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Credit card fees possible, but unlikely

Published: Wednesday, Feb. 13, 2013 11:30 a.m. CST

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If you feel you are paying more by using your credit card, you might be.

As a result of an antitrust lawsuit settlement between credit card companies and merchants, merchants are free to impose a 1.5 to 4 percent surcharge on customers paying by credit card.

The big question

Which retailers will impose such fees? Locally, it appears not many.

“We’ve been eating the expense before, so we’ll continue to do that,” said Kent Sinn, owner of Creston True Value. “Unless something changes with the big players, we don’t have any plans to do so.”

According to True Value Retail Consultant Rob Bock “it’s not going to happen.”

“The retail environment would not be conducive to additional fees,” said Bock. “There are too many options for consumers.”

Bock provided the example of gas stations card fee practices.

“Years ago, the gas stations tried that,” said Bock.  “One price for the charge card and one for cash. That didn’t work and went away. Consumers are pretty educated. There are no secrets anymore. And that’s good. Because we are all consumers.”

Local retailers agree that doing so is bad for business. Walmart, Maurices, Akin Building Center and Coen’s Furniture would rather swallow the cost.

“In doing so (applying a surcharge), it’s like having a black mark on your name,” said Sinn.

“People will just go somewhere else.”

Litigation over fees started in 2005 when merchants accused Visa, MasterCard and other large banks such as JP Morgan Chase, Bank of America and Wells Fargo of conspiring to unlawfully fix prices and overcharge merchants billions of dollars in credit card swipe fees.

In the settlement, reached on behalf of a class of approximately 7 million U.S. merchants, Visa, MasterCard and other large banks agreed to forfeit a total of $7.25 billion and lower credit card transaction swipe fees for merchants in addition to allowing merchants to pass on the surcharge to consumers.

The surcharge, or interchange tax, is meant to offset the cost of processing credit card transactions for the merchant.

Settlement

According to the National Retail Federation, under terms of the settlement, retailers who add a surcharge to purchases made with Visa or MasterCard are required to do the same with American Express cards; however, AMEX prohibits surcharge fees. Therefore, merchant who accepts American Express in addition to VISA and MasterCard are not allowed to surcharge any of those cards.

Consumers should know  4 percent is the maximum surcharge merchants can charge per transaction. Additionally, merchants may only apply the surcharge to credit card purchases, not purchases made with debit card or prepaid cards.

Retailers who choose to impose a surcharge on credit card transactions are required by law to notify customers before customers make an actual purchase at the store entrance, at the point of sale, whether in person or online, and disclose the surcharge on every receipt.

Currently, 10 states prohibit the surcharge; California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Consumers charged a surcharge or checkout fees in these states are encouraged to report the retailer to the state attorney general’s office.

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