Findings:
Merchant steering, where retailers offer discounts for using specific payment methods, is not as common as expected.
Consumers are increasingly frustrated with surcharges and tip inflation, leading to changes in spending habits.
A recent court ruling rejected a $30 billion settlement between Mastercard, Visa, and retailers that would have allowed for greater merchant steering.
Key Takeaway:
Despite being allowed for over a decade, merchant steering with discounts remains rare, suggesting that it may not be as effective as anticipated in influencing consumer payment choices.
Trend:
Consumers are becoming more sensitive to additional costs like surcharges and excessive tipping, leading them to cut back on spending and seek out alternative merchants.
Consumers Addressed:
The report addresses credit card users who are increasingly frustrated with surcharges and tip inflation, as well as "choice financers" who prefer to use credit for essential purchases.
Conclusions:
While merchant steering was expected to be a widespread practice, it has not significantly impacted consumer behavior.
Surcharges and tip inflation are more pressing concerns for consumers, influencing their spending habits and driving them away from businesses that impose these additional costs.
Implications for Brands:
Businesses need to be mindful of the impact that surcharges and tip inflation have on consumer perception and spending.
Instead of relying solely on merchant steering, businesses should explore alternative strategies to manage payment processing costs and maintain customer satisfaction.
Implications for Society:
The increasing prevalence of surcharges and tip inflation may contribute to consumer dissatisfaction and economic hardship.
The rejection of the swipe fee settlement could lead to further legal battles and uncertainty in the payment processing industry.
Comments