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Large Retailers Want To Refuse Rewards Earning Credit Cards
Imagine that you went to your local Target, or Targé as my mother calls it, and when you were checking out your card was declined. The bank didn’t decline it, Target said we don’t accept that kind of card. That is because you were using a Chase Sapphire Reserve card which is no longer allowed at their stores. That could be the case if Target, Amazon and Home Depot get their way. Retailers want to refuse rewards earning credit cards because they cost more in swipe fees.
Say What? Different Cards Charge Different Fees?
According to the Wall Street Journal (try going through their Facebook page or Twitter account if you don’t have a membership) that is exactly the case. The largest retailers are likely to opt out of the recent $6.2 Billion settlement reached with Visa, Mastercard and others over swipe fees. They want to flex their muscles.
What is news to me is that different cards charge different swipe fees. Under the current set up if for example you accept Visa you need to accept all Visa cards. Well some Visa cards come with 1% swipe fees while others come with 3%. Those 3% cards are the ones we love and cherish.
This is a big deal since WSJ reports that 92% of credit card purchases are done with rewards earning credit cards. Swipe fees accounted for $43.4 Billion in business for the credit card providers last year.
I think this is posturing by the merchants to get better rates or a flat rate across the board. Either way it probably means reduced earning rates for us on our favorite cards in the future. If the banks make less money on swipe fees then they will reduce rewards earning rates for the cards.
Another interesting fact brought up in the article is that different merchant categories pay different swipe fee rates. That could be why restaurants are a bonus category for many cards, they pay higher swipe fees.
Hat Tip to Reader Pauline
Miles to Memories has partnered with CardRatings for our coverage of credit card products. Miles to Memories and CardRatings may receive a commission from card issuers.