Would You Pay An Extra Fee to Use Your Credit Card?

Image this: you go into your favourite clothes retailer to purchase a $40 hoodie. If you get to the counter and pull out your bank card, the individual behind the counter says, “I’ll have to cost you an additional $2 if you happen to pay with that bank card.”

What do you do? Do you go forward and pay extra so you should utilize your bank card? Do you employ money as a substitute to keep away from the price? Do you even have sufficient money on you? Quickly you could be coping with this quandary.

The Battle Over Interchange Charges

One of many raging battles happening proper now between retailers and the bank card processors issues the interchange price — a price that the retailer should pay MasterCard or Visa or American Categorical or Uncover on each bank card transaction these corporations course of. This price is normally within the 1% to 3% vary. Up till now, you by no means noticed that price — the retailer had to contractually agree to pay it so as to settle for your bank card.

However that’s altering. By a collection of authorized and political skirmishes, retailers fought for and gained the suitable to add a surcharge to bank card prospects’ purchases — that means they’ll make you pay that interchange price if you happen to use your bank card.

Now What?

This leads to many questions:

1. What number of retailers will cross this price on to their prospects who use bank cards?

2. What number of shoppers preferring to use bank cards will agree to pay this price?

3. If shoppers gained’t pay the price, will they nonetheless make purchases via different means (equivalent to money) or will they keep away from shops that cost the additional charges and solely frequent these that don’t cost the price?

One startup within the processing discipline, LevelUp, is trying to offer processing with no transaction fees for retailers or consumers, but it surely’s not possible to know if they’ll make that work.

Would you pay an additional price to use your bank card?

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