MDJennings

So I did some research on this and found that Florida's courts struck it down sometime in 2015 as a violation of the first amendment. Apparently the AG is trying to get SCOTUS to take this case.

http://www.orlandosentinel.com/busin...706-story.html

EDIT: Looks like SCOTUS picked it up and it will be decided by the end of this current term ending in June.

http://www.reuters.com/article/us-us...-idUSKCN11Z1VO

tuphat

WSJ article. Lede below, remainder at link behind paywall.

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.

https://www.wsj.com/articles/shopper...hem-1537867801 via @WSJ

luv2ctheworld

Not entirely unexpected... in the past few years the credit card rewards game has become more popular and it's a natural reaction for the businesses trying to minimize their transaction cost.

As a beneficiary of these credit card rewards, I hope that this won't become reality, but I can sympathize with businesses saying enough is enough.

worldtravels

Interesting. Merchants can contract with any bank now and negotiate their credit card rates. Merchants agree to the rates and terms in advance.

littlewinglet

That's right, and we're to believe it's for our own good and will lead to lower prices. The transaction cost is already built into the price, so this is a pure money grab and a lie. I feel especially bad for Amazon. How will they ever make ends meet with such high interchange fees?

Often1

Anybody who thinks that those miles/points and other perks from a CC don't come without a cost is simply naive.

Under the current vendor agreements, the extra costs are spread over all card users and all sales. Effectively people with a plain CC which has no special features are subsidizing the higher-end cards.

That won't last. Whether it ends in this go around or over a few years is anyone's guess. But, the business model is not sustainable. It will be up to the card issuers to determine whether they will bear the additional costs for HVC's or simply abandon the concept of a reward card providing other than some minimal benefit.

ericdabbs

With the way people use CCs in the US, it is very competitive. If you drop benefits and make the card undesirable, people will drop you like a bad habit and find another card that will provide sufficient rewards. This of course will lead to less swipe fees.

To be honest, I think it just merchants trying to cheap out on not wanting to pay CC swipe fees. The merchant should be negotiating with Visa, MC, AXP, and Discover on lower swipe fees. Credit cards accessibility are a part of business especially if the merchant sells high value items.

dealhunter32

This makes sense... The credit card companies like to say the swipe fees are "only" 2% or 3%, but margins on groceries are often 10% or lower, which means the swipe fees are 20%, 30%, or even more of the profit.

NeGourmand

Just like when Dodd-frank capped debit fees. Those savings were clearly passed on to the customers 🤥

Klemhuzzah

This reminds me of buying gasoline. The station couldn't charge you extra for using a credit card, but they could give you a discount for paying in cash. I could see merchants saying this is the price, but you get a discount if you use a no frills credit card.

littlewinglet

I would say you're mostly right, but where would the Debit -> MO cycle be now without the cheap debit interchange fees? We may not have that option now.

With Debit, there's also the difference that banks effectively made interchange fees for giving out our own money to the merchant, straight from our bank account. At least with credit transaction they take on risk and provide some useful value that could justify the fees.

NeGourmand

Very true and valid points indeed. Legislator's unintended consequences I suppose.

tmiw

Sorry for resurrecting an old thread but it appears that the settlement mentioned in OP is back on. While the new settlement offers a bit more money than the previous one, some larger retailers are still opting out anyway.

Additionally, stuff like the "honor all cards" rule still hasn't been resolved with this settlement. That rule, if ultimately dropped, would likely do as much damage to the miles and points game as a EU-style interchange cap would (IMO, anyway).

akr1970akr

How would retailers practically administer a NON 'honor all cards' world anyways? Would merchants really be able to check each card before ringing up a sale to determine if its a valid payment channel? Would they really be happy with irate customers just leaving stuff at the cashier if declined and marching out in a huff?

I could see maybe a website telling people that cards stored on it are no longer eligible - no different than vendors saying 'no Amex' - but I don't think ordinary folks will get the nuances between all the Visa variants (nor should they....)

mikesyr18

The Supreme Court should keep it simple.

Problem 1:

Well, no, the card networks are a private entity. The 1st amendment protects you against government intrusion in free speech, and there's no anti-trust violation -- the networks charge what they want to charge, they don't consult with one another. Therefore, the merchants have no first amendment protections here, or an anti-trust lawsuit argument. You're bound by the terms of the contract you signed... Don't rely on the courts to fix your stupidity.

Maybe a bunch of workers from Target should stand in the middle of Walmart and advertise their business there so they can steal customers... Kinda the same thing merchants want to do. "Oh, use a Visa and we'll give you a free candy bar with your purchase." Well no, because you're putting AMEX , MasterCard, and Discover at a disadvantage now.

Problem 2:
Again, you agreed to the terms of the contract. Don't like it? Don't take cards. I bet the merchant would realize how much money they've lost when they stop accepting payment cards. The networks can charge what they want as it's a free market economy. For the longest time, AMEX charged higher swipe fees than Visa or MasterCard did. Today, card networks compete to be accepted at the highest number of merchants possible... If the free market wasn't working, the networks would charge merchants 20% of each purchase if they really wanted to. Instead, we have 2.5% to 3%, and even 0% at some merchants (like Costco).

The merchants will whine and whine until they can suck everyone else dry of their money but themselves... So in other words, they'll whine forever because they "have to" pay employee, benefits, and credit card fees. If credit card fees were ever eliminated, they'd move on to whining about how much health insurance benefits cost, and how employees need to make rock bottom wages.