My regular readers know that I am the father of the modern credit card. On this 50th anniversary of MasterCard there will be a book out on the history and my role in it.
The issue comes up because a legal case on the issue of credit card merchant fees went before the U.S. Supreme Court last week.
The issue is irrelevant from the perspective of the credit card business. Back when we started in 1967 all the merchant agreements banned discounts or surcharges for a ten year period. We borrowed the language from the existing charge cards. The issue for us was to make sure that merchants did not penalize credit card usage during the roll-out period when credit cards were hardly used and not understood.
After ten years, the multi-purpose bank issued credit card was widely understood and widely used. The legal restriction was no longer relevant. However, the card issuing companies went to the trouble to write state laws banning discounts and surcharges. I was long gone from that business.
It is rather stupid for a merchant to discourage credit card usage in order to save $.25 on each sale, the usual minimum fee for a card usage. I did plenty of retail surveys which were often used to sell merchants on the value of the card. The results showed that people who used a credit card bought an average of 10% more merchandise.
Today, only fools and Chinese small grocers try to discourage credit card use. The issue disappeared a long time ago.