Saturday, July 14, 2012

credit card surcharges and you

Underneath all the election year garbage, some news of actual import to everyone who uses credit cards or runs a business that accepts them. Via Kevin Drum, it appears that, thanks to a major anti-trust settlement against Visa and Mastercard, merchants are no longer barred by contract from passing along card companies' 2.5% swipe fee on to consumers.

Drum is mainly looking at the possible effects of this settlement from a wonky point of view, but what does it mean for the consumer? 2.5%, if added as a surcharge to every credit card purchase, swamps any savings gained by most rewards programs, as they all give in the neighborhood of 1% back. Will it still be worth it not to carry cash? Will this apply to debit cards as well? Will we find, as Drum suspects, that the swipe fees were too high in the first place, and now businesses will get a respite from the grift of a greedy oligopoly? Will this mean the end of rewards programs?

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