Before there was the class action, the US Justice Department sued. Visa and MasterCard settled.[1] The settlement required those companies to allow merchants to "steer" customers to less expensive cards with with discounts and incentives. Not that this agreement didn't override state laws which prohibit that practice. AMEX choose to go to trial, lost, and the case is currently on appeal at the Second Circuit (the judgment stayed).[2]

The class action lawsuit was settled in principle back in 2012 and approved by the district court in 2013, but was thrown out recently by the Second Circuit.[3] It would have been the largest class action settlement in history, but many large merchants objected to being bound by a settlement that they had no part in negotiating.

[1] http://www.lexology.com/library/detail.aspx?g=a2722e0c-e0a6-...

[2] http://www.reuters.com/article/us-american-express-antitrust...

[3]http://www.wsj.com/articles/visa-mastercard-class-action-set...

I believe either VISA or MasterCard - likely both - have rules against charging any additional fees when paying with their cards as a merchant, with the implicit threat of them pulling their services and leaving you unable to process cards if you don't follow said rules.

The typical workaround, which isn't against their rules, is to offer a discount for paying in cash - I can't recall the last gas station I saw that didn't do this (for gas at least), and a number of restaurants also offer cash discounts.

The reason for offering a discount for paying in cash is probably that most clients would get angry if merchants tried to charge them more for using a credit card while they are always happy when they get a discount for paying in cash. I think the credit card processors are smart enough to realise that this is happening, so if they wanted & could do anything about it, they would probably write their terms differently (cca. "prices for payments in cash and with cards must be equal").

In the UK, a majority of bars and corner shops will have a 50p charge for card use below a certain threshold or even refuse to take payment.

In the past I've just offered hesitant merchants 50 cents extra. Probably only works when the merchant also owns the business though.

They do, but they shouldn't. Both MasterCard and VISA explicitly prohibit this practice in their terms.

Plenty of places demand a minimum payment for credit card transactions, with an additional fee in lieu of that.

If they do, they aren't enforcing it at all in new Zealand, where a 2% surchage for credit cards is fast becoming the norm.

Cash can often be used to fiddle the accounts too ... which also leads to a cash preference for some.

That used to be the case, but as stated by the above poster, it is no longer the case due to a lawsuit a few years ago.

>US merchants rights to charge consumers higher prices or fees for using rewards cards was confirmed.

This is illegal in ten states: http://www.creditcards.com/credit-card-news/credit-card-conv...