Credit cards assess a hidden tax called the Interchange Fee. It is the money withheld from the merchant by banks and credit card companies to pay for the privilege of using a credit card in the transaction. This tax also frequently falls on cash customers, because credit card contracts with merchants generally provide that merchants cannot reveal the tax with a surcharge for using a credit card. Merchants can offer cash discounts, but most do not, charging the same prices, and so cash customers subsidize credit card fees. This is VERY big business, due to oligopoly in the industry.
- Facts About Fees [More...]
- "Hidden credit card and debit card swipe fees inflate the cost of nearly everything consumers buy, even when they pay cash. Consumers pay hundreds of dollars every year in hidden fees just for the "right" to swipe their cards. That money -- about $50 billion every year -- goes directly to banks and credit card companies and is more than twice what was paid in credit card late fees and three times ATM fees."
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