The NY Times discusses the problems caused by rewards earning credit/debit cards for merchants and consumers alike. Visa, and to a lesser extent Mastercard, come off looking like health insurance companies. Entities who don’t add significant value to the economy, but manage to skim huge profits and act as a burden anyway. One solution:
Life might be simpler and more efficient if retailers could levy a surcharge that covers their costs to accept cards and let consumers figure out whether to pay it. But the card companies donâ€™t allow that, and Congress hasnâ€™t yet forced their hand, though this is now how things work in Australia (where some retailers charge excessive fees, alas).
And from a few days earlier, here is the Times talking about why the fees are so high.
The banks have used interchange fees as a growing profit center and to pay for cardholder perks like rewards programs. Interchange revenue has increased to $45 billion today, from $20 billion in 2002, driven in part by the surge in debit card use.