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It is a question of fairness. People who use a product or service should be the ones who pay for it, not those who don't. The popularity of credit cards is in part due to the fact that part of the cost is paid by people who don't use them. Former U.S. senator William Proxmire explained it in a Senate hearing way back in 1984: 

...(W)hen you or I buy something with a credit card we get a bill at the end of the month and then we have another 30 days before we are hit with a finance charge. During this time, we have the use of the money. It is like an interest-free loan...But it isn't really free. Someone must pay for this credit. Initially, the merchant pays in the form of a merchant discount. When he sends our sales slip to the credit card company, he only gets back an average of 97 cents on the dollar. But most merchants operate on a very thin margin and few can afford to absorb the 3-percent charge. So what do they do? They increase their prices to cover their costs. Thus, everyone, cash customers as well as credit card customers, wind up paying...If practically everyone used credit cards, this wouldn't be so bad. But many people can't qualify for credit cards or don't want to use them. So what we have is a system where the poor subsidize the rich to the tune of $6 billion a year. This is the cost of the merchant discount reflected in retail prices.

That $6 billion was in 1984. In 2003, card associations collected $29.2 billion from electronic transaction fees (both debit and credit). 

An 8/14/06 article in the Lansing State Journal said that credit card use costs the average family $270 a year - whether they use them or not.

The solution is simple. Prohibit the card company from charging the merchant for any of the transaction cost. Require them instead to add the full cost to the cardholder’s bill. One “merchant” is already adding the fee to the purchase. The IRS allows taxpayers to pay with a credit card, but it charges 2.49% fee, according to a 3/14/05 article by Kathy Chu of the Associated Press: 

The fee – typically 2.49 percent of federal taxes, or about $88 on the average balance due of $3,523 – has been in place since the Internal Revenue Service first accepted tax payments by credit card in 1999. 

Thankfully, the IRS chooses not to pass on the cost of paying by credit card to other taxpayers.

I use a credit card and it doesn’t cost me anything because I pay off my bill each month. I charge about $1000 a month on my card. With a 3% transaction fee, I’d have to start shelling out $30 a month to pay for my credit card use. I wouldn’t like it at all, and I’d either curtail my use of the card or shop for a card with lower transaction costs.  

I think what would happen is that credit card companies would scramble to find ways to reduce fees. One way would be give cardholders a discount if they pay off their balances more quickly and frequently, not just once a month. That would shorten the period of the “loan”. Also, competition might just force them to give up some of their profits - $30 billion in 2003. There is no incentive to keep fees low now because the customer doesn’t pay them and therefore doesn’t shop around for the best deal.  

Here’s how I imagine my future credit card bill will look. It will list each transaction along with the transaction date, as it does now. The total amount due will be the sum of the following: 

• the purchase amounts

• the transaction processing charge, which is the number of purchases multiplied by a per-transaction fee, for example, $1

• the interest charge, which is the total of the amounts calculated for each transaction from date of the purchase to the date of the bill

In addition to the total amount due on the billing date, the bill will show how much interest will be added for each additional day the bill goes unpaid.  

While we are at it, let’s do something for the cardholders. Currently, credit card companies can increase the interest rate on outstanding balances whenever they want. You might run up a balance of $5000 during a time that your rate is 16%, and then suddenly the credit card company increases the rate to 25%, even if you have always made your minimum payment on time. Bills have been introduced in Congress to end this practice, but due to the huge campaign contributions from the industry, those bills don’t get anywhere. We need a law that requires credit card companies to notify the cardholder before the rate is increased, and then apply it only to purchases made after notification.

There is another possible benefit from requiring credit card holders to pay their own fees. If it causes them to pay off their balances sooner, more money will be available for other loans, causing interest rates to drop.