Why do some stores not accept certain credit cards but will accept others?
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First shot at ELI5 answers, go easy on me.
Credit cards when used do not charge the customers any fee because we are spending money. But merchants (the stores who receive money) get charged a percentage of the amount charged as a fee (called processing fee).
Card issuers (companies who issue credit cards – VISA, Mastercard, American Express) charge this fee because they know that the sale of the store will increase when credit cards are accepted because since introduction of credit cards most people prefer to earn rewards that you get while spending on credit cards (points, cashback, miles etc) which makes people want to spend more and also its much safer than carrying actual money.
This puts the card issuers at an advantageous position which allows them to charge a percentage of the transaction as fee from the merchants. Merchants know its a loss, but they hope to make up for this in the excess of sale they make from doing business with credit card users.
Some added info:
Most small-scale merchants only decline cards with high processing fees and are relatively used by a small percentage of people. That’s why typical mortar stores outside US usually ban Amex as they are usually high on processing fees. Big issuers like VISA and Mastercard are only declined at stores that are big and have a loyal fan base and know that customers will shop regardless of the type of cards they accept (Eg: Costco)
Hope this helps!
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