Was $37.50 the extra or was the extra the $2.50?

Yes, a group of retail businesses just won an anti-trust lawsuit against the CC companies, on the basis that the common practice that vendors must hide the 'interchange' costs from costumers amounted to market collusion.  The court finally agreed.  You'll see more of that going forward.

This is good and healthy (in many ways). In my dayjob credit card purchases affect profits signifigantly, for example amex can take 4% off the top. Which is a lot when your working with goods where pricing is very competitive, for example groceries.

7% isn't bad. Think about it, 1% on that purchase for the flat rate, plus 3% for the transaction fee. Then think about how much he has to pay in taxes when the cash just goes in his pocket. It costs him much more than 7% to have a paper trail.

No 7% isn't on the high end 7% is just a way to the merchant to pad his pocket.

The court decision limits surcharges to actual costs or a max of 4%.  Any swiped merchant is going to pay <2% these days.  Hell Joe Blow with 0 days business experience can get an account with Square (or a host of other providers) and swipe cards at <3%. 

Nonsense, that is not all of the charges.  Square doesn't charge for the 'interchange' fees, because they don't have too, the contracts that the CC companies had with the vendors and each other negates most of that.

And nothing in this conversation includes the interest and fees that the cardholder eats due to his own contract.

Just checked my charge again. $37.30 to be exact.

But 7% would make sense in that our sales tax is 7%.

So by taking cash they have no paper trail. With a credit card they eat the CC fee and charge you sales tax.

I have noticed a few more gas stations charging based upon credit card or cash.

if i ran a business i would advertize in card price and tell everyone i give a "cash discount" =)

You would would be contractually prohibited from actually advertising the cash discount, but everyone does it.  You could go into any major electronics store right now, pick out some high dollar widescreen tv, and even if it's on sale, you could ask for the 2.x% that the company pays the CC company as an additional discount if you paid in cash, and you can expect to get it.  I've done this a dozen times over the past decade alone.  It's just not worth the effort for low value items, although I have done it at Wal-mart for a microwave that was listed for only $80 on sale at the time.  The only time that I can't expect to get it, is when the manager is busy and would consider the discount to not be worth *his* time.

You also can't expect to do this with anything in groceries.  Their margins are so tight, that the 'grocery side' of department stores don't make *anything* from there unless the customer is paying cash anyway.

BTW, this is a great way to get a new refrigerator if you've got the cash, but you would literally have to have the cash in your hands.  The managers are usually empowered to offer this cash discount, but are trained to deny the request unless they can see the cash; because so many people have been known to only have half the cash and then offer the rest as a personal check.  The big chains have been stung many times, and regard this as a kind of 'bait and switch' game.

Not any more.  That was what the court case was about.  The courts agreed that the prohibition on cash discounts and the prohibition on charging consumer for using credit cards amounted to collusion between the major credit card networks.

Today merchants are free to offer any discount % for cash buyers.  Merchant can offer 50% off to cash buyers if they want.
Today merchants can charge consumers a surcharge on credit cards but not more than the actual interchange rate or 4% which ever is less.

The 7% in the OP was simply a merchant ripping a consumer off.  The court decision is relatively new most people don't know the details I expect a like of stuff like this going on for a while.