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Settlement Allows Retailers To Add 'Checkout Fees' For Credit Card Purchases

by Staff Reporter
Posted On: 1/28/2013

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TAGS: credit card checkout fee, retail news, credit card transaction fees, merchants credit card fee, Visa, MasterCard, fixed credit card processing fees, swipe fees, cashless vending, vending machine purchases

Retailers in most states now have the option to charge a fee to consumers who pay with a credit card. The new "checkout fee," in effect since Jan. 27, is the result of a multibillion dollar settlement announced last summer between credit card issuers and millions of merchants.

Visa, MasterCard and nine major banks agreed to pay $7.25 billion to settle charges that they were fixing credit card processing fees. Credit card issuers agreed as part of the deal to reduce the "swipe fees" that merchants pay to issuers when cards are used, but only for eight months.

Additionally, the settlement granted retailers the option to add a surcharge for credit card purchases, beginning Jan. 27. The charge can be no higher than the processing fee, which is about 1.5% to 3% of the total purchase price.

The new checkout fee does not apply to purchases made using debit cards, and it is not legal to charge the new fee in 10 states, including California, Connecticut, New York and Texas.

In November, the National Retail Federation and more than a dozen retailers asked a judge to reject the proposed settlement, arguing that the new fees threaten a merchant's ability to keep prices low for customers.

Last summer, Target said it did not plan to tack on a charge customers who use credit cards more "in order to allow Visa and MasterCard to continue charging unfair fees." Wal-Mart called the agreement "bad for both retailers and consumers."

Smaller merchants are also faced with the dilemma: Do they transfer the cost to customers in an already competitive environmen

t or continue to absorb what they consider to be excessive swipe fees?

MasterCard said in a statement that it doesn't expect most merchants to implement the surcharge, since they won't want to drive away customers.

USA Technologies, the Malvern, PA-based cashless vending provider, implemented a two-tier pricing option for its customers last January that allows them to charge a standard vend price for credit or debit card transactions, and a discounted price for cash purchases. It was being used in 11,000 locations in December. | SEE STORY