> a law allowing merchants to add any processing fees (perhaps above some nominal baseline cost) on to the bill

This!! So much. The status quo amounts to price manipulation that harms the market and is utter B.S.

Item 8 from http://donellameadows.org/archives/leverage-points-places-to...

Actually most states do permit credit card surcharges by the merchant. California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas are the ones that ban it. Some of those states have pending litigation against those laws. Some of them also allow discounts for paying cash (as if it's any different than a surcharge for processing)

There was a time from 2013 to 2017 that merchants were permitted by processing agreement to do it, but Visa and Mastercard convinced an appeals court to throw it out. A few places in my state still do surcharges, but it's pretty rare.

Thanks for the insight. I would like to see surcharges mandated for credit cards (but not for debit cards).

In practice, I don’t know of anyone offering 0.3% card processing fees. Most POS systems and online payment processors are more like ~2% e.g. Stripe is 1.4% + ~€0.30 to take online payments from within the EU. And chargebacks are passed on to the merchant with an additional fee tacked on.

Can you point me to any cheaper solutions?

I like the idea of having the processing fees displayed prominently on the receipt though (like VAT). If people had to actually pay more to use Amex (rather than the merchant absorbing the blow, or distributing the costs across their other customers), then they might quickly go out of business (and rightly so).

>In practice, I don’t know of anyone offering 0.3% card processing fees

Obviously. They need to pay 0.2%-0.3% to the issuer (ie. the bank that gives you your card), but VISA/MasterCard and the processor want their cut as well.

> Can you point me to any cheaper solutions?

At least in Germany there are quite some cheap POS solutions:

0.69% for Visa/MasterCard:

https://translate.google.de/translate?hl=de&sl=de&tl=en&u=ht...

0.98% for Visa/MasterCard:

https://translate.google.de/translate?hl=de&sl=de&tl=en&u=ht...

The actual problem here is that rewards programs and universally applied CC fees represent a transfer of wealth from those who use cash to those who use credit.

>What those high fees really come from is the need to cover the cost of all those rewards programs

You've swapped cause and effect here. It's the other way around.

High fees lead to rewards programs.

No, it is the way GP described it. Both transaction fees and reward programs are governed by the same entity: payment processing company. Reward programs were a trick to make people accept high transaction fees, because people fall for the illusion of "getting something in return". In practice, transaction fee is paid by everyone, but many people do not bother to claim their rewards, so it is a net win for payment processors. Also, even people who do claim their rewards usually do not do excesive calculaitons and do not realize that for 3% payment fee they get 0.5-1.5% worth of reward.

Last time I worked at a place that could swipe credit cards, we would get charged one fee for regular cards, and another, much higher fee if it was a rewards card.

(This was back when non-rewards cards were the regular variety, so I'm assuming things have changed since then.)

Solid point, thanks for the additional context.