Stores and restaurants are appealing to Congress for relief from exorbitant credit card transaction fees, and they present a compelling argument. Despite our supposedly sophisticated financial system, the fees that US retailers pay to accept credit cards, which amount to 2% to 3% of each transaction, are the highest in the world. Last month, Senators from both parties introduced a bill to lower these fees. However, there is a catch. Stores and to-go restaurants must simplify their payment interfaces, which have become increasingly complex and difficult to navigate. If you’ve been to the United Kingdom or Europe in recent years, you would have witnessed how effortless and straightforward paying for goods and services can be. Whether you are purchasing a paperback book, a morning croissant, or a freshly slaughtered chicken at a farmers’ market, all you need to do is tap your card or phone against a small machine, hear a satisfying beep, and be on your way. This seamless process applies to high-end department stores and even amusement parks. (For larger transactions, Europeans may need to enter a debit-style code into the machine’s touchpad, but this is a predictable and uncomplicated process.) It takes mere seconds and requires no mental effort—time that can be better spent expressing gratitude to the cashier and bagging your purchase. In contrast, in America, you have no idea of the hurdles you will face when executing even the simplest transaction. Therefore, it is only fair that stores and restaurants request relief from high credit card transaction fees from Congress. This is despite the fact that billions of dollars have been invested by credit card companies, banks, and some retailers to make our system just as user-friendly as Europe’s. For instance, a decade after contactless microchipped cards became widespread in Europe, we finally have them in the United States. These cards, or phones enabled with the same technology, are faster and more secure than old-fashioned magnetic-stripe cards. However, rather than enjoying convenience, we are confronted with new and meaningless inconsistencies. Some merchants’ terminals require approval of the total purchase price, while others do not. Some terminals require this approval before tapping your card, while others require it afterward. Some terminals accept tap payments, while others require card insertion. Astonishingly, you may still be required to sign a touchscreen to complete your payment, despite the fact that Mastercard and Visa stopped requiring signatures five years ago. Signatures are now pointless in preventing identity theft, as the squiggly line you draw with your finger or a touchscreen pen looks the same as anyone else’s. The blame for these issues cannot be placed solely on credit card companies. Some merchants have not bothered to update their basic equipment, even though this negligence makes customers wait longer and discourages in-person shopping. One would think that the pandemic would have prompted merchants to address this issue, but in March 2020, you could still find yourself touching the same screen dozens of others had touched that morning, as people coughed and anxiously waited in line behind you. Some stores require you to input your phone number, while others ask for your email. Some even ask you to donate money for school supplies or sick cats. The most frustrating aspect is the tip screen. It seems that all coffee shops, bakeries, and gelato shops decided to make the payment process more difficult and time-consuming than it was in the days of old-fashioned magnetic cards. The problem lies not in the additional $2 you are forced to pay for two $5 croissants, but in the inconsistency and potential for error. Purchasing items in other countries tends to be a more straightforward experience compared to the United States. Some merchants start their tip options at 15%, while others start at 20%. Additionally, the top tip option varies between 18% and 30%. As a result, people have accidentally left hundreds of dollars as a tip due to the “custom” choice. Merchants are sending conflicting messages to customers. On the one hand, they expect customers to move quickly for the sake of the next person in line. On the other hand, they ask customers to pause and make a deliberate choice from a range of tip options. This predatory behavior is disliked by everyone. If a store wishes to pay their workers more, they should raise their prices and do so. Most customers would be willing to pay a slightly higher price for goods or services. Therefore, it may be appropriate for Congress to reduce credit card fees for merchants. However, in return, merchants should cease to stress, confuse, and deceive their customers. Let us tap our cards for our cannoli and be on our way. Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.
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