Actually, the banks do charge the merchants more to process cash back credit cards than they do for non-cash back cards. Each type of credit card has a separate bank fee, and it is all rolled into the monthly fee to the merchant. However, the restaurants definitely benefit by accepting credit cards. For example, when McDonalds started accepting credit cards in 2003, their average transaction amount increased from $4.50 to $7.00. People just spend more money when they can charge it.
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