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.
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.
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
It's the merchants who sued the CC companies to get the right to charge you directly. Convenience and service are not free.
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!
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.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. 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 SIX Financial Information.
The telecom giant has stealthily added a 61-cent 'administrative' charge that will add up to millions in revenue.
- Detroit in hot water over proposal to sell art
- Sears spirals toward oblivion
- Soaring ER use adds more pain to health costs
- Teen's invention recharges cellphones in seconds
- Netflix gets 'Arrested Development' stars cheap
- McDonald's CEO: Relax, Ronald's not bad
- Oklahoma senators change tune on disaster relief
- At software giant SAP, autism is an asset
- Mike Bloomberg's next career: Taxi magnate?
[BRIEFING.COM] The major averages have continued their climb towards yesterday's closing levels. The Dow trades with a loss of just three points as the relative strength of Procter & Gamble (PG 81.93, +3.23) and Wal-Mart (WMT 77.08, +0.75) partially overshadows the weakness of most other components of the price-weighted index.
Although the key indices have recovered a good portion of their losses, the CBOE Volatility Index (VIX ... More
More Market News
A collapse in the Japanese markets is weighing on US stocks. Is it an opportunity or a warning sign?