Why pricey credit cards may soon cost more

Your cost of doing business is about to change as merchant rules for credit card surcharging loosen up. A major legal settlement involving Visa and Mastercard is paving the way for retailers to pass high swipe fees directly to the customers who use premium rewards cards. Historically, merchants had to treat all credit cards the same. Now, you may soon have the right to charge extra for those expensive ‘Infinite’ or ‘World Elite’ cards that eat into your margins. For most retailers, this means a shift in how you price your products and how you talk to customers at the point of sale. While surcharging can protect your bottom line, it also risks frustrating your most affluent customers who expect a seamless experience. This shift makes alternative financing options like Buy Now, Pay Later (BNPL) or private-label store cards even more attractive. These alternatives often come with fixed costs that are easier to manage than the fluctuating fees associated with high-end premium credit cards. We expect to see a rise in 'dual pricing' models where cash or low-cost debit users get one price, while premium cardholders pay a premium. If you operate in a high-ticket industry like home improvement or automotive, now is the time to audit your processing statements. Identify how much of your revenue is being diverted to reward programs for banks. You may want to steer customers toward lower-cost financing alternatives before these surcharging rules go into full effect.

Source: Payments Dive

← Return to the library· Submit a correction