> Merchants need to be allowed to add card processing fees on top of any transaction

They can* and they do.

*It is capped to the actual processing fee, the card network must be notified, and the fee must be disclosed upfront to the consumer. A couple of states like CT and MA disallow consumer fees.

On most planned larger purchases (like more than $1000), I've seen CC fees recently.

> Merchants should be allowed to pick and choose which cards they accept without penalty.

To be clear for readers, merchants can choose their accepted card networks -- Visa, Mastercard, Amex (or alternatives like PayPal).

Networks requires merchants to accept all of the card within that network (hence the name "network"). Visa has three tiers; Mastercard has four. Something like ~90% of CCs fall in the traditional rewards tier, so there's less card variation than you might think. Though higher tiers tend to spend disproportionately more.

Traditional merchant accounts don’t expose the cost to the merchant until it settles. If you review the bill, it will list a few rates/amounts for different things that vary by card type. It can vary based on so many factors it’s practically impossible to estimate. The tiers don’t have tier level settings, each card product in that tier can have different amounts.

Stripe and the flat x% + $y are of course popular because of the simplicity and predictability of it.