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Who can surcharge?

By Janna Herron · Bankrate.com
Tuesday, January 29, 2013
Posted: 4 pm ET

Consumers learned this week they could pay more at stores when they use a credit card, thanks to a court settlement that allows retailers to recoup the cost of accepting credit cards.

What remains unclear is which retailers can actually impose this added fee.

Starting Sunday, retailers are allowed to recoup costs from processing a credit card transaction by charging consumers a checkout fee. The new policy comes under a preliminary class-action settlement between retailers and Visa, MasterCard and a host of national banks.

Some who oppose the preliminary settlement say existing rules with Visa and MasterCard greatly limit which retailers can impose surcharges. But the law firm representing the retailers in the case disagrees.

The National Retail Federation, the largest retail trade group, contends that retailers that operate in the 10 states that ban surcharging -- California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas -- would not be allowed to charge the checkout fee in the 40 other states.

"Existing Visa/MasterCard rules require retailers to handle credit cards the same in all of their stores, so national chains that have stores in any of those 10 states would not be able to surcharge in any state," says Craig Shearman, a spokesman for the National Retail Federation. "The same would apply to regional chains that have stores in any of the 10 states."

Not so, says Thomas Undlin, an attorney with the law firm that represents the retailers in the settlement case. Undlin says this issue was brought up at the preliminary approval hearing in November, and it was clarified that a retailer could charge a checkout fee in a state that allows it while also not surcharging in a state that bans it. He said the point was clarified in the settlement notice sent to retailers.

In the notice, it states that "the fact that a merchant’s ability to surcharge may be restricted under the laws of one or more states is not intended to limit that merchant’s ability under the settlement to surcharge Visa or MasterCard credit cards where permitted by state law."

"It seems they are raising a lot of issues because of concerns about the settlement," Undlin says. "This one is not accurate."

Aside from the NRF, several major retailers and associations including Walmart, Target, the National Association of Convenience Stores and 10 of the 19 named plaintiffs have objected to the settlement for a host of reasons.

In the end, it doesn't matter who is allowed to surcharge or not. Not many will, says NRF's Shearman.

"While there can always be exceptions, merchants in general have no intention of surcharging," he says. "We have discussed the settlement with many, many merchants, and not a single merchant we have spoken to plans to surcharge."

Have you found a surcharge? Where and how much?

Follow me on Twitter: @JannaHerron

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16 Comments
michelle
February 05, 2013 at 9:50 pm

I as a mom and pop shop.... Was configuring our expenses for the year and almost had a heart attack when I added up what we paid to the credit card processing company as fees for this year end ....for me to accept credit card or debit cards it cost me over $6000.00 we are not a walmart and we do keep our prices at working man prices...but we as merchants should not be paying for the card holders rewards . The banks arent paying those rewards....the small businesses are...and that takes 4 months of retail storefront rent outta my pocket....not fair

Mary Ann
February 01, 2013 at 9:36 am

I will not shop at a store that charges this extra fee. The economy is bad enough. As they say, the rich get richer and the pooor get poorer!!

Mike
January 31, 2013 at 1:03 pm

If the retailers start charging the check out fee, that will be the end of your shopping with that retailer. Please study your statement and/or call the 1-800 number for your credit card Company after the charge at the retailers and it will give you the total amount of the transaction via phone and/or internet. Then check the amount on your receipt. If the amount is higher, you have been charged the check out fee! It is that simple and have a great day! This is not rock S--------, just simple math!

James young
January 30, 2013 at 10:37 pm

Retailers should start giving discounts to costmers who pay with cash or by checks.

brenda
January 30, 2013 at 9:43 pm

I also will not patronize any retailer who adds a fee for me to use my credit card. These same retailers encouraged us to apply for and use these cards and now they want to charge us an extra fee??? I don't think so.

Thaddeus Kozubal
January 30, 2013 at 6:55 pm

Haven't you noticed that credit card issuers are now offering you 5-20% cashback in points or miles? That's been a scam from the beginning. It's gone from 1 or 2% to the 5-20% range. The issuers are trying to draw your business in the hopes that you never redeem their offer, or you end up floating your balance with minimum payments so they can make their usury interest rates up to almost 30% a month. And, you certainly don't want them to pay for this. Retailers were eating the cost until just recently when this cashback offer is eating into their profits. Yes. It is another way the banks are sticking it to you with a hidden cost at their benefit. When is the federal government going to stop taking "presents" from these credit card issuers and start treating them as the gangsters for which they are? We need severe regulation on these crooks in Wall Street clothing.