Well merchants certainly think so. Have you ever heard of something called a interchange fee. It the hidden fee that's paid by a merchant's bank to the customer's bank during a credit card transaction. It typically runs about 2% or $2 for every $100 that is spent. These fees are additional monies collected by credit card companies and in 2008 over $48 billion was collected in interchange fees.
How does this affect you? Well it could drive overall cost of good as retailers look to cover these lost costs in a very competitive, slim profit industry. The Department of Justice has filed a lawsuit that charged Visa, MasterCard and American Express with engaging in anti-competitive practices. At issue are rules that prohibit retailers from offering consumers discounts or rewards for using less-expensive forms of payment, like cash or debit cards. Visa and MasterCard agreed to a proposed settlement, American Express declined to settle. This could be good news for consumers, and eventually lower prices. I always thought that credit cards charged a flat fee per transaction, not a percentage. Let's hope that this change is for the better and doesn't just turn into a another reason to increase interest rates.
Where you aware of the interchange fee? When you shop do you prefer cash or credit?