I would be remiss not to mention the recent lawsuit - October 4, 2010 - launched by the US Justice Department against the three renowned credit card companies, American Express, Visa and MasterCard, for anticompetitive practices.
At issue is the merchant rules and regulations signed when a business owner is approved for a merchant account to accept any one of these credit cards. Simply put, merchant account rules typically deny the merchant the ability to steer customers to alternative, less costly forms of payment at the point of sale - such as cash, check or a less costly card - by offering incentives, discounts or special treatment.
VISA and MasterCard have already settled the suit (dang that's quick!), but American Express is standing firm - if the merchant does not wish to abide by the companys rules and regulations for card acceptance - than they should simply choose not to accept the card. Fascinating.
So the brouhaha about monies made by the issuing banks (paid by the merchant) through interchange fees finds its way to the courts in a backhanded sort of way. Remember the credit card companies themselves receive an assessment fee per transaction - not interchange fees.
I wonder though - how will the merchant overcome several decades of consumer behavior?
Can merchants really tell us what to carry in our wallets? Will the prices of goods and services really come down? Will we carry cash for a 5% discount? Can sales clerks be trained to identify a rewards card (higher interchange fee) or a no frills cards, johnny on the spot?
Remember the credit card prank, which was not so much a joke on credit card companies, but unsuspecting merchants, and clearly, poorly trained staff. Today's emphasis on security and specifically PCI DSS has done a lot to change lackadaisical behavior by employees at the retail point of sale and elsewhere....but can we really expect our lowest paid staff to be the credit card police?
Will each new crackdown on the credit card companies serve to benefit or hurt the consumer in a purchasing world markedly tipped towards the power of plastic?
What do you carry in your wallet?