Credit card customers face checkout fee

Retailers get the right to impose surcharges of up to 4% on purchases made with plastic, though many big chains so far are refusing.

By Jason Notte Jan 30, 2013 5:12PM
Seriously, just start paying for everything in pennies.


In yet another example of how nobody seems to understand American consumers in the slightest, a settlement that went into effect on Sunday allows retailers to charge a "checkout fee" of up to 4% on credit card purchases to offset swipe fees charged by banks and credit card companies. It's the compromise reached in July on a lawsuit dating back to 2005 in which retailers accused MasterCard (MA), Visa (V) and a group of banks including JPMorgan Chase (JPM) of conspiring to fix fees charged to retailers.

Though the card companies and banks paid out $6 billion to retailers and agreed to cap fees on debit cards at 21 cents per transaction, the tradeoff only capped credit card fees for the last eight months and opened the door for a retail credit card surcharge of between 1.5% and 4% to cover the cost of swipe fees.

Just about nobody outside the credit card industry is happy with this little arrangement. Though 40 states are going to allow the credit card surcharge, advocacy group Consumer Action says California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas have made such fees illegal. Image: Man paying with credit card --UpperCut Images/UpperCut Images/Getty Images


Meanwhile, according to CNN Money, the National Retail Federation and a group of retailers including Target (TGT), Wal-Mart (WMT), JCPenney (JCP), Gap (GPS) and The Limited (LTD) in November asked a U.S. District Court Judge in Brooklyn, N.Y., to reject both the settlement and the new fee. The brief they submitted, to no avail, insisted that "raising consumer prices by adding an 'interchange tax' is no remedy for Visa's and MasterCard's continuing monopoly abuse."


Wal-Mart, Target and even McDonald's (MCD) have all publicly declared that they will not apply the surcharge to customers. Meanwhile, MasterCard says it doesn't expect most retailers to implement the surcharge while Visa has posted an entire Web page warning its customers about potential surcharges and advising them to pay cash when possible.


So is this surcharge just an empty threat? Not to small independent retailers who are now more likely to strongly encourage debit card use or just go cash-only. Think about the local gas stations that charge one price for cash and another for credit or the local burger place that scoffs at your plastic. Other small businesses can get around that surcharge by taking payments online through PayPal or other swipe-fee-free services.


While the plastic prone can still use their debit cards without a problem, other shoppers should have no reservations about holding up the line while counting out bills and change to avoid this latest fee.


More on moneyNOW

13Comments
Jan 31, 2013 7:11AM
avatar
We all know it's the large bank scumbags Now the smallmer business must do something  to recover the cost the banks charge them. I personally will use cash.
Jan 31, 2013 2:19PM
avatar
A little education for all you idiots. The banks don't own the CC companies and the banks do not control them or tell them what to do. The CC companies are the customer but they tell the banks what they will have to pay just like they tell the merchants what they will have to pay.
It's the merchants who sued the CC companies to get the right to charge you directly. Convenience and service are not free.
Jan 31, 2013 10:15AM
avatar
Its nice to see socialized wall street banks charge the tax payers who saved them ... ONLY IN THE USA.... Sad to say ... They have real good lobbyist in Congress. The US CONGRESS the best money can buy.. It shows.. Keep electing them idiots...
Jan 31, 2013 11:01AM
avatar
The banks and credit card companies have gone to far. Don't pay their fees . The merchants that except them are declining to pay their fees so they want to pass these charges on to you. It is greed just throw the plastic away, or find a card that will promise no fees...Start paying with cash and ask for a discount from the retailer. Haven't you had enough? I have!
Jan 31, 2013 2:12PM
avatar
Old news and no company is going to do it. It's already priced into the cost of doing business.
avatar

I am guessing it is time to go back to cash.

Jan 31, 2013 11:46AM
avatar

Good!

 

Credit cards should be charged 100% interest per transaction and maybe then people will learn to pay with cash and debit cards and stop living on credit and debt.

 

Learn to live within your means and stick to your budgets. It's that simple!

avatar

The Credit card companies are already charging the vendor (your store) a 3% charge on Credit Card use.  In other words if you use a credit card to purchase a pack of gum or a new car, the store has to give the Credit Card company 3% of the amount.   This is probably why the vendors want to pass on the cost to the consumers to pay for this.   

 

Next time you pay for something in cash, ask for a 3% discount on the purchase price otherwise you will use a credit card (for those not already charging this 4% extra).  You may be surprise at the number of vendors that will give you the reduced price for cash as that will be all they receive from the deal anyway.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?

MARKET UPDATE

[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).

Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More

MSN MONEY'S