I just read this article about how Visa and MasterCard are trying to lock in a deal so that they would have the ability to reject certain credit cards. In turn, they would pay a lower fee to the credit card companies. It hasn't been approved yet and would have to go through the courts, but if it happens, it could be that reward cards will be targeted since the merchant fee is higher for those.
Unlocked article link is below.
Thanks for sharing. I wonder if the awards programs are doomed. Certainly for those of us who earn more points or miles through purchases than through flights this is a game changer.
I have to wonder if the smaller merchants could survive if they were picky about which cards to accept. I don't carry cash or even my debit card anymore, so if you want my business you'll need to accept my rewards card. If not, I'll move on to the next store.
I'm kind of with you on this one, Allan. I don't like it when merchants do this. I'd rather that they just raise their prices a little bit to make up for the credit card fees. That's what I would expect them to do.
The Perkins here in town is now making you pay more for your meal if you pay with a credit card. So, I've decided not to go there anymore and I let them know that. There are other and better restaurants in town that I'd rather go to anyway, so it was kind of a no-brainer. The only reason I went is because my grandkids like going. But they like the other places too, so they will survive. 😂
I do find it interesting that the U.S. seems to be traveling a bit backwards on this, while at the same time European merchants are moving more and more towards cards and no cash.
And Laurel, I agree, especially since most people who have reward credit cards are probably the ones spending the most money. Not accepting those would definitely cause a downturn in their business, I think. Of course, I don't know that for sure, but I think it's a reasonable assumption
The question really is....are merchants ready to lose sales because of this? Does a1/10th of 1% additional fee actually going to have merchants give up potential sales. (That's 10 cents on a $100 purchase.)
I use reward cards to gain points for free flights, free hotel rooms, and other travel benefits. If they go away, my travel will definitely change.
Thanks for explaining how those rewards are funded. I always wondered.
Mardee, I respect your opinion. But you could look at it the other way - with one price, people who pay cash are subsidizing the people who use cards. This was once required by the card issuers in the US, but no longer. There's been a discount for cash in some countries for a long time.
I was struck by the combination of the two statements:
"I'd rather that they just raise their prices a little bit to make up for the credit card fees."
"The Perkins here in town is now making you pay more for your meal if you pay with a credit card. So, I've decided not to go there anymore and I let them know that. "
I pay at local small places (restaurants and others) that have two prices, one for cash and one for paying with a card. It costs them more for the card so why shouldn't they pass that charge onto people who want to use one?
edit: I suppose it depends on how much business they do for each. If it's almost all credit card then a separate price for cash wouldn't seem to fit. And if it's almost all credit cards a separate fee to use a card smacks of gouging.
"people who pay cash are subsidizing the people who use cards"
Not sure about the US, but in many other countries cash is on the way out - for example, when I'm in my home country of Australia I almost never carry any cash at all. Ditto the UK. Australia actually allows merchants to apply a surcharge for card, but is abolishing this as of 2026 because virtually everyone pays with card, and we're all fed up with being charged extra. Accepting cash also has a cost in terms of security, staff time and bank charges. I'm certainly seeing more and more "Cash not accepted" signs around.
We ran into places in New Zealand that would not accept cash, and added a small fee, about 2% for those that used a credit card?!
A couple days ago we celebrated my husband's birthday at a midrange St. Paul restaurant. I believe the total was just under $100. They accessed about a 2% fee on credit card use. That bugged me a bit, because most will not have that amount in cash. Just add a bit more to the menu prices.
Simon, I agree, and that's the problem. Every other place in the world is going towards credit card usage, and yet the United States is going backwards. And I do think it's a backwards movement to mandate cash. Why would I want to use a dirty old bill when I can just use my phone to access credit? Am I willing to pay more for the privilege? No, because this has been a part of our economy for a long time.
And Jules, I think that's a problem too. The merchants are mandating this extra fee for credit card usage, but they're not letting customers know about it, at least not in a noticeable way. I didn't even realize it was happening at Perkins until the second time I was there and I looked at my bill and realized that there was an extra fee added on. So I asked them about it.
If you're going to do something like that, then promote it. Put a big sign in the window saying "If you want a 2% discount, then pay cash. If you want to pay more, use your credit card." Don't try and sneak it in, but that's what many are doing.
Mardee, agree, and some gas stations have been doing this for a while and making it quite clear that there is a cash discount (or credit card surcharge)
It costs them more for the card so why shouldn't they pass that charge onto people who want to use one?
Because it's 2025.
I think the credit card fees can be onerous for a small business. A friend who has a service business just gave up on taking credit cards as the fees and ancillary costs were too much. Hasn't hurt his business all that much and he is a lot less stressed.
Another local bakery has a cash price and a credit card price and that seems to work well for them.
I just returned from Japan and plenty of small businesses don't take credit cards, especially when you get out of Tokyo and the main tourist areas. Heck, even in Tokyo I found places that were cash only. There is a hefty cost for the convenience of cards that is not always obvious.
I have seen many restaurants that charge a tad more if a credit card is used. Sometimes I use the card and pay the higher amount, sometimes I pay with cash, and sometimes I go elsewhere. I do agree that the pricing difference should be transparent. Make the policy known--don't "hide" it on the bill.
"There is a hefty cost for the convenience of cards that is not always obvious"
Just like there's a cost to accepting cash. Big businesses pay for secure transit, small business pay for staff time and bank fees for cash deposits. Surely businesses can treat card charges like any other business cost and build it into their pricing and margin calculations?
Certainly in many countries you'd go out of business pretty quickly if you didn't take card (or in Asia, QR code payments systems like WeChatPay).
It's been said that the airlines make more money from credit card partnerships than ticket sales. Without rewards they'll lose credit card customers. How will they survive?
The US has always seemed to be behind the rest of the world when it comes to cards.
On the other hand, the US now has a penny shortage. Some places are now rounding up or down if you pay by cash. I was at Home Depot yesterday. They had a sign asking you to pay by card otherwise use exact change if paying by cash due to the penny shortage.
I'm not sure what I'd consider the status of banking/credit cards in the U.S. are relative to the rest of the world. When we traveled to New Zealand, the locals were making it sound like a WISE card was everything, and completely necessary. We couldn't see why we needed it and spent our 5 weeks using credit cards and a very small amount of cash. In the end, we determined that the WISE card would have cost us more to use than our credit cards. I was told by quite a few locals that no fee credit cards, and bank credit cards without foreign transaction fees were pretty nonexistent?
Our dentist used to give a 5% discount for cash/check, but they've discontinued that, so now I use our credit card with rewards.
It's been almost 40 years since I worked in banking, but back then cash took a lot of processing time for both the business and the bank. I know that time is shorter now because banks have money counting machines, but I would hope the customer would want to balance before they head to the bank with a deposit. I vividly remember one of the local grocers walking the two blocks to the bank daily with the deposit bag under his jacket looking scared to death, and hoping he didn't get robbed on the way (he didn't).
I'm not a fan of using currency.
