rewards credit cards

Consumers love rewards point programs, with millions of cardholders switching over to the best rewards credit card they can find - and in today's saturated market, there are plenty of options. But although consumers welcome the freebies they receive by using these cards, merchants are anything but satisfied with the steep prices they're charged to process premium credit cards.

While regular cards like the average MasterCard or Visa charge anywhere from 1.5 to 3 percent of the purchase price as a transaction fee, the new premium cards can charge much more - sometimes as high as 5 percent, according to MontrealGazette.com. As a result, merchants are forced to absorb these fees themselves, pass them on to consumers, or risk losing customers by refusing to accept certain credit cards, such as American Express.

Merchants' dissatisfaction with the gradual increase in fees is more than just empty complaining, says Robert Shapiro of Georgetown University. The professor collected extensive data on credit card processing fees between 2004 and 2008, reports DailyComet.com, and found that the dues paid by merchants nearly doubled during this period: from $26 billion to $48 billion. As a result of merchants passing these fees onto their customers, Shapiro says, the average American pays an additional $230 each year even if they never use a credit card.

In contrast to the high percentages paid as swipe fees on premium credit cards, debit cards cost merchants only a fixed rate fee, though that rate is up for debate as well. Increasing demand for national legislation would limit the amount that can be charged as credit card processing fees. Until such laws are passed, however, merchants will continue to wince every time a customer pulls out one of the popular airline credit cards to pay their tab.