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posted by chromas on Saturday September 29 2018, @12:40PM   Printer-friendly
from the BuT-mUh-FrEe-ReWaRdS! dept.

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.


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  • (Score: 3, Interesting) by Runaway1956 on Saturday September 29 2018, @07:30PM (4 children)

    by Runaway1956 (2926) Subscriber Badge on Saturday September 29 2018, @07:30PM (#741885) Journal

    I am almost certain that by 1990, it was universally illegal throughout the US to advertise a "cash price". It was common in the '60's and '70's. It was growing far less common in the '80's. At some point, it became illegal, and I'm pretty sure that point was before 1990.

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  • (Score: 0) by Anonymous Coward on Saturday September 29 2018, @07:53PM

    by Anonymous Coward on Saturday September 29 2018, @07:53PM (#741888)

    The advertised price was the credit card price and there was a stated discount for cash or credit. This was well into the '90s.

    Legally speaking, this is a matter of the merchant agreement and I don't think that change happened until later.

  • (Score: 1) by Blymie on Sunday September 30 2018, @04:44AM

    by Blymie (4020) on Sunday September 30 2018, @04:44AM (#742006)

    It never has been illegal to state a cash price.

    You're confusing civil (typically common law in most US states) with criminal law.

    What happens, is that the credit card company forces the merchant to *sign an agreement* to not charge a different price for card, versus cash. And further, to not advertise the rate. So when you see companies in "court" for doing so, they are in civil, not criminal court.

    If a merchant breaks that contract and charges different rates, that's not breaking the law, and the merchant did nothing illegal. It's breach of contract.

  • (Score: 0) by Anonymous Coward on Sunday September 30 2018, @12:24PM (1 child)

    by Anonymous Coward on Sunday September 30 2018, @12:24PM (#742061)

    In Australia it is illegal to display a non-GST price. The price displayed must be inclusive of GST. If you have ever shopped in America or the EU with VAT etc you'd understand why.

    • (Score: 2) by Pino P on Sunday September 30 2018, @04:57PM

      by Pino P (4721) on Sunday September 30 2018, @04:57PM (#742113) Journal

      In Australia it is illegal to display a non-GST price.

      In the Canadian province of British Columbia, it's the other way around: it is illegal to advertise a price including tax. I learned this from the FAQ of the Tarsnap online backup service.