Will credit card users now have to pay swipe fees?

The massive Visa-MasterCard settlement ends a long-running battle with merchants, but also opens the door for retailers to charge customers extra.

By TheWeek.com Jul 16, 2012 1:36PM

Image: woman swiping a credit card © Rubberball/Mike Kemp/Rubberball/Getty ImagesVisa (V), MasterCard (MA), and several banks have agreed to pay $7.25 billion to settle antitrust charges that were brought by 7 million merchants -- a diverse group ranging from the nation's largest chains to mom-and-pop shops.

If the deal is approved by a federal judge, it would end a long-running dispute over the "swipe fee" -- 2% to 5% of the bill -- that Visa and MasterCard charge merchants every time a customer uses plastic. Under the terms of the settlement, Visa, MasterCard, and the banks would pay out $6 billion in penalties and reduce the swipe fee. In addition, merchants would be allowed to levy a surcharge on customers who use credit cards, which would let them recoup the cost of the reduced swipe fee.

Are retailers likely to do so?

Yep. Customers should expect to start paying more: Many retailers will likely impose a new "checkout fee" for consumers paying with credit cards, says Susanna Kim at ABC News. While big chains like Wal-Mart (WMT) and Target (TGT) may decide that they can afford to eat the costs of the swipe fee in order to retain customer loyalty, struggling mom-and-pop shops around the country are more likely to take advantage of this windfall.

In some cases, customers won't even have a choice: The checkout fee is a "tricky question for many retailers because they risk angering customers who prefer credit cards for purchases," says Robin Sidel at The Wall Street Journal. But "hotels and airlines are among the industries that may be the most likely to impose surcharges because their customers don't typically pay any other way." In those cases, the surcharge will probably be incorporated seamlessly into all their products and offerings.

No. Retailers would be dumb to charge more for plastic: Merchants have benefited enormously from the spread of credit cards, and most of them would be insane to put that revenue stream at risk, says Daniel Fisher at Forbes. Many sales would simply not occur if customers had only a credit card in their wallet and were expected to pay more than those who happened to have cash. Furthermore, introducing a checkout fee would make the shopping experience too similar to buying an airplane ticket, evoking the multiple surcharges and hidden fees that have made the industry synonymous with awful customer service.

More from The Week

Jul 16, 2012 2:39PM
have never ever paid one dime in credit card interest.
will not do any business with any merchant that charges more for using plastic!

Jul 16, 2012 3:27PM
Try it, and your business will suffer.  I use my CC for most purchases, and pay it off every single month.  If I'm charged more, I will go back to cash, which is a lot harder to part with! 
Jul 16, 2012 4:49PM
I wish we could go back to the good ole days of Mayberry. No Cell phones, No computers, No card swipes, etc, etc. You enjoyed life and paid for what you bought with cash or a check! That seemed like such a easier simpler time.
Jul 16, 2012 2:52PM
It seems every time I check into a hotel/motel or rent a car a credit card is required.  If they are going to charge me extra for what they require, that is totally bogus.  As for the merchants, they started adding the swipe fee for credit card use to their merchandise price so long ago that most of them weren't even born yet.  They never gave a discount for cash why should they start charging for credit card use now?
Jul 17, 2012 10:59AM
Institute swipe fees and I will go back to cash and checks, hacking off everyone in line behind me and forcing cashiers to remember how to make change.  If checks or cash is not useable I will not shop in those stores.
Jul 16, 2012 3:59PM
OMG  I am going to have to write checks again and balance the book again.  Maybe I just will not shop your store at all.
Jul 16, 2012 7:58PM
Just take a cart full of products to the check out put it on the counter and as they are scanning . Ask do you charge a fee to use  credit cards? If they say yes . Say I don't think want any of these things  if I have to pay a fee and leave. It everyone does that The fee's will soon go away.
Jul 16, 2012 6:35PM
The merchants who wish to assess swipe fee on me will have two choices:  1) Tie up the register line while I write a conventional check,  2)  Put my merchandize back on the shelves, and not see me in their stores anymore.
Jul 17, 2012 10:29AM
If the fees currently paid by merchants are being reduced, why is it now necessary to pass a charge onto customers making a credit card purpose.  Seems like a win win for the merchant.  I might start checking for stores that don';t pass this charge on.  What idiot lowers the cost then says charge the customer more?
Jul 16, 2012 8:42PM
if "mom&pop" think they will get away with charging customers 2-5% they will quickly find themselves OUT OF BUSINESS.  Consumers will never stand for this.
Jul 17, 2012 1:08PM

