New Credit Card Fee May Be Coming

As part of the fallout of a $7.25 billion anti-trust settlement brought by a number of retailers against Visa, MasterCard, and other large financial firms, stores in most states may begin charging point-of-sale “checkout fees”—up to 4% of the total purchase—for credit card transactions. Ostensibly to compensate for raised swipe fees from credit card issuers, the credit card fee has already generated quite a bit of controversy.

A host of major retailers, including Wal-Mart and Target, joined the National Retail Federation in arguing against the settlement’s repercussions, claiming that it burdens them with an impossible choice: either retailers swallow substantially higher costs for swipe fees, or they take the risk of passing the credit card fee on to customers. The deal is still evolving, but it’s hard to say at this point whether the final terms will improve the situation. Logistically, implementing register changes and extensive paperwork may not prove worthwhile to many merchants. Ultimately, consumers’ purchasing power and merchants’ bottom line will be the deciding factors for the surcharge question.

Hardest hit will be smaller or low-margin businesses without the clout to negotiate lower rates from the credit card issuers. And consumer advocates claim that allowing the credit card fee would set a dangerous precedent, one that was mercifully avoided when consumer ire forced banks to roll back debit card fees over the past few years.

Not everyone needs to worry; ten states (among them New York, California, and Texas) have made the new fee illegal, and cash and debit purchases will remain unaffected. There are also laws requiring retailers to maintain the same card acceptance policies in all stores, which could prevent the new surcharge from taking off in national or regional chains.