Consumers have mixed feelings on differential pricing for cash and card purchases, and their views similarly are mixed on whether merchants might reduce product prices if caps are set on interchange rates, new research suggests.

New York-based management-consulting firm Auriemma Consulting Group Inc. conducted the research, surveying 408 credit card users online in July.

Some 38% of respondents approved of differential pricing, while 20% opposed the concept. About 42% of survey participants were neutral on the issue.

Many consumers believe they are not “getting the full story from either side of the interchange debate—the Merchants Payments Coalition and the Electronic Payments Coalition,” Scott Strumello, Auriemma associate, tells PaymentsSource.

“Consumers think they are getting mixed messages from both sides and do not know who to believe,” Strumello says. Each side is “presenting various facts, but the reality really lies in between the facts being presented.”

And while the facts presented “are not necessarily incorrect, they may not be the whole story,” he says.

Additionally, in the United States consumers “don’t really negotiate with merchants for most purchases,” Strumello says. However, for some consumers, paying for a purchase with cash to get the lower price may lead to substantial savings over time, he adds.

Aside from consumers’ reactions to differential pricing, the survey also asked respondents about interchange fees. About 41% of respondents noted they did not think merchants had to pay credit card companies a fee to process transactions. However, 59% of respondents said they thought merchants pay transaction fees to credit card companies, with 32% assuming the fee is between 1% and 2% of the sale, which is a relatively accurate answer, according to Auriemma.

“It’s not that surprising that many consumers do not know merchants have to pay a transaction fee,” Strumello says. “The fees are not explicitly itemized on receipts or invoices for consumers, so it makes sense they wouldn’t know about the fees.”

Of those respondents who knew about transaction fees, only 14% thought it was likely merchants would pass along savings to consumers by reducing prices if Congress passed a law that reduced or capped the amount of merchant fees. About 51% of respondents said they doubted they would benefit from a cap, while 35% were unsure what merchants would do.

Despite both sides of the debate looking for consumer allies, the way the law is written “it is up to the regulators to interpret the law and give guidance to the various parties involved. And right now, there are really no clear answers regarding interchange or differential pricing,” Strumello says.

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