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Checkout fee questions answered

By Janna Herron ·
Wednesday, January 30, 2013
Posted: 4 pm ET

I'm getting a lot of questions about a class-action lawsuit that has allowed retailers to charge people a checkout fee if they use a credit card.

The questions come after a provision in a preliminary settlement between retailers and Visa, MasterCard and major banks went into effect on Sunday. The provision allows merchants to recover the costs they are charged to accept credit cards.

Here are four common misconceptions or questions over the new credit card surcharge.

1. Are debit cards subject to the checkout fee?

The checkout fee only affects credit cards, not debit or prepaid cards under any circumstances. Even if the retailer runs a debit card as "credit," the credit card surcharge doesn't apply to you, according to Trish Wexler, a spokeswoman for the Electronic Payments Coalition. The EPC is a trade group that represents Visa, MasterCard and other card payment networks.

2. Who profits from the surcharge -- the banks or retailers?

Retailers who impose a credit card surcharge cannot profit from the fee under the settlement. The fee can only reimburse the cost the retailer is charged by Visa, MasterCard and the banks to run a credit card, called an interchange fee. Typically, stores pay between 1.5 percent and 4 percent of the total purchase each time a customer uses a credit card. Now, if retailers choose, customers will pay for their ability to use a credit card at the store. The extra fee goes to Visa, MasterCard and the banks. However, most retailers already have accounted for the interchange fee in the price of their goods and services and shouldn't need to surcharge to recoup costs, says John Ulzheimer, president of consumer education at

3. My gas station has long charged more for credit card purchases. What has changed?

Retailers, including gas stations, have long been able to offer cash discounts to customers who pay by cash, check or PIN debit cards, Wexler says. Retailers offering cash discounts typically post two prices, one for cash and one for credit cards. Cash discounts are most commonly seen at gas stations and liquor stores.

"A cash discount would have been a fair way for retailers who wanted to steer their customers to other forms of payment," she says. "With surcharging, however, an argument can be made that retailers are double dipping. After all, these fees are already built into prices."

4. Who is charging this checkout fee?

You tell me. National retailers aren't saying what they'll do. I haven't seen any announcements about implementing this credit card surcharge. In fact, several major retailers such as Wal-Mart, Target and Home Depot are opposed to the settlement that provides the option to surcharge. There is some confusion over whether retailers that operate in states that ban surcharging can, at the same time, impose a surcharge in states that allow it. Read more about that in Tuesday's post. The EPC, MasterCard and the attorney for the retailers in the settlement case all say that retailers can impose surcharges in states that allow it, even if they operate in other states that don't. The National Retail Federation says they can't. Maybe that's one for the courts to decide.

Follow me on Twitter: @JannaHerron

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February 01, 2013 at 5:03 am

I bought some items at a Tesoro store here in Seattle, WA about a year ago - the clerk (an asian guy) told me that, because I did not spend the minimum amount (I was using a credit card) he was going to charge me a $3 fee. I looked at him and calmly told him that the "minimum charge" practice was illegal - he promptly gave me an "I don't speak English" look even though he spoke to me, in perfect English, when I entered the building. I re-iterated to him that the "minimum charge" practice was illegal and, after glaring at me, he grabbed my card of the counter, swiped it, gave it back to me, and I left.

Needless to say, I don't patronize that Tesoro station anymore.

February 01, 2013 at 4:47 am

Anyplace that charges these fees must have a notice posted in full view as you enter.They must also show it on your receipt.My state is one that dosen't allow these charges at all..California..Maybe that's because we are already to broke to pay them..LOL

February 01, 2013 at 2:34 am

Chuck when we ran our own business I was told implicitily by the bank who issued the visa/disc/mc machine that you can not tell them they have to purchase a certain amt to credit, its not allowed. But by who the visa co? I dont know I just never did it. But we often paid so much in fees for processing them it wasnt worth it honestly.

February 01, 2013 at 2:05 am

the store that i visat tells me that i have to spend at least $10.00 to use my debit card or get a sircharge of .50 cents. can thay do that ?

February 01, 2013 at 1:25 am

Will the consumer be aware of or notified prior to a purchase? Will the fee show on the receipt?

February 01, 2013 at 12:28 am

WEll, I can be really bullheaded (askmy wife) and I will not deal with any business that charges, no matter how badly I want the item. It's just that simple

February 01, 2013 at 12:23 am

I will not use a credit card if I will be charged for using it. I will not even keep a credit card if there is an annual fee.

January 31, 2013 at 10:37 pm

I would not cancel my credit cards, I would just choose not to shop at the stores that charge the fee. I should not have to pay that, that should be on the store, it is one of the costs of doing business.

January 31, 2013 at 9:27 pm

well i guess they won't miss me cancell my cards

January 31, 2013 at 9:25 pm

good by cards