How often do people read the fine print when they receive their credit card statement, or review the “changes in service” pamphlet? Usually we’re more concerned with the interest, making sure the charges are valid, and sending in the payment on time.
The next chance you get, study your credit card statement for “Merchant Surcharging” and “Understanding Payment Card Changes,” because as of January 27, 2013 Visa warns that merchants in the US and US Territories will be permitted to impose an additional checkout fee on consumers when they use a credit card.
This checkout fee is considered a surcharge. A surcharge is an additional tax that a retailer adds to the cost of a purchase when the customer uses a credit card to pay. This means you will likely see a line on your receipt that will say “surcharge” followed by a dollar amount, along with the state tax (if any), and the total.
This checkout fee is a result of a settlement arrangement from a class action litigation of retailers in 2005, poised again credit card companies.
Visa explains they would normally not permit retailer surcharges, as it penalizes the customers who are already paying a percentage of interest fee on the credit card purchase.
According to ABC27 News, retailers argue they are under the thumb of credit card companies, as they take a hit for having to pay for credit card readers and per swipes fees. Merchants who offer credit card options for payment pay a fee to credit card companies per swipe. This can total thousands of dollars a month in fees that is due to the financial company sponsoring the credit card, in order to continue being allowed to accept and process their card. If a retailer fails to remit payment on these fees, they are banned from processing cards. In order to recoup these costs, the legal settlement will allow merchants the option of charging the customer an additional surcharge on credit card purchases.
What this change means to you? Customers who use a credit card to pay for a purchase will be subject to an additional fee if that particular retailer has opted to participate in applying a surcharge. Retailers will have limits on the amount they are allowed to charge for this fee.
Merchants must disclose the surcharge before the customer finalizes the purchase, either at the store entrance, main page online, or at point of sale at the register. They must also clearly distinguish the surcharge on every receipt.
Debit cards and prepaid, for now, will not be subject to this particular fee. Retailers cannot impose an additional fee to these types of cards.
Surcharging isn’t allowed everywhere. Currently, there are laws limiting surcharging in the following states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Consumers who are subjected to a surcharge or checkout fees in states where they may be protected by law may want to report the retailer to their state attorney general’s office.