Interchange credit card fees higher in US

[Opti]

Found this article in the NY Times. I was unaware that the 2% or more interchange fees here in the US are much higher than in Europe.


www.nytimes.com/2023/03/04/opinion/credit-card-rewards-points-poor-interchange-fees.html


The United States now has some of the highest credit card processing costs in the world, typically at 2 percent to 2.25 percent of every purchase. This is eight to nine times as much as the prevailing swipe fee in the European Union. The vast majority of merchants pass these costs on to consumers by charging more for their products — regardless of how one pays.


Not exactly nothing. Credit card perks for educated, usually urban professionals are being subsidized by people who have less. In other words, when you book a hotel room or enjoy entry to an airport lounge at no cost, poor consumers are ultimately footing the bill.



Demand for rewards is only going up. In 2016, Chase launched its Sapphire Reserve card. The card comes with perks, bonuses and points multipliers that for big-spending travelers and diners are worth far more than its steep $550 annual fee. There was so much initial demand that Chase ran out of the metal slabs it prints the cards on. Sapphire’s enormous success set off a credit card perks war, with numerous banks flooding the market with sign-on bonuses worth thousands of dollars.



In 2022, the Federal Reserve published data showing that the cost of rewards, as a share of total transaction volume on credit cards, increased 25 percent from 2015 through 2021. This bonanza has helped affluent professionals flood Instagram with envy-inducing shots of white sand beaches, hotel suites and plush airport lounges.

[CCL]

How do they figure poor consumers are pay the costs for credit card fees? Noone forces them to use credit cards or even to make most purchases. In general, wealthier shoppers are likely to spend more money, so they would be paying more in total, anyway.

[haapai]

Mar 6, 2023 7:42:45 GMT -5 CCL said:

How do they figure poor consumers are pay the costs for credit card fees? Noone forces them to use credit cards or even to make most purchases. In general, wealthier shoppers are likely to spend more money, so they would be paying more in total, anyway.

Even if poor consumers pay for everything with cash, retailers have been raising prices to accommodate the interchange fees that are deducted from what they get when customers pay with plastic. 

Pay with plastic, get rewards.  Pay with cash, pay for someone else's rewards. 

You can try to justify it any way that you want to.  Humans are pretty good at that.