Credit Cards Blog

Finance Blogs » Credit Cards » Checkout fees take effect

Checkout fees take effect

By Janna Herron · Bankrate.com
Monday, January 28, 2013
Posted: 4 pm ET

Starting this week, Americans may find a new checkout fee on their receipts if they pay by credit card.

Retailers can now charge up to 4 percent for credit card transactions under a provision in a class-action settlement between retailers and Visa, MasterCard and major banks. The new provision took effect Jan. 27 and allows retailers to recoup the fees they pay to credit card networks for processing credit cards.

Retailers cannot profit from the surcharges, which affect only credit card transactions and not debit or prepaid purchases, according to the settlement that was reached in July. Ten states -- California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas -- ban these surcharges, so the settlement is moot in those areas.

So far, no major national retailer has announced a credit card checkout fee, says John Ulzheimer, president of consumer education at SmartCredit.com.

"I would be very surprised, too, because they compete on price," he says. "It's like them saying, 'Hey, we're going to raise our prices.'"

Instead, Ulzheimer expects to see the surcharge pop up at liquor stores, gas stations (where profit margins are notoriously slim as it is) and mom and pop shops that operate one or few locations.

MasterCard also doesn't expect many retailers to start charging these fees, either, says company spokesman Seth Eisen. But if they do, customers must be told in advance, he notes.

Retailers must disclose the checkout fee at the store entrance, at the cash register and on your receipt. Online retailers must provide the disclosure on their website.

Follow me on Twitter: @JannaHerron

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
57 Comments
Lo
February 01, 2013 at 2:48 pm

I agree that cash is king. Credit card users can't really complain that the cost is rising when it's their very own card swipes that are causing it. Charge a fee and if users don't like it, they with go some where else or pay in cash. You don't what customers that lose you money, you want customers that make you money. That is why you are in business, is it not? Not charging a fee on small purchases just encourages small purchases. And paying people to walk away with your merchandise is not what you are in business for.

Stormy
January 31, 2013 at 2:27 pm

Stores mark things up a lot it's not fair to impose such a fee, after all we pay a high enough interest rate as it is. Discover offers rewards in certain stores. American Express offers discounts in certain stores & I have seen the stores deplete in the years of owning an American Express card. I had/have no idea that credit card companies charge stores when they charge the holder so much interest. I am in shock!

Rick
January 31, 2013 at 12:33 pm

You think the stores would give discount for cash?

Phil J
January 30, 2013 at 5:33 pm

Just like anything else, it is the cost of doing business. Why is there such a significant difference in a retailer's cost for an item versus the price charged to a customer? To cover the retailer's overhead of course. You have to raise the price or keep them low and go out of business. At the end of the day, it is still the customer who is paying for it. If you as a business owner aren't including fees such as this in your markup, then you only have yourself to blame.

Ralph
January 30, 2013 at 4:16 pm

Call it a fee or raise your price--it's the same money from the consumer. However, if you hit me with a separate fee to cover this expense, should I expect a surcharge when your rent goes up or a special "lighting fee" if utility costs rise? You either have pricing power or you don't. If you do, use it. If you don't, then take the lower margins or do something else. I will pay more to a small business just for the time-savings of not walking 10 minutes to the back of the store and another 10 minutes to the checkout. Build it into the price and quit whining.

Mike
January 30, 2013 at 4:03 pm

@Anne You don't lose at all on credit card transactions. You pay that fee, partially for the convenience of it and the fact that by accepting it, you gain business. I personally do not pay for things with cash. It's all credit cards and I pay the bill at the end of the month. If I was to come to your store, and you only accepted cash, I would not make a purchase there.... ever. You also save money by not having to spend time counting all that cash and by having to take it to the bank and spending that time to do so. You are paying for the convenience, and if you feel that it hurts you so much, stop accepting them and then see how if affects your business.

T.J.
January 30, 2013 at 3:21 pm

For those that say they won't buy from a store that charges this fee, you're only hurting the business that is charging this simply to defray the cost of taking credit cards. I own a small business where my average transaction is under $10 yet 30% of my revenue is through credit cards. There are busier days, like the upcoming Super Bowl, where 60%+ will be in credit cards. The fees on these transactions reduce my revenue significantly but given the volume I take in, I can't refuse credit cards. I don't take AMEX because their fees are even higher. My business is in NJ where it is against the law to refuse to accept credit or debit cards for any purchase amount even with a posted sign. This is the only alternative I have but may not do it simply because the general public will take out their anger on me instead of the credit card companies. So while this seems to be a "win" for a business like me, it's not.

glenn
January 30, 2013 at 2:14 pm

if your telling me anne that you don't allow for a mark up then you should,t be in business.

Vicki Penn
January 30, 2013 at 2:09 pm

The cost of doing business... for any business that charges this surcharge, i will not give them ny business. Businees have more power to negotiate with the credit card companies than individuals do so make something happen- quit offering credit sales if they charge you such a high fee and if enough companies do that it will impact the credit card companies and they will have to adjust the fee schedules. Businesses are the ones with power, not the average citizen...

Anne
January 30, 2013 at 1:44 pm

As a small business owner, it is us that loses on every credit card transaction, not the credit card company or the consumer. The credit card companies offer "rewards cards" which is great for the consumer but we pay for it not the credit card companies!
Credit cards?......toss them and use cash.