Not only will merchants lose out (and you are absolutely correct about that !), but to truly implement UIGEA (as it was intended to be implemented) would require the banking system to put considerable resources into it. These resources, would need to be subsidized by the banking industry, with ZERO revenue payback. Hence, there is really no incentive for anyone to see UIGEA implemented correctly. You can bet that most of the banking industry is just waving its hands, to make it appear that it is doing something. Unfortunately, the Credit Card industry actually has implemented some of this stuff, and it is surely reducing their revenues, and they cannot be happy about this.