Is Target, Amazon & Home Depot Trying To Devalue Your Rewards Earning Credit Cards?

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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

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  1. I just applied to set up a merchant account so my small business can accept cards. I had no idea that different cards cost different swipe fees until the application process, but what really surprised me was that co-branded rewards cards actually cost LESS than some other types of cards, with any business card costing the most!

  2. Well Target wants you to you use their Red Cards. Which is a rip off, especially their so called Debit Cards. I think most stores would love if you use their store cards.

    • How is 5% a “ripoff”?

      For a 5%-off-retailer card, that doesn’t require a hard pull, the debit card is amazing…

  3. Interesting post. I use my Target Redcard and my Amazon Chase card to get back 5% at those retailers – that’s a better return (for me) than using any of my other cards.

  4. I’m surprised you didn’t know cards have different swipe fees. I’m too lazy to dig charts back up, but yes swipe fees are very complex.

    A lot of people think amex is the highest swipe fees, but visa business and visa infinite are higher than amex (I forget the specifics, but wanting to say on average or as the highest absolute for several categories).

    Chase Sapphire is a visa infinite. That’s why it’s hated by retailers.

    Restaurants and hotels I’m fairly certain both are 2.5-3%+ for visa infinite, thinking back to last time I looked at a table.

    • Yeah I was not aware of that. I don’t think most people are unless they are a merchant or work in that arena. Very interesting stuff – thanks for sharing.

  5. It’s all a big hampster wheel. They might wanna reduce swipe fees but WHEN we end up back in a recession they’ll start to lose their leverage cause their just gonna want business in general. Add in that tariffs might occur and price of goods increase, banks will once again have a huge amount of leverage to control swipe fees. Idk I’m just freestyling I could be entirely wrong lol.


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