Merchants that accept credit cards typically pay an interchange fee to their credit card processing company.
However, new laws are now in place that allow merchants to impose an additional surcharge, as much as 4% of a total purchase, to customers.
Consumer Action, a consumer advocacy group, is warning people to be on the lookout for these surcharges when using their credit cards to purchase retail products after January 27, when retailers in certain states began charging these fees. Debit card users need not worry, as these checkout fees will not apply to them. Whether or not retailers will include these additional charges for credit card purchases isn’t certain.
Ruth Susswein, Consumer Action’s deputy director of national priorities believes that many retailers will not charge checkout fees to customers for fear of backlash, however, if some retailers are doing it, others might jump on the bandwagon.
While these payments are banned in 10 states – California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas – this could still affect a majority of consumers in the United States.
The Origins of Checkout Fees
The legality of these payments comes on the heels of a massive settlement between merchants and credit card companies in November. In 2005, merchants filed the suit against Visa, MasterCard and nine other companies to recoup fees, claiming they had conspired to fix fees that the merchants pay. Now, according to the settlement, merchants will be allowed to compensate themselves by charging customers checkout fees.
Before the settlement, Visa and MasterCard didn’t allow merchants to charge these fees, but with the new settlement, that rule has been lifted. The settlement also mandates that the credit card companies pay $7.25 billion to 7 million retailers who have been charged swipe fees. That’s an average of $1,000 per merchant.
Checkout Fee Safeguards
Consumers must be made aware of which retailers will impose the surcharges.
The retailers are required to put a sign outside the store, near the cash register or on receipts that informs customers about the checkout fees. And, e-commerce stores must inform customers on their website’s front page.
As a consumer it is important to make certain the merchant makes you aware of the new additional “check out” fee before you make your purchase and ensure only your charge cards are assessed, debit cards or cash sales should not be. In addition, Susswein says that if consumers are unhappy with the checkout fees, they should inform the merchants. If enough customers make their voice heard, it’s possible that the merchants will stop charging the fees.