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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
Anna
January 30, 2013 at 5:14 pm

How much more do the banks want to milk their public. Charges are just getting out of hand. These banks keep charging more and more for their services and while they do so, then invest your money to line their pockets. The economy is in a very bad way right now, so how much more do they want to take from the middle income public. Let the the politicians pay for their own vehicles, their own insurance and all the free perks they get for being a politican. They work to do their jobs the same way we do.

Gabby
January 30, 2013 at 5:08 pm

It seems that one way or another, the taxpayers bear the burden. Retailers can recoup from us, the taxpaying card holders, the fee charged by the credit card companies, so they pay zip. WHY should we be "stuck" paying the fee when we are patronizing their store with their store cc or a Visa? The relatives and friends I have had that owned a variety of stores (and still do) incorporate their "overhead" into the prices they charge. That's always been a given in business. By the time we pay the state, federal, local, county, municipal,and whatever all taxes, we end up paying the price of the item plus 15% or more, cash or credit. Now they want up to 4% more? And then there are the annual (if any) fees, and the interest charges for unpaid balances. Geez! Let the retailer bear the burden of those fees as they have for decades. We, the taxpayers, were told over and over again that the federal "free" cell phone program to those that qualify (which # of phones issued has tripled since Obama has been president)was paid via the government accessing fees to communications companies. Guess again. The part of that law they "forgot" to mention to us, is that communication companies can charge back the amount they are accessed to their customers ... you and me! Check the "Universal" charge on your phone/cable/internet bill. Like I said, the burden seems to fall back on us. Will it ever stop?

janet
January 30, 2013 at 4:55 pm

as a small business owner we walk a tight rope, we want to make it convient for our customers but to what extent? the credit card companies charge more and more to cover the cost of all these rewards they love to give out to bring in more business than the next quy. the only thing this does is drive up the cost of what you are buying. WAKE UP PEOPLE nothing is for free. when my rates go up i have no choice but to make it up somewhere, so the cost of goods go up. rememeber we also have to pay for paper and ink in the credit card machines. I would love nothing more than if everything went back to cash and we just might stop all the bankruptcys, you can spend what you dont have if you use cash.

a. wylie
January 30, 2013 at 4:28 pm

If I encounter a store in my area of Virginia charging this fee, that will be my last visit to said store...period.

Ron
January 30, 2013 at 10:12 am

Please read the article folks. It would be the retailer who charges the surcharge, not the credit card company. The retailer would do this to recoup the money he pays to the credit card company on every purchase.

Janna Herron
January 30, 2013 at 8:56 am

@Jeanette: Interest charge is charged by the bank that issued your credit card. This checkout fee is charged by the retailer/store to recoup the fees the store pays to Visa, MasterCard and the banks to process a credit card transaction. Retailers/stores typically pay between 1.5 percent and 4 percent of the total purchase for each credit card transaction. So, if you pay $100 to the store by credit card for your purchase, the store gives $1.50 to $4 of that to Visa, MasterCard and/or banks.

Janna Herron
January 30, 2013 at 8:52 am

@Dorothy: The banks won't be charging the fees. Retailers/stores will. However, surcharging is banned in Connecticut, so you should not see these checkout fees for credit card purchases.

Jeanette Luppe
January 30, 2013 at 8:05 am

I'm not certain I fully understand this new option for credit card companies. My credit card statement shows an interest charge on all credit applied on a monthly basis and it is a substantial amount to my charge account. Wouldn't that cover card usage? How does it help the vendor if they pay a fee to swipe and the consumer pays a fee to swipe isn't that double dipping?

Very dismayed credit card customer! Should I close my credit cards "can't" need a card for car rental, reservation for vacation accommodation. Well I think they have us by the you know what...

dorothy setaro
January 30, 2013 at 7:06 am

Can you name the banks that will be charging these fees? I live in Ct and we were told that Ct. can not be charged, however, I feel that if others states can , we might be next.

karen
January 30, 2013 at 3:51 am

my shredder will be happy when i shred all my credit cards.