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Comment by SkiFire13 | Hacker News Reader

Most of your cash back money actually comes from fees that merchants pay. In the US and especially for credit cards with cash back those fees can be quite high, and unfortunately it's illegal for merchants to discriminate against credit cards with high fees.

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This used to be true. But the 2025 Interchange Fee Settlement abolished the “Honor All Cards” regime. Perhaps, I know it’s crazy, but… perhaps segmenting the market into extremely high-spending customers, normal pay-every-month-relatively-low-fees, and no-frills, was a smart move by the big issuers? My sense is that alienating big spenders (whose interchange fees tend to be in the 4% range) is just not worth it?

All I can say for sure is no store I’ve ever encountered has operationalized the newfound ability to differentially reject some cards yet. I am starting to see grittier establishments offer 5% cash discounts more frequently than they used to, and I’m always happy to pay cash when they do.

But when there’s no discount, why would I forgo better accounting and 3-5% back in points?

Costco in the US has, for as long as I’ve shopped there, only accepted visa or debit.

I'm pretty sure this is because they negotiated a very good rate with Visa in exchange for being exclusive.

That’s only fairly recently at my Costco. For years and years it was only American Express and debit.

Interesting. In Canada they only accept Mastercard in store.

This is orthogonal to the Interchange Fee Settlement.

The settlement allows stores to decline different *classes* of Visa cards. It was always possible to accept Visa but not MasterCard, etc. What was not previously possible was to query, before the transaction “what will the fees be” and reject cardholders presenting high-fee cards from a network you have a relationship with.

That is now allowed, by consent decree. But so far no one is doing it.

> it's illegal for merchants to discriminate against credit cards with high fees

Do you have a source for this? Often times merchants don't accept American Express because it charges higher fees [1].

[1] https://www.bankrate.com/credit-cards/business/why-american-...

Those rules are about discriminating against various cards from the same brand. They have also been significantly limited in many jurisdictions by now.

It isn't illegal but it is against most credit card companies merchant agreements. But I do rarely see it like in some vending machines.

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