Retailers Aim To ‘Swipe’ Rewards Cards

The Wall Street Journal: “Consumers have become addicted to credit cards with generous rewards programs. Retailers are trying to cut them off. Large merchants including Amazon.com Inc., Target Corp. and Home Depot Inc. are pushing for the right to reject some rewards credit cards, which typically carry higher fees for merchants.”

“The retailers are trying to end the card networks’ ‘honor all cards’ rule, which requires merchants that accept Visa- or Mastercard-branded credit cards to take all of them. If merchants could pick and choose among Visa or Mastercard credit cards, those with the highest merchant fees—and most generous rewards—likely would be on the chopping block.”

“Some 92% of all U.S. credit-card purchase volume is currently charged on rewards credit cards, up from 86% in 2013 and 67% in 2008, according to estimates from Mercator Advisory Group Inc., a payments research and consulting firm. Yet merchants say the most generous rewards credit cards with the highest fees are cutting into their profits … ‘swipe’ fees vary widely, but are higher on rewards credit cards—sometimes around 3% of the cardholder’s purchase price.”

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