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Alright, so we've got this "settlement" between Visa, Mastercard, and businesses about swipe fees. Big deal, right? On the surface, it sounds like Main Street finally gets a break from the credit card oligarchy. Merchants can now choose which cards they accept and even tack on surcharges. But let's be real; this ain't David slaying Goliath. It's more like David politely asking Goliath to maybe, pretty please, trim his toenails.
The Devil's in the Details (As Always)
The headline is that Visa and Mastercard will lower swipe fees by 0.1 percentage point for five years. Oh, wow. A tenth of a percent. That's like finding a nickel in your couch and declaring yourself financially independent. And merchants can add a surcharge of up to 3% for credit card use? Great. So now I get to pay extra for the "convenience" of using my rewards card? Thanks, guys.
The National Retail Federation calls the proposed settlement "all window dressing and no substance." You know what? I actually agree with the NRF for once. And that's saying something.
Experts are saying retailers probably won't reject rewards cards because they don't want to alienate customers. Of course not! Because everyone is addicted to those sweet, sweet airline miles. It's like offering a crackhead a hit and then expecting him to say, "Nah, I'm good."
Here's the thing: about 85% of credit cards issued today are rewards cards. And where do you think the money for those rewards comes from? Interchange fees, baby! About 86% of those fees go straight to funding those rewards programs. So, if the fees go down, what happens to the rewards? They shrink. They vanish. They become as useful as a screen door on a submarine. As What the Visa, Mastercard legal settlement means for your rewards credit card - CNBC reports, the settlement has many implications for rewards credit cards.
The Real Losers (Spoiler Alert: It's You)
So, merchants might save a few bucks (maybe), but consumers are definitely going to get screwed. Either we pay extra at the register, or we see our rewards programs gutted. Or both!
And let's not forget the banks. They're reportedly upset with the settlement because it gives merchants more leverage. Cry me a river. These are the same banks that charge us exorbitant interest rates and fees for everything else. The same banks that needed a bailout in '08. The same banks that are currently raking in record profits. Are we really supposed to feel sorry for them?
Speaking of feeling sorry for people...I'm reminded of that time my landlord tried to raise my rent by 20% because "the market" and "supply chain issues." I told him where he could stick his "market." He didn't appreciate it.
This whole thing just feels like a carefully orchestrated Kabuki dance designed to make us think someone is actually fighting for us. They expect us to believe this nonsense, and honestly...
The settlement still needs court approval and is months away from implementation. More time for the lawyers to rake in billable hours, I guess.
The whole "honor all cards" policy is going away, finally. But what does it really mean? Are we going to walk into a store and see signs that say, "We don't take your fancy platinum card here, peasant"? Probably not. But we might see some sneaky surcharges pop up. Or maybe the stores will just raise prices across the board to cover the costs. Who knows? Who even cares anymore?