Credit Card Reform Act Could Let You Pay Less If You Use Cash Or Debit

A Wall Street Journal story highlights one potential amendment to credit card reform legislation, which could allow vendors to charge different prices depending on how you make your purchase. Under the Durbin-Bond amendment, if you pay with a credit card, you’ll also have to fork over the fee the business will have to pay for accepting your transaction that way. Pay by cash or debit card and you’d get a discount.

A business executive interviewed in the story says as things now stand, businesses are forced to pass credit card fees on to all customers.

As part of a sweeping bill to change the rules for credit cards, a pair of senators are pushing to lift constraints that Visa, MasterCard and other credit card networks impose on merchants’ ability to offer discounts for paying by cash or check.

Retailers have long chafed under the restrictions, which make it burdensome for them to make transparent to consumers the fees they pay to credit card companies. Those fees amount to tens of billions of dollars a year. The result, they complain, is that cash-paying customers unfairly end up sharing the cost of letting other customers buy on credit.

“Cash customers pay a penalty because we take credit cards,” said Jeff Miller, president of Miller Oil Co.

The Norfolk, Va., company, which runs 44 Miller’s Neighborhood Market stores in Virginia and Florida, says 60% of its transactions involve credit cards.

“It’s just a weird thing that a vendor like that can dictate to us how we’re allowed to sell our product,” Mr. Miller said.

What goes unaddressed is whether businesses that try a tiered pricing system will drive credit card users away rather than coaxing them into paying differently.

Paying With Cash Could Soon Pay Off [Wall Street Journal]
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