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Big Retailers Want to Start Rejecting High-End Credit Cards

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There’s some potentially bad news on the horizon for frequent flyers who carry high-end rewards cards like the Chase Sapphire Reserve.

Big-time retailers like Amazon, Target and Home Depot are moving to be able to reject certain cards in their stores and online, according to the Wall Street Journal. They want to outlaw some premium credit cards while otherwise accepting other Visas, Mastercards and more.

Their issue? Credit card processing fees. Retailers pay banks a certain percent every time you swipe your card or insert the chip on a purchase. However, it’s not a fixed rate. The general rule of thumb? The more generous your rewards, the higher that fee on retailers is.

So it’s become a sore spot for retailers as the prevalence of rewards cards has grown. And they want out. Stores sign an agreement to accept all of a bank’s credit card products in order to allow credit card payments.

However, these big box stores apparently plan to reject a recent $6.2 billion settlement with Visa, Mastercard and other banks surrounding those fees as they push to pick-and-choose which specific cards they can accept. Which cards could be on the chopping block is, of course, unclear. It’d be up to individual retailers to decide if their plan pans out.

Some of the most valuable rewards cards would be easy targets. That means Amazon, Target, and others could stop accepting the Chase Sapphire Reserve, Platinum Card from American Express, Citi Prestige and other top-of-the-line cards.

These are the cards that offer a suite of major travel perks – perks that the processing fees help pay for. And who knows, retailers may even balk at the fees on wallet mainstays like the Chase Sapphire Preferred Card, though we doubt that.


Our Analysis

Don’t be alarmed. It’s too early to declare defeat and put those high-end credit cards in your drawer. Banks and retailers play hardball when it comes to negotiations like this. There are literally billions of dollars on the line: Visa and MasterCard collected $43.4 billion in these fees last year.

One possibility is that the retailers’ posture could force credit card companies to lower the fees across the board. Visa and MasterCard won’t want to lose out on the sizable fee revenue they get from premium cards

American Express is clearly very sensitive to this. The credit card company’s high fees are the sole reason why it’s harder to pay with your Amex than other cards. And that’s why American Express decided this earlier year to slash its fees to a 20-year low, according to The Points Guy.


Bottom Line

This could be bad news for premium travel rewards cardholders, but it’s too early to panic. Consumers, credit card companies and retailers all likely lose if big-time cards are no longer accepted.


Lead Photo Credit of Target

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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