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New Credit Card 'Checkout Fee' Arrives This Weekend

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By Matt Brownell

Posted 6:00AM 01/24/13 Posted under: Credit Cards, Shopping, Consumer Protection
Credit Card Checkout Fee SurchargeThis Sunday marks the first day that consumers could start paying an extra fee just for using their credit card to make purchases. But don't panic: It's unlikely to kick in right away, especially at the biggest retailers.

First, a bit of background. The fee in question is widely described as a "checkout fee," and starting on Jan. 27, retailers will have the option of charging it on any purchase made with a credit card. The fee came about as a result of a settlement reached in July 2012 between merchants and credit card networks, and is intended to help defray the costs of the swipe fees charged by those networks. As such, it can't be higher than what the merchant actually pays as a swipe fee -- usually between 1.5% and 3% of the transaction.

The settlement was actually merchants' second swipe-fee victory in recent years. The first came in the form of the Durbin Amendment, which capped swipe fees on debit card purchases at 21 cents per transaction. The July settlement didn't cap swipe fees on credit cards, but it did give retailers the right to pass them on to consumers -- if they choose to.

"I don't think we're going to see a mass amount of surcharges come the deadline," said Ruth Susswein of Consumer Action, which has led the charge in educating consumers about the impending fee. Retailers, she says, are more likely to introduce the fee gradually. "It might creep into costs of shopping over time."

Indeed, it's still unclear whether the nation's larger merchants actually plan to take advantage of their new right to add surcharges.

"I would be very surprised if Walmart or Costco or Target or any of the other mega-discount retailers did something like this," said John Ulzheimer, president of consumer education for SmartCredit.com. "Their pitch is, 'Hey we're cheaper than the competition.'" Ulzheimer added that if a big retailer was considering charging the checkout fees, they would start out by testing them in a few select markets to see how consumers responded.

So if you do see checkout fees, it's more likely to be at smaller retailers, which tend not to be winning on price anyway. In fact, Ulzheimer noted, you've probably already seen small merchants charge a form of credit card checkout fee in the past, by offering lower prices to customers paying with cash -- for instance, at a gas station. Now that they're allowed to call the credit card surcharge what it is, more small merchants will try out variable pricing.

Tens of millions of customers will never see checkout fees, though. That's because 10 states have formally banned the practice, a list that includes California, New York, Florida and Texas.

If you don't live in one of those 10 states, though, you could potentially see signs alerting you about checkout fees as early as this Sunday. If you do, you can avoid them by paying with cash or a debit card -- or by taking your business elsewhere.
by on Jan. 24, 2013 at 9:24 PM
Replies (31-40):
IntactivistMama
by on Jan. 25, 2013 at 9:54 AM
Thank you, Jeebus! Colorado is on the ban list. :-)

So if I go to Joann's tp buy yarn, I won't get raped in the keister with fees? I got rid of credit cards, I only use a bank card, but I process it as a "credit" rather than with a PIN. I never get dinged a fee for this - the $ exits my bank account...
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NWP
by guerrilla girl on Jan. 25, 2013 at 9:59 AM

Ugh...

NWP
by guerrilla girl on Jan. 25, 2013 at 10:01 AM
1 mom liked this

We REALLY need some consumer protections put in place for the banking industry.

meriana
by Platinum Member on Jan. 25, 2013 at 10:07 AM
1 mom liked this

 


Quoting NWP:

We REALLY need some consumer protections put in place for the banking industry.


 Yep and that's exactly what some of our law-makers and those on wall street don't want.

Jeanetts
by Member on Jan. 25, 2013 at 4:55 PM
I am old fashion and still use cash or checks. I realize people think I am out dated but hey, no stupid fees here. Some times for big cost items I use a credit card but have never been charged a fee. When tht starts happening, they'll get a check or no business.
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FromAtoZ
by AllieCat on Jan. 25, 2013 at 5:00 PM

Don't use a credit card.

I never allow my card to be run as credit.  If the place won't run it as debit, they don't get my business.

If the place charges for debit as well, I will go get cash first.

storkradio193
by Member on Jan. 25, 2013 at 5:13 PM

It is going to hurt the credit card companies.  This is actually not in favor of banks and the financial industry and they fought it.  I, for one, won't use a credit card if they charge a 1% to 4% fee (as allowed).  I would use a debit card or start carrying cash/checks.  I don't run credit balances, so the main advantage of credit cards is getting 1% or more rewards back.  There is no point, if fees counter the rewards.

http://www.cafemom.com/home/storkradio193

daughteroftruth
by on Jan. 25, 2013 at 5:22 PM
Each consumer has protection. Its called commonsense. If you do not like the product or service, do not use it or go else were. If people would practice it a bit more, then we would see more change. Stop using credit cards. Go with smaller banks or credit unions. Seek loans through smaller banks and credit unions.

Quoting NWP:

We REALLY need some consumer protections put in place for the banking industry.

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AdrianneHill
by Platinum Member on Jan. 25, 2013 at 5:26 PM
1 mom liked this
You're a communist!

Quoting NWP:

We REALLY need some consumer protections put in place for the banking industry.

Posted on the NEW CafeMom Mobile
ReginaStar
by Gold Member on Jan. 25, 2013 at 5:28 PM

I don't have a credit card but I certainly have a debit card and I use it. I hardly ever carry cash anymore. I hope this doesn't effect the debit cards but if it does I'm surely going back to using checks. 

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