Why? Because the US government does check processing.
That does not follow. In my country, our main payment system is handled by private banks and it's also cheaper than MasterCard/Visa (only 0.9%, with a maximum of 1.5€).
Sorry, I should have written "the US government does check processing free of charge". That makes a paper check purchase often have lower transaction cost than a credit or debit card purchase, at least to the merchant.
I'm not sure what the legal status of charging the customer a different price based on method of payment is in the US - for a long time, merchants couldn't charge different prices based on what the customer used to pay. But now occasionally you see the very oddly named "Courtesy Fee" for when you pay with a credit card.
It's not directly a legal issue: Prior to Dodd-Frank, most/all merchant agreements only allowed for a "cash discount". That is, when agreeing to accept Visa or MasterCard, a merchant had to also agree to accept cards for all transactions and charge the same price no matter the payment type, excepting an option of a lower price for cash (but not for checks or debit cards).
Dodd-Frank made such agreements illegal: All merchant agreements must now include an option for the merchant to refuse credit (but not debit) cards for purchases under $10.
the US government does check processing free of charge
Does it?
With passage of the Monetary Control Act of 1980, Congress required the Federal Reserve Banks to charge fees for payments services (including checks, automated clearinghouse transfers, wire transfers, coin and currency, settlement and safekeeping) that are priced to recover the Fed’s cost of providing those services (including direct and indirect costs, overhead, imputed taxes, and imputed returns to capital). The Act was designed to increase competition between the Fed and private sector service providers.
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Why? Because the US government does check processing.
That does not follow. In my country, our main payment system is handled by private banks and it's also cheaper than MasterCard/Visa (only 0.9%, with a maximum of 1.5€).
Sorry, I should have written "the US government does check processing free of charge". That makes a paper check purchase often have lower transaction cost than a credit or debit card purchase, at least to the merchant.
I'm not sure what the legal status of charging the customer a different price based on method of payment is in the US - for a long time, merchants couldn't charge different prices based on what the customer used to pay. But now occasionally you see the very oddly named "Courtesy Fee" for when you pay with a credit card.
It's not directly a legal issue: Prior to Dodd-Frank, most/all merchant agreements only allowed for a "cash discount". That is, when agreeing to accept Visa or MasterCard, a merchant had to also agree to accept cards for all transactions and charge the same price no matter the payment type, excepting an option of a lower price for cash (but not for checks or debit cards).
Dodd-Frank made such agreements illegal: All merchant agreements must now include an option for the merchant to refuse credit (but not debit) cards for purchases under $10.
Convenience fees are apparently a rat's nest of state laws, litigation settlements and issuer policies: http://www.cardfellow.com/blog/charging-customers-a-credit-c...
the US government does check processing free of charge
Does it?
With passage of the Monetary Control Act of 1980, Congress required the Federal Reserve Banks to charge fees for payments services (including checks, automated clearinghouse transfers, wire transfers, coin and currency, settlement and safekeeping) that are priced to recover the Fed’s cost of providing those services (including direct and indirect costs, overhead, imputed taxes, and imputed returns to capital). The Act was designed to increase competition between the Fed and private sector service providers.
Checks in the UK are quite cheap too - about 75p to write or receive for small business, often free for private accounts. The banks do the processing.