mia

Square is an unprofitable niche player (less than 1% market share), not representative of the type of card processing contracts that large merchants would have.

Churnman

I suspect just a cash settlement from this latest attempt which will probably take years anyhow. I will boycott any business that actually tries to do what some say they want (if they actually win judgement after all appeals exhausted if any) and direct all my business to retailers who continue to accept all cc brands without pricing differences. I'll also influence all my clients, friends and family to do the same. I don't have to buy from AMZN, WMT and so forth. Could be a new opportunity for the smaller retailers to compete. Watch stock prices of the big box stores or 'too big for their own good' online retailers in coming years if this actually comes to fruition. Customers are king.

tmiw

Interchange plus pricing does exist but requires merchants to ask/look for it, which some smaller ones might not know enough to do. Plus, depending on the business, it might not be less expensive than a flat rate for all cards. If interchange were to be cut, however, interchange plus might start making sense to more merchants.

Square uses Chase at the backend, which according to this is #3 in market share (of course, that doesn't imply anything about how much of Chase's market share is attributed to them). Also, I see Square being used often enough around here that I doubt it's only 1%.

Speaking of Chase, I remember an offer showing up in my account at one point for merchant services and the pricing mentioned definitely wasn't interchange plus. I can't seem to find the page now though.

Jose2011

Well said! Cash back/points/miles/etc. are a rebate that reduces the price of what we pay, so in my mind I always do a price comparison *after rebate*, and pick the best combination of merchant and payment method. Paying cash at a local small retailer may become competitive again indeed. I currently don't use any credit card that does not provide at least a 2% "rebate" and if those go away I don't have any problem in going back to using cash and checks for in-store purchases. However, online purchases may require a credit card due to the consumer protections compared to using a debit card, for example.

tmiw

You might not need a card to shop at Amazon: . Other stores will be more of a challenge, though.

Really, though, the main difference with debit (besides the fact that it's your own money that's temporarily gone) is that you only have 48 hours to keep your total possible liability at $50. However, this likely wouldn't even be an issue if PIN were required for all debit card transactions and 2FA was way more common at US online stores.

D582

"ChaseNet" is simply a fixed deal Chase made with Visa for VisaNet. All Visa transactions are processed through VisaNet one way or the other, and Visa still gets paid, one way or the other.

cbn42

I don't really consider Square to be a true payment processor, more of an overlay to a payment processor. The value in Square is that you can get set up without ordering or configuring any hardware. Just plug the reader into your phone and you're ready to accept credit cards. Most Square users are sellers who probably wouldn't have otherwise accepted credit, such as stalls at farmers' markets, girls selling girl scout cookies, etc. These folks are probably not too concerned with a 0.1% difference in profit margin. For legitimate businesses that have the money to invest in a card reader, there are much cheaper options.

I think it would be very difficult to measure that. We are talking about a fraction of a percentage reduction in processing charges. Retail prices are constantly fluctuating anyway, so how can you attribute a change to any particular factor?

Feel free to do that. I will continue to buy what is the best deal for myself, taking into account all factors including surcharges, discounts, and rewards points. If you want to pay a 5% higher price to support a merchant who accepts your chosen credit card, you will essentially subsidizing customers who are more diligent.

tmiw

I imagine merchants who participated in the linked study would be able to check their statements and give a reasonably accurate response.

Interestingly, there wasn't much of a change in the numbers of merchants who adopted surcharges/discounts/minimums after Durbin (table 2). Would many currently imposing card restrictions continue to do so if a credit interchange cap is imposed?

tmiw

Here's an interesting article about the whole merchant fee debate. In particular, it claims that most consumers (except for those who got the most CC rewards) came out ahead when Australia capped interchange:

It also seems to imply that since the courts found in AmEx's favor regarding its anti-steering rules, Visa/MC's "accept all cards" rule may end up being ruled as acceptable too. Assuming that Visa/MC's greater acceptance/use doesn't cause them to be ruled as anticompetitive, of course.

tmiw

Looks like interchange fees might be increasing later this year. We'll see if merchants react in kind.

To be honest, I expected way more to be charging them by now, but that might be due to inertia from decades of customers not paying any (for the most part).

mia

I do not think large merchants actually want to charge consumers for using cards, but they want the unambiguous right to charge as a negotiating tool with card processors.

tmiw

That only works if merchants follow through and actually start surcharging when fees get too high for them (and based on the ongoing lawsuits and other actions by them, we're close if not already there). If they don't do that, then that loses its effectiveness.

rasheed

I think the interchange fee increase in April (or later this year) will just encourage the large retailers to negotiate more special rate contracts. I think it is still possible to see some more merchants only support Visa or MC and not both if the deal is strong enough. I think Kroger might be the closest to actually trying this beyond their handful of no-Visa credit locations.

What matters most I think is what Square, Toast and other small business processors do on their fees. Will they absorb the increase or do they have the ability to negotiate something or will there be some upheaval in that part of the market?

Finally, there was an indication that the bank would get less revenue on the transaction. I think the best option there is to see more benefits cutting (especially on the insurance benefits) or more of the Chase/Visa or Citi/MC agreements where the bank is not as dependent on the changing interchange fees to get their revenue.

tmiw

I assumed that Square et al already had some sort of arrangement with the networks. Otherwise they would be making far less than they currently are (or they get way more debit card use than I thought).

As for Kroger I wouldn't be surprised if they extend the no Visa thing to their entire footprint. They might continue to allow acceptance through their new pay app in order to encourage use of it, knowing that they'll eventually transition users to using ACH or some other mechanism instead.

cbn42

I agree that mainstream merchants (Walmart, Safeway, Home Depot, etc.) will probably not charge consumers for using cards, but the discounters might. Aldi did not accept credit cards in its US stores until recently, and Winco never has. Those types of merchants might be interested in accepting cards if they can pass on the cost to consumers.

This is my concern too. The large merchants will either be able to absorb the costs or negotiate them down. Smaller companies will get hit hard.



There are more debit transactions in the US than credit, and merchants that use Square (small, mom-and-pop type places) are likely to have even more debit transactions than other places.

Kroger stopped accepting Visa credit cards in one part of one division, in a market where they have virtually zero market share. This policy impacts 21 stores serving all of northern and central California, which has a population of over 15 million. 21 stores is less than 1% of their total store base, so I'd be very surprised if they extended it to any more markets where they have actual market share to defend.

With that said, I live near a Foods Co and the new policy doesn't seem to have impacted anything, so it's possible that they will at least continue it.