Coming Soon: Pay to Pay!

Last week, the two payment processors and major banks agreed to pay at least $6 billion to settle a suit that alleged they conspired to fix the fees that retailers must pay them whenever customers pay with credit cards. These “interchange” or “swipe” fees are typically a portion of the amount that customers charge to their cards, thus reducing the amount that retailers ultimately pocket.

As part of the settlement, stores such as Kroger and Rite Aid for the first time will also be able to charge customers a fee for paying with a credit card.

The idea is to discourage customers from paying with credit cards, and instead pay with cash, so that retailers wouldn’t have to fork over any fees to the card-issuing banks.

This happened on Friday. And then American Banker asked a bunch of industry experts and analysts what the settlement means. A lot of them said a lot of things! But one of them said something that spoke to ME AND MY PERSONAL EXPERIENCE AND LIFE (e tu, maybe?).

Overall, surcharging is a bad idea for merchants. Surcharging can cause consumers to think twice about their purchase at the checkout counter, but there’s more to it than that. … Forcing consumers to use a given payment type makes them consider how much money is on-hand in cash, in a [checking] account, and available to pay for the purchase, a mindset that can reduce the amount of goods and services consumers will buy and lower the average ticket price of sales for merchants.

—That’s Madeline Aufseeser, senior analyst at Aite Group (great website), explaining that it’s bad for everyone, except, if you read between the lines, maybe for people who might have spent an amount of money with a credit card without thinking, but once forced to think about that same purchase in terms of dollars, will decide: Not worth it.

I asked myself, what do I think of this? And: I will happily (“happily,” okay, not happily—resignedly?) pay a surcharge to use my card instead of using cash. I never have cash, so the choice is really: Go to the ATM across the street and pay a fee to get cash, or stay here, don’t move and pay to swipe? I’ll stay, thanks. I would do this right now, FYI. Cash-only is terrible and also the worst. And bad, too.



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