Comment by abdullahkhalids
4 years ago
The reforms needed everywhere in the world:
1. Fees related to mode of transaction (credit, debit, cash) are separate from price of product.
2. Cash-backs need to be banned altogether to prevent this pseudo-regressive tax.
FedNow instant payments go live this year. This will allow bifurcation: if you need immediate settlement for commerce, you’ll be able to get it for a few cents per transaction. If you want to charge the customer who wants credit card float, you can pass along a credit card surcharge and let them pay for the feature. This should shrink this vacuum of value from those of less means to those with the means to efficiently use rewards cards.
Due to US politics and the financial services lobby, it’s unlikely we’ll see interchange caps like Europe enacted, killing most rewards programs, so you’ll have to rely on merchant economics to drive the change.