Merchants Balk at Higher Fees for Credit Cards

By Gwendolyn Bounds and Robin Sidel, The Wall Street Journal

The letter that arrived in late February at 30 Minute Photos Etc. was so nondescript that co-owner Carl Berman nearly tossed it in the trash. But then he read the fine print that infuriated him: As of April 1, merchants like 30 Minute Photos would pay a higher fee when customers used one of several premium Visa and MasterCard credit cards issued by the country?s biggest banks.

Merchants swallow the per transaction “interchange” fees they fork over when customers pay by plastic because they chalk it up to the price of doing business in a credit-card world. But now they are incurring increasingly higher fees for certain trendy cards that give affluent consumers an array of perks ? from an early chance to score hot concert tickets to snagging reservations at a popular restaurant.

As a result, a backlash is brewing among small-business owners who say they are hurt by the fee creep more than bigger merchants. To fight back, the owners of 30 Minute Photos, for instance, e-mailed a letter to 25,000 customers on March 31, asking them to contact their charge-card providers to justify the fee increase. “This is another one of those opportunities for credit-card companies to enhance their revenue stream on the backs of merchants,” said Mitchell Goldstone, co-owner of the Irvine, Calif.-based photo-developing retailer that also operates a national online photo service.

For this complete story, please visit Merchants Balk at Higher Fees for Credit Cards.