Merchants pay Visa (or any credit card company) a fee based on a percent of the purchase. That fee is higher for a Signature card than a regular Visa. They are required by the agreements they sign with the card companies not to pass on this fee directly, so in effect, they make less money when people use a Signature Visa or an Amex (which charges the highest fees of all). This is also why banks want you to use your debit card as a credit card -- debit card merchant fees are very low, but once you make it a credit transaction instead of a PIN-based one, banks can charge merchants the higher interchange fee.

This article does a good job of explaining the conflict: http://archive.southcoasttoday.com/d...5/d06bu365.htm