http://www.nytimes.com/2009/11/25/your-money/credit-and-debit-cards/25card.html

Headline: “In Australia, Curbs on Credit Card Fees Backfired”

Actual message of story: curbs on credit card fees led to retailers transparently passing along to customers the actual additional costs of credit-card transactions.

Currently the costs of using a credit card rather than a debit card or cash are completely hidden from the customer. Everyone pays the same price even though CC customers cost the merchant more. So, cash & debit customers pay more than they really should in order to subsidize credit customers. That is the current system and it is perverse and bad for consumers.

The change to credit card fees being tacked on on top of the basic cost is a much fairer system. Don’t want to pay them? Pay cash or use a debit card.

Unless transaction costs are visible to the customer there is little pressure to reduce them. The fact is using a credit card is more expensive than using a debit card and yet the customer, the only one with the ability to choose how to pay, has that fact hidden from them.

Of course the credit card companies are screaming bloody murder over this. When you’ve had decades of slicing off fat transaction fees you’re going to do anything you can to keep them hidden.