I use my credit card for almost every purchase I can because it is convenient and safer than carrying around wads of cash.  I always pay off my balance every month as I set up direct payment from my bank.  I will most likely NOT do business with merchants who charge extra for credit card purchases.  If I find out I get charged after my purchase then both my time and the merchant's time will be wasted as well as the line of customers behind me because I will have to cancel the transaction.  I am sure online sales will also drop rapidly if merchants charge credit card swipe fees to customers.  Businesses will really end up suffering losses if they start charging customers and this makes no sense especially in a struggling economy.  Are we trying to destroy our economy?  Perhaps I am in the minority of those who are more responsible with my finances and using credit cards?  Perhaps the government thinks there are too many irresponsible credit card users who get themselves into financial problems that it is necessary to dissuade credit card use and go back to the old ways of using cash? The problem is, I doubt those people will be any better with their finances even with cash. People need to learn to live within their budget! Why are you buying expensive designer clothes when you barely can afford your rent or mortgage payment?!?

Jul 16, 2012 4:21PM
yep just another reason to justify a price increase. Ban them all and bring back paper checks and cash, the way it should be. merchants wanted debit cards to cut down on the number of bad checks, well they got it and now we will all pay for that. CASH only should be our battle cry and refuse to purchase anywhere that increases prices or charges a fee.
Jul 17, 2012 11:50AM
Back when credit cards were first introduced, those fees charged to the merchants who accepted them were charged to the customer through price increases on the goods purchased. Now here in 2012 the merchants want to come back charge again for those fees. Sounds something like double taxation without fair representation.
Wow, what a crock, a lot of cards charge annual fees, plus you pay interest on the money you are using from them already. Now they are going to turn around and be able to charge you yet again and this time for using the actual card?! Wow, thanks for really watching out for the consumer!!!
Jul 17, 2012 1:34PM
I'm getting real tired of having to pay to spend my own money!  One fee after another fee it is really getting out of hand.  We are being feed to death!  It's time to stop.  Why don't we all as human being just stop using banks, credit unions, credit cards & just use cash for everything, that's what my husband & I did while we were raising our 5 sons, if we couldn't pay cash then we didn't purchase it & really it is that simple.
Jul 16, 2012 2:53PM

So what happens now with using pay pal, and other forms of on line sales transactions? Will e-bay add swipe fees...this has the potential of making easy and fast on-line shopping a thing of the past, for the little man who has to save every single penny just to keep his head above water.

Jul 16, 2012 8:38PM

6 months ago I went all plastic & cash after using last check

now I ordered a new box of checks and ready to slow the lines down again.

Jul 16, 2012 3:29PM

Prepare for longer check-out times...if fees to use credit cards are imposed then I'll use the "old" personal check...


"Driver's license please and a second form of identity"


Customers/Hour through the checkouts will take a big hit... (But that won't cost the merchants anything).

Jul 16, 2012 3:37PM

This may be just the beginning,

More charges will follow, Then...

It will turn around and bite them in the a$$,

Just like it did BOA.

Jul 16, 2012 10:49PM
I would simply quit my cards !!!! I already pay a sickening % rate as it is   I am not an idiot !!!  Thats more like the government (tax the hell out of you) then charge you when  you spend your pay on anything !!!!!!

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