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Shops to Start Charging you for Paying by Credit Card From Tomorrow

A new rule going into effect Sunday could  cost you more when shopping with a credit card at some stores.

Visa and Mastercard have agreed to let  merchants add a service charge equal to the cost of processing a credit  transaction to the bottom line. The cost of processing is usually 1.5 to 3 perent, and merchants are capped at a 4 per cent fee under the agreement.

The rule change was made as part of settling  an antitrust suit brought by retailers.

Merchants will still not be allowed to add a  surcharge to debit card transactions.

However, few stores seem interested in  raising their customer’s costs.

Charged: Retailers could soon add a fee up to 4 per cent for credit card transactions

‘We have discussed the settlement with many,  many merchants, and not a  single merchant we have spoken to plans to  surcharge,’ said Craig Sherman,  spokesman for the National Retail Federation,  which was not involved in the lawsuit.

Wal-Mart, Target, Sears and Home Depot  all told NBC Newst hat they had no plans to add a  credit card surcharge.

California, Colorado, Connecticut, Florida,  Kansas, Maine,  Massachusetts, New York, Oklahoma and Texas all ban credit card  surcharges.

Both Visa and MasterCard  have rules  requiring retailers to handle credit cards the same way in every store  regardless of location, so if a chain has a store in a state where surcharges  are banned then none of its locations would be allowed to have a  surcharge.

Under the settlement terms, a merchant adding  surcharges onVisa  or MasterCard would have to do  the same with American Express cards, but that  company prohibits surcharge fees.

‘The bottom  line is that very few retailers  would be able to surcharge under the  settlement, and that the vast majority  don’t want to surcharge even if  they could,’ Sherman said.

In the brick-and-mortar world, no one who  does any sort of volume business is going to want to surcharge because it will  drive their customer  crazy and slow down transactions,’ agreed Ed Mierzwinski,  Director of Consumer Programs at U.S. PIRG.

With the exception of small retailers, credit  surcharges are not a major issue for most businesses.

Still, over time they could become popular as  a way for stores to make extra money.

That’s because stores already factor in the  cost fo processing a credit care when they price their merchandise. Unless they  dropped their prices,  second charge would be double-dipping at the loss of  the consumer.

‘We shouldn’t have gotten to the point, but  unfortunately because of the  court settlement we have,’ said Edgar Dworsky,  founder of ConsumerWorld.org. ‘There’s no one standing up  for consumers and  saying that this is really bad.’

He notes that in Australia, where surcharging  originated in 2003, extra charges have boomed to the point where one-third of  retailers charge extra to use a credit card.

Advocacy group Consumer  Action warns shoppers to watch their receipts and argue any fees that don’t  belong.

Source: The Daily Mail

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Posted by on January 26, 2013. Filed under NY News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.