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Attention shoppers: Another credit card fee is here 1/28

Posted by on Jan. 28, 2013 at 8:30 AM
  • 9 Replies

Attention shoppers: Another credit card fee is here

It could soon cost you more to shop with a credit card at some stores. As of this Sunday, Jan. 27, merchants who accept credit cards issued by Visa and MasterCard will be allowed to add a service charge to the purchase price.

Visa and MasterCard had always prohibited merchants from doing this. They agreed to change the rules and allow the surcharge as part of the settlement of an antitrust suit brought by retailers.

The surcharge is supposed to equal the actual cost of processing the credit card transaction, which is typically 1.5 to 3 percent. Under the agreement, the fee is capped at 4 percent. The surcharge can vary based on the type of card. For example, it could be higher for a rewards card or premier card.

Merchants still cannot add a surcharge to debit card transactions.

The big question is: Will any stores do this? Should you worry about paying a credit card surcharge?

“We have discussed the settlement with many, many merchants, and not a single merchant we have spoken to plans to surcharge,” Craig Shearman, spokesman for the National Retail Federation (NRF), said in a statement. The NRF was not involved in the class action lawsuit.

NBC News contacted some of the country’s largest retailers. Wal-Mart, Target, Sears and Home Depot said they have no plans to add a credit card surcharge.

Credit card surcharges are banned by law in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Visa and MasterCard have rules that require retailers to handle credit cards the same way in all of their stores across the country. That means a chain with stores in any of the 10 states where a surcharge is banned would not be able to have a surcharge at any of its stores.

The National Retail Federation points out that under terms of the settlement, a merchant who adds a surcharge to purchases on a Visa or MasterCard would have to do the same with American Express cards. But AMEX prohibits surcharge fees. So a merchant who accepts American Express as well as Visa/MasterCard would not be able to surcharge any of those cards.

“The bottom line is that very few retailers would be able to surcharge under the settlement, and that the vast majority don’t want to surcharge even if they could,” the NRF’s Shearman said.

Ed Mierzwinski, Director of Consumer Programs at U.S. PIRG agrees.

“In the brick-and-mortar world, no one who does any sort of volume business is going to want to surcharge because it will drive their customer crazy and slow down transactions,” Mierzwinski said.

In fact, most consumer advocates believe that except for some small retailers, a credit card surcharge is a non-issue in the short-term.

But Edgar Dworsky, founder of ConsumerWorld.org, worries that over time surcharges will gain traction.

”It’s predictable what’s going to happen,” he said. “We’re at the top of the hill and we’re going to start going down that slippery slope.”

Dworsky points out that stores factor in the cost of processing credit cards when they price their merchandise. Charging for that again, he said, would be double-dipping, unless stores rolled back their prices – which no one expects them to do.

“We shouldn’t have gotten to the point, but unfortunately because of the court settlement we have,” Dworsky told me. “There’s no one standing up for consumers and saying that this is really bad.”

Dworsky points to Australia, where surcharging credit card use began in 2003. At first, few merchants charged the fee.  His research shows that approximately one-third of the sellers there – including some hotels, supermarkets, department stores and utilities – now charge extra to use a credit card. 

What about disclosures? 
The advocacy group Consumer Action has published a booklet on credit card checkout fees. It warns shoppers to be on the lookout for these fees and advises them to express their dissatisfaction.“Customers shouldn’t stand for it,” said Ruth Susswein Consumer Action’s deputy director of national priorities. “Our advice is to tell them you don’t like the fee and this makes you want to take your business elsewhere.”

The new rules from Visa and MasterCard require retailers who apply a credit card surcharge to post a notice at the store’s entrance. The exact percentage of the surcharge does not need to be disclosed until the point of sale. The customer receipt must list the amount of the surcharge.

Online stores with a surcharge will not be required to have a notice on the home page. They only need to alert shoppers about this when they reach the page where credit cards are first mentioned. In most cases, that means the final step of checkout when the purchase is being completed.

Not the end of this story 
The settlement that allows merchants to impose a surcharge is only preliminary. The court has yet to issue its final ruling in this case. That’s expected later this year. 

Once that happens, various retailers and business groups plan to challenge the settlement. That could drag into late 2014.

For now, the possibility that the settlement could be modified will probably keep most businesses of any size from instituting credit card fees.

“We’re not convinced this is going to be an issue,” Consumer Action’s Susswein told me. “They may never do it, but as individual consumers we need to be aware.”

Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitteror visit The ConsumerMan website.

http://www.nbcnews.com/business/attention-shoppers-another-credit-card-fee-here-1C8086499


by on Jan. 28, 2013 at 8:30 AM
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Replies (1-9):
SlightlyPerfect
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I am so spoiled.
Today at 10:46 AM
by Bronze Member on Jan. 28, 2013 at 8:49 AM

Can anyone explain why it costs anything to "process" a transaction? Like, what actually goes into it that warrants a charge? Shouldn't this be totally automated and computer-driven at this point?

I guess with a credit card you have more leverage than with a debit card, but these baseless fees are agitating.

slightlyperfect

wandep
by Gold Member on Jan. 28, 2013 at 8:51 AM

thank you

abra
by on Jan. 28, 2013 at 11:25 AM
The merchant already gets charged a fee for accepting credit transactions, so that seems fair to me, but we dont use credit cards either!
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emilyrosenj
by on Jan. 28, 2013 at 12:31 PM

We don't use credit cards and this is just one more reason not to start!!

Juniper53098
by on Jan. 28, 2013 at 1:08 PM

We use them, but pay them off every month.  If they start charging transaction fees, we will probably stop using them.

Hottmomma607
by Silver Member on Jan. 28, 2013 at 1:28 PM
We use our debit cards which has Visa&Mastercard on it. It irks me when they charge a fee at the gas station! But with our bank they give those charges back!
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Heather2001
by Bronze Member on Jan. 28, 2013 at 2:05 PM

Wow, good thing I don't use credit cards.

BabyTeki
by on Feb. 4, 2013 at 10:49 PM
So far I haven't run into a place charging
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meam4444
by Bronze Member on Feb. 5, 2013 at 10:38 AM

 Same here....now with this thought, I am given a discount when using cash at our grocery store in town.

Quoting BabyTeki:

So far I haven't run into a place charging

 

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