Merchant costs for credit card transactions

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Merchant costs for credit card transactions

Postby RichA » Wed Aug 25, 2010 8:22 am

People should be aware that using high-end cards (VISA Signature Preferred) or other rewards cards costs merchants considerably more. While a classic non-rewards credit card might cost them 2%, a high-end, or corporate card might be costing them as much as 4.5%. Of course ultimately, the cost is filtered down to the consumer at some point.

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Postby jeffysdad » Wed Aug 25, 2010 4:12 pm

That isn't necessarily/completely true.

The cost of interchange fees to merchants is around 2% for premium cards, and it varies by merchant type, volume of business done by merchant, card, size of transaction, etc.

My understanding of the recent credit card legislation is that merchants will now be allowed to impose a surcharge on cc transactions if they wish. Good luck with that; I won't be buying from anyone that does that.

This GAO paper makes some good points for both sides, much better than I could.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.

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Postby Mogul of Pineapples » Fri Aug 27, 2010 6:45 pm

I don't believe the cost is necessarily filtered down as RichA says. Businesses do much higher volume thanks to credit cards. Research has constantly shown that people spend more when paying with credit over cash. That is something you have to consider.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

Current Cards:
American Express: Blue Cash, Simply Cash Bank of America: WorldPoints Platinum Plus Chase: Amazon, British Airways, Cash Plus Rewards, Freedom, Ink Cash Citi: Thank You Premier, Dividend Platinum Select Discover: More
Primary Everyday Card: American Express Blue Cash
Primary Travel Card: Chase Sapphire Preferred

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