Comment Re:Retailers pay your visa rewards (Score 1) 732
The fee that is charged to merchants is called a "discount fee" because it typically is the amount "discounted" from the batch deposits into the merchant's bank account.
You may see articles that refer to the fees as 1-3% or so. Some cards have higher fees than others, and often even different transactions can have different fees even on the same card. Rewards cards have the highest fees, so yes, it is taken pretty much directly from the merchants. Your airmiles or whatnot are being paid to you by the people from whom you shop.
And the agreements with Visa/MC/AmEx state that a merchant can't refuse one Visa (or MC or AmEx) and accept a different Visa (or MC or AmEx). By accepting credit cards, the merchant has agreed to take it in the backside when a customer uses a rewards card.
It's nice for the CC companies because, like you, no one seems to realize that the merchants pay for the rewards.