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The reason why some places don't accept AMEX is because their transaction fees are higher. I haven't paid a cent in interest in probably over a decade but AMEX incentivizes me to use my card for everything with rewards and make money off the fees.

This isn't necessarily true anymore. AMEX has lowered rates over the last few years, and also only charges one rate for all of their cards (from no annual fee up to Platinum & Centurion cards). Visa on the other hand charges different fees depending on the tier of card (Platinum, Signature, Infinite), with the higher tier fees being higher than AMEX IIRC. In fact, some retailers (Hello, Kroger) have gone to bat with Visa over the high fees and stopped accepting their cards (even if temporarily) recently.

It's also the reason why credit card benefits are worse in Europe, as I believe there are restrictions on what the card companies can charge for transaction fees.

Here's a typical case:


In this example the fees capped were for outsiders who are buying things in the EEA. e.g. an American buying something from an Italian vineyard or an Australian buying some authentic British tableware (for now).

The EU also forbids hidden fees for most types of transaction. It wants the advertised price to match the price paid by consumers‡. If I have 25 EUR in my pocket and you advertise a product for 25 EUR I should be able to get that product. Whereas in the US if you see a product advertised for $25 you know they'll want maybe $30 or more as they add fees, taxes and charges on top of the supposed price. As a consequence this means the fee for a card ends up built in to most online prices in Europe, even if you actually transact in some other way that reduces or eliminates the fee for the seller. So ensuring the fee is low makes good sense here too.

‡ British supermarkets (used to?) use a trick to reduce taxes here - they charge you a fee for their backend card processing, but they subtract that fee from your checkout price. The cost to you doesn't change, and you'd never notice unless you read the small print, but they've successfully argued that this service fee should be taxed differently than your purchases, saving them money. Since it doesn't affect the headline price versus price paid the EU doesn't care.

How would the supermarket save money by charging a separate service fee? Many of the items sold in supermarkets (e.g. bread and milk) aren't subject to VAT, whereas (almost) all services attract VAT at 20%

I'm guessing it has something to do with claiming the VAT on processing fees as input tax: https://www.gov.uk/guidance/vat-guide-notice-700#section4

That's not true. The restrictions only came into force a few years ago. The benefits were never there (or at least much shittier - some banks even charge for credit cards!) in the first place.

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