Be aware.....so far this applies to some of the states, but if it catches on, it's only a matter of time before retailers in Canada will be looking at it as a way of increasing their profit margin....the fees that a retailer pays are already calculated into the price of goods and services. If they can tack on another 4%, that is NOT due to a cc fee. I'm just cranky because I use my Master Card to amass points. If it weren't for that, I'd be using debit or cash only.
MasterCard and Visa credit card users might see a surcharge of up to 4 percent on their receipts
Merchants are allowed to add an extra fee to credit card purchases starting Jan. 27. The surcharge is the result of a class-action lawsuit brought by major retailers against MasterCard, Visa, and several other banks and credit institutions.
Joe Raedle/Getty Images
Starting Jan. 27, merchants will be allowed to add a surcharge of up to 4 percent to payments made with Visa or MasterCard.
Merchants who accept MasterCard and Visa will soon be able to tack a surcharge onto your bill. The surcharge is fallout from a class-action settlement reached last July that ended years of legal battles between merchants on the one hand, and banks and credit card companies on the other.
Along with paying a group of retailers $6.05 billion, Visa, MasterCard, and several banks and credit card institutions agreed to allow merchants to charge an extra credit card fee starting Jan. 27.
RELATED: VISA, MASTERCARD IN $6B ANTITRUST SETTLEMENT, LARGEST IN U.S. HISTORY
Ever seen a “cash only” sign at a mom and pop store? All retailers have to pay a percentage of their profits to credit card companies in order to process in-store credit card payments. Smaller merchants who don't want to take this transaction fee out of their profits might institute a “cash only” policy. Other stores establish an unofficial minimum for credit card purchases or factor the transaction fee into their prices.
The surcharge proposed by last year’s settlement is supposed to be equal to the cost of processing a credit card transaction, which usually comes out to about 1.5 to 3 percent of the purchase. According to the settlement, merchants can’t charge consumers more than 4 percent. They also won’t be able to add extra fees to debit card transactions, NBC News reports.
Despite the changes, few merchants seem willing to add to their customers’ costs.
RELATED: MASTERCARD SAYS IT IS INVESTIGATING A POTENTIAL SECURITY BREACH
Joe Raedle/Getty Images
Credit card surcharges are illegal in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Credit card surcharges are illegal in some states, ABC News reports. The surcharges won’t affect consumers making credit card purchases in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Merchants who want to start charging extra have to take a couple of steps to warn consumers about the change. They will have to post a sign at their storefront announcing the extra fee. They’ll also have to disclose the fee at the checkout counter and on the receipt, according to the EPC.
RELATED: CARD SNAFU DRIVES CABBIES MAD
Since some stores already factor interchange fees into their pricing, Edgar Dworsky, founder of ConsumerWorld.org, fears that some merchants would “double-dip” and charge consumers twice.
“It’s predictable what’s going to happen,” Dworsky told NBC News. “We’re at the top of the hill and we’re going to start going down that slippery slope.”
Some of the country’s largest retailers are holding off on adding a fee to credit card purchases made in their stores. Wal-Mart, Target, Sears, and Home Depot told NBC News that they do not plan on taking advantage of the new rule. Rite Aid doesn’t plan on adding surcharges as well, the Wall Street Journal reports.
Some retailers might still be waiting to see how the case plays out in court. U.S. District Court Judge John Gleeson gave the settlement a tentative okay in November. The National Retail Federation is not a party to the lawsuit, but claims that their members would be negatively affected by the settlement. They plan to challenge the judge’s verdict in court, according to a press release.
A final ruling on this case will be made later this year, meaning modifications to the settlement might surface later on.