The boycott was targeted at interchange fees charged by card issuers every time they swipe a customer's card. Those fees -- which are capped at 21 cents per transaction on debit cards and tend to be around 2 percent to 4 percent on credit cards -- have been a source of conflict between merchants and banks for years.
But this boycott wasn't an organic grassroots movement by a coalition of angry merchants. Rather, it was organized by mobile payment processor LevelUp, and customers had the choice of using either cash or the LevelUp app to pay for their meals.
The app lets consumers link a credit card or debit card with the free smartphone app, which displays a QR code that can be scanned at the point of sale. Merchants using it are charged a 2 percent transaction fee, which is on the low end of normal credit card fees.
But the real advantage is that merchants can get rid of the transaction fee altogether if they instead opt to pay for LevelUp's suite of advertising and loyalty programs, which make use of payment data gathered by the app. For instance, restaurants can offer discounts to customers using the app at their establishment for the first time, or give an automatic discount to customers who come in for a meal when it's raining out.
So it's not hard to see why merchants would want to use the system -- it allows them to take money they'd normally hand over to the bank, and instead put it toward customer retention and promotions.
But we're not sure about this credit card boycott, which the company framed as a "Credit Card Diet." We'd certainly be pretty miffed to discover that our usual lunch spot had suddenly made it harder to pay for a sandwich just so that it could engage in a publicity stunt for a mobile payment processor.
As for Tuesday's proceedings, LevelUp CEO Seth Priebatsch conceded that a small minority of customers walked out after being told that they couldn't use their credit card. But he explained that LevelUp took precautions to make sure that restaurants didn't completely alienate their customers.
"We had a street team member at all of the locations, with a little area set up with chips and candy to hold people over if they're starving to death," he explained. He added that customers also got the usual first-time discount, providing them with an additional incentive to customers to play along.
We're still not crazy about restaurants taking away a payment option that people are used to using, but we have to admit that getting a discounted meal and a free bag of chips would be enough to keep us from angrily storming out.
Priebatsch says that the company is considering subsequent "Diet" days in the near future. But next time, there might be more people already equipped with the app: The company announced Thursday that it just registered its millionth user.
Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.
Photo Credit: Alamy