Co.'s Sapphire Reserve, Capital One Financial Corp.'s Venture and Citigroup Inc.'s Double Cash are wildly popular among consumers for their perks like cash back, airfare and hotel stays. Some 92% of all U.S. credit-card purchase volume is currently charged on rewards credit cards, up from 86% in 2013 and 67% in 2008, according to estimates from Mercator Advisory Group Inc., a payments research and consulting firm.
Yet merchants say the most generous rewards credit cards with the highest fees are cutting into their profits. When shoppers pay with Visa or Mastercard credit cards, merchants are charged interchange fees that are set by the card networks and funneled to the banks that issued those cards. These "swipe" fees vary widely, but are higher on rewards credit cards -- sometimes around 3% of the cardholder's purchase price.
Card networks say preventing merchants from picking and choosing among credit cards creates a frictionless experience for consumers. They argue their rule also creates an even playing field by making sure credit cards issued by banks large and small are accepted.
"If a merchant agrees to accept Mastercard, there cannot be any discrimination between different issuers' cards or between different types of cards issued by one financial institution," a Mastercard spokesman said.
"Visa believes consumers should always have a choice in how they pay, including being allowed to use their Visa credit card regardless of the card type or issuer. When consumer choice is limited, nobody wins," said a Visa spokeswoman.
[...] Visa and Mastercard premium credit cards charge some of the highest interchange fees, often north of 2.1% of the purchase amount, compared with roughly 1.2% to 1.7% on nonpremium credit cards.
[...] For some merchants with lower margins, like grocers, the fees can have a big impact. Kroger Co. unit Foods Co Supermarkets stopped accepting Visa credit cards in August after the two companies failed to reach an agreement on swipe fees.
Kroger Chief Information Officer Chris Hjelm said in an interview at the time that the growing use of rewards credit cards factored into the decision.
(Score: 2, Insightful) by ShadowSystems on Saturday September 29 2018, @04:13PM (3 children)
I'd just leave the potential sale sitting at the register & walk out.
"The sign says you accept Visa. I'm using a Visa. You refuse my Visa. I refuse to do business with you. Chiao!"
Voting with the wallet (my Visa debit card) is the best way to pound the lesson home.
Leaving $100+ in groceries at the till & leaving forces the merchant to examine all that lost profit while they clean up the mess.
Have fun with that half melted ice cream, thawing frozen vegetables, & warming hamburger - I'm sure it'll still sell fine to the next Visa customer that tries to buy it too.
(Score: 0) by Anonymous Coward on Saturday September 29 2018, @04:40PM
This is what will happen.
Also not because 'my feelings'. It will be because THAT is all I have to use to pay for this. I do not carry 150 bucks in cash around because well because I do not have to 'swing by the bank' anymore. I spend about 3k per month on my card. I sure as HELL am not walking around with 3k or making extra trips to the bank. I am not going to duck out and grab some money or use that sketchy ATM you conveniently have in your store. I just will move on and not come back. This is not the 1960s anymore. Oh you do not take less than 10 dollars on a card? Well here is your stuff back have fun with that. I will consider you a place to avoid in the future too.
I did not use costco for the longest time. Why? Because I did not want to deal with cash and they only accepted 1 type of credit card that I did not have. Same with Sams. The stores did just fine without me. But even now that they do accept everything else I still do not shop there. Probably never will.
(Score: 3, Insightful) by tibman on Saturday September 29 2018, @10:04PM (1 child)
And whoever was with you would be embarrassed. Then you'd have to re-cart all that stuff again at another store. Then when your card was rejected again you'd do what?
Retailers should be able to decide what card fee they are willing to pay. Or they should be permitted to tack the fee onto your purchase. It's their business and there is a happy medium somewhere. Visa is bullying everyone because credit cards are a must have.
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(Score: 0) by Anonymous Coward on Sunday September 30 2018, @03:25PM
Not embarrassed at all. I would just leave again. Do you maybe see a pattern? I am not embarrassed at all. My family would do the same thing. Sure the store would get exactly the kind of customer it wants. Ones with the 'special cards' and 'cash'. The rest of us would just skip ever going back.