system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: Why is that grocery stores do not charge for a service fee when paying with a credit card, but paying my college tuition with a credit card has about 3% service fee?
gpt
The first is competition. There are typically many players in the grocery store market and grocery store customers are extremely price sensitive. If one store started charging a service fee they would lose customers. Are you going to swap colleges because there's a 3% service fee? No. You're a captive market.

The second is that grocery stores are almost exclusively card present transactions. They attract much lower interchange rates. Does your college let you pay online via the web? That's a card not present transaction and attracts a higher fee from the payment processor.

The third is the chains usually are negotiating directly with the card processors on interchange fees so they're typically closer to 1.5%. For instance when Visa refused to give Krogers a deal they just stopped accepting Visa as leverage in the deal. Your college isn't doing the volume to make a deal on that.