The divergence is just the fee being placed into the margin you're paying regardless.

If you pay via a medium that does not return some of the margin to you in the form of rewards or a 'cash/debit' rebate, then functionally you're paying an invisible tax.

This means everyone should be using credit, ideally the highest reward options, which themselves have the highest processing fees, which result in higher prices all around. The creation of higher tiers of rewards and super-premium cards just repeats this cycle, whereby normal cardholders and cash/debit users are now subsidizing high-spend premium card users.

Further, large retailers negotiate significantly preferential rates and lower processing fees for their book of business. This means small and medium sized businesses pay significantly more per transaction for processing, meaning they're less competitive and less pricing pressure is placed on large retailers, which again raises prices for you.

There's also the card issuer side of things, but in short if you're not changing your credit cards regularly, companies will depreciate rewards and benefits over time in previous lines to move you into a higher margin segment of their portfolio.

In short, there's already a divergence, and you're already paying for it in multiple ways.

There's some precedent on how do deal with this on this side of the pond. Require the list price to be achievable with some card at no extra fee (so no cheating with a high annual fee card or some exclusive condition for example) and have the merchant disclose which. Then the extra fee only appears with cards that charge more.

Or put another way: the list price must be reasonably achievable, but charging more for "extras" (eg. a more expensive card with benefits) is always permitted.

Once you've diverged from the listed price actually being the price you pay, I don't see much value in just keeping is vaguely close but still incorrect. I'd prefer either a completely itemized price or an all-inclusive price to a sort-of-inclusive price.

The best answer is probably a combination of the two: break out the bullshit costs the customer has to pay so that the consumer can see them, but still give them the upfront cost as early in the transaction as possible.

True, and I empathize, but... that difference is basically a spending tax that your card provider has chosen to impose on you. If it helps, instead of a per-transaction cost, consider it packaged together with your cashback, credit points, and the like.

Meanwhile in Australia, it’s illegal (misleading trading) to display a price lower than the customer pays, and has been for a long time. It’s fine; fees etc are disclosed up front.

Solution: The listed price should be the cash price. If you want it, pay cash.

So you prefer always paying the higher 'card price'?

That's exactly the problem: people don't want to know how much they're actually paying for banking services. They just want their credit card "rewards."

So don't use a card that has the payment processing fees.

Then pay with cash.