Credit Card Transactions -- Could They Be Free?

If you had told me a decade ago that I could pay $40 a month for all the phone calls I could make coast to coast, I wouldn't have believed it. I used to routinely have $250 phone bills. But now, as a reporter who frequently needs to call all over the country, I am a prime beneficiary of the new all-you-can-eat calling plans.

What if credit cards could work the same way for small businesses--a flat fee per month for all you can charge? In a thought-provoking article on the retail-tech/e-commerce site Storefront Backtalk, Focus Brands vice president of information technology Todd Michaud opines that there could be. The credit-transaction business, he argues, is ripe for a disruptive new model that would radically lower costs for merchants.

As I'm sure I don't have to tell anyone regular readers of the Daily Dose, credit-card transaction fees are the bane of every retailer's existence. Customers are always coming in to buy a $.95 pack of gum, and wanting to charge it. And the fee erases all the profit in the transaction, and more. It'd be sweet if card fees became more affordable.

How could it be done? Michaud suggests finding sponsors and basically turning card transactions into a marketing opportunity that would cover the costs, rather than retailers having to pay a fee. Card providers could sell ad space on charge receipts, or banner ads on card-signing pads. Merchants could agree to sell their data to sponsors in exchange for discounted rates.

Is the credit-card space ripe for a disruptive new model that could help take the fee burden off retailers? Or is it just a pipe dream? Comment and let us know what you think.

Personally, I smell a great business opportunity for someone with banking experience who could bring all the parties together to create a new model.