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Your favorite bodega cat just got a little grumpier.

In a battle against small businesses -- amid a larger war to create a cash-free society -- credit card giant Visa is cracking down on pesky surcharges sometimes attached to credit card purchases, according to a new Bloomberg report.

Big Sur-charge

Nearly a quarter of all US small businesses impose an extra fee on customers paying with plastic, according to a 2022 survey from payments consultancy Strawhecker Group -- a move that supposedly compensates for some processing costs that banks impose on electric credit card payments.

And while those interchange fees often amount to mere pennies per purchase, the costs are starting to add up for merchants. Last year, store owners paid a record $160 billion to process over $10 trillion in payments, a nearly 17% year-over-year spike, according to the Nilson Report. But Visa still thinks merchants have gotten too brazen: In April, it capped surcharges at 3%, down from 4%. Now, it's getting even tougher on shopkeepers to ensure compliance:

  • The company is dispatching in-person auditors to stores and restaurants to ensure its rules are being followed on surcharge fees.
  • The company also is levying increasingly steep fines on companies it finds violating its policies: the first strike gets a warning, strike two is a $5,000 fine, and strike three brings a $25,000 fine -- presumably all paid in cash to avoid interchange fees.

"We're just making sure that when consumers do get surcharged, it's something that's fair and equitable," CEO Ryan McInerney said on a recent conference call, Bloomberg reports.

Buy Now, Pay Now: Card surcharges may be a small obstacle compared to the new, looming asteroid headed straight for the payments landscape. Last week, the Federal Reserve launched FedNow, an instant-payments system that can move money into and out of checking accounts with potentially no fees. In countries where instant-payment systems have already been widely adopted by merchants, like the UK and Brazil, credit card usage has significantly decreased. With Americans holding a record of nearly $1 trillion in credit card debt, this might be a good change.