Surcharge: what is it all about?
It’s been called a “Surcharge,” “Swipe Fee,” “Credit Card Fee,” or a “Checkout fee.” Until today, retailers were not allowed to pass these fees on to their customers. But as of 27 January 2013, retailers are permitted to charge consumers up to 4 percent.
This is not a new fee, it’s just the question of who pays this fee. Until January, 27 retailers had to pay a swipe fee every time consumers used a credit card to pay for purchases. For a long time Visa and MasterCard had a rule prohibiting retailers from forcing their customer to pay surcharge fees. But Visa and MasterCard dropped that rule. Now retailers are allowed to pass surcharge fees to customers for credit card transactions only.
The charge is capped at 4 percent. Retailers can only charge enough to cover the processing cost, which is usually about 1.5 to 3 percent of the total purchase.
You may have the impression that you will have to pay 4% more for everything starting today. But the charge does not apply to debit cards or prepaid cards. And you will pay this fee when you use your credit card at retailers who decide to impose the surcharge.
Currently 10 states have already prohibited merchants from adding a surcharge to purchases. They are: California, Connecticut, Florida, Maine, Massachusetts, New York, Texas, Oklahoma, Kansas, and Colorado.
Any retailer who imposes the new surcharge has to notify consumers about it somehow. However, most retailers rejected the proposed settlement and won’t pass that fee on to shoppers. The largest retailers like Starbucks, Target, Wal-Mart, Staples and Best Buy have already made statements saying they will continue sales unchanged.
The settlement that allows retailers to impose a surcharge is only a preliminary. The final ruling is expected later this year.
Latest Credit Card Fees News
Recently Discover shared results of their new online survey. The survey was conducted from February 12 to 17 by research company Dynata on behalf of Discover Financial Services.
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Good news for entrepreneurs and small business owners: there’s a new rewards credit card that gives unlimited cash back and has no annual fee.
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