SoylentNews is people
SoylentNews
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: 3, Interesting) by TheRaven on Sunday September 30 2018, @11:23AM (1 child)
sudo mod me up
(Score: 2) by martyb on Sunday September 30 2018, @12:50PM
Thanks for that. There's also that, for small shops, cash could find it's way to the owner's pocket without being reported as income, thus resulting in a lower tax. Entirely illegal, but I'd be a fool to assume that THAT never happens! OTOH, in large department stores with, say, 50 or so registers, there's a huge desire to keep the sales staff from pocketing a $20.00 here and there. If there were no controls, word would get out and there would be such rampant theft that controls would soon be instituted. So, that means much more overhead (labor == money) to record all transactions, tally the actual amounts received from each register, who worked on each register and when, reconciling shortfalls, never mind the cost of actually having the cash deposit picked up. And, further, if someone shows up with a $100.00 bill and buys a $25.31 item, they'd kind of like it if they would get change back. So that means receiving an assortment of bills and coins from the bank to keep on-hand for replenishment of each register's cash-on-hand... said cash just sitting there and not earning interest. (back of the napkin calculation... 50 registers @ $300.00 each... that's $15,000 just sitting idle in each store. During the holiday season, more registers are often put out, so that number could be even larger. Time for me to get going, but thanks for the opportunity to expound a bit on the topic!
Wit is intellect, dancing.