Are Travel Loyalty Programs at Risk? by [[Elaine Glusac]] 2024-03-28

Visa and Mastercard Agree to Cap Swipe Fees in Settlement by [[Tara Siegel Bernard]]

During the coronavirus pandemic, many vendors facing inflation began to pass along the 3% (or more) credit card processing fees to their customers. Previously many credit card companies would penalize vendors for doing this (and possibly cut them off). This fee was considered "the cost of doing business".

Some vendors prior to the pandemic would provide cash discounts on large orders because they could circumvent these fees.

Does this affect (harm) inflation? Is it a form of Gresham's law at play here? What effect does this have on credit card companies? Are they so integral to the system that it doesn't affect them, but instead the customers using their legal tender?

Baker, S. R., Farrokhnia, R. A., Meyer, S., Pagel, M., & Yannelis, C. (2020). How Does Household Spending Respond to an Epidemic? Consumption During the 2020 COVID-19 Pandemic (Working Paper No. 26949; Working Paper Series). National Bureau of Economic Research. https://doi.org/10.3386/w26949