One common pet peeve of mine has always been merchants that either didn’t understand or simply refused to play by the acceptance rules for the credit cards they accepted. Back when I still used PayPal, I had retailers refuse my perfectly-valid MasterCard-logo-bearing debit card because it also had a PayPal logo – something they’re not allowed to do. Technically, they also aren’t supposed to charge extra for credit or debit transaction, even though those transactions cost them money. Well, they weren’t supposed to, but that just changed.
Yesterday as part of the final settlement of a 2005 court case, merchants got the ability to charge you extra to use plastic. The court case centered around anti-trust allegations, claiming that Mastercard, Visa and nine other companies conspired to fix the fees merchants pay to process credit card transactions. This sort of collusion is, of course, unlawful and no one can deny that it was hurting merchants everywhere to pay artificially high transaction fees – but now the burden is being shifted to the rest of us.
As part of the settlement, the wording in most credit card acceptance policies barring customer-facing surcharges has been removed and merchants are now explicitly allowed to charge their customers any amount up to the actual fee they’re paying to swipe their card. Despite bearing similar (although admittedly lower) fees, debit transactions aren’t covered by Monday’s ruling, so merchants still aren’t allowed to charge you any fees there. Also, since they weren’t named in the case, you still can’t be charged extra for using online payment processors like PayPal and Dwolla.
As a proponent of the online currency Bitcoin and a former Verifone employee, I’ve said for ages that cheap/free payment processing should be Bitcoin’s “killer app” but sadly it wasn’t likely since only the merchants really knew or cared much about these fees. With the burden of payment processing fees now potentially shifting to the customer, we may be looking at a completely different paradigm now. What do you think?