Good for Consumers, Bad for the Markets

Last week’s multi-billion dollar settlement with Visa and MasterCard will allow merchants to offer discounts to customers paying with cash and to impose fees on those paying with credit, as detailed in a recent New York Times article.

My take is that once consumers see how much they are paying to use their credit cards – in other words, how much those precious airline miles and other perks are really taking out of their wallet – the less appealing it will be to use plastic. So expect a slightly longer line at the local ATM, and more change jiggling in people’s pockets.