A new rule going into effect Sunday couldÂ cost you more when shopping with a credit card at some stores.
Visa and Mastercard have agreed to letÂ merchants add a service charge equal to the cost of processing a creditÂ 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 settlingÂ an antitrust suit brought by retailers.
Merchants will still not be allowed to add aÂ surcharge to debit card transactions.
However, few stores seem interested inÂ raising their customer’s costs.
‘We have discussed the settlement with many,Â many merchants, and not aÂ single merchant we have spoken to plans toÂ surcharge,’ said Craig Sherman,Â spokesman for the National Retail Federation,Â which was not involved in the lawsuit.
Wal-Mart, Target, Sears and Home DepotÂ all told NBC Newst hat they had no plans to add aÂ credit card surcharge.
California, Colorado, Connecticut, Florida,Â Kansas, Maine,Â Massachusetts, New York, Oklahoma and Texas all ban credit cardÂ surcharges.
Both Visa and MasterCardÂ have rulesÂ requiring retailers to handle credit cards the same way in every storeÂ regardless of location, so if a chain has a store in a state where surchargesÂ are banned then none of its locations would be allowed to have aÂ surcharge.
Under the settlement terms, a merchant addingÂ surcharges onVisaÂ or MasterCard would have to doÂ the same with American Express cards, but thatÂ company prohibits surcharge fees.
‘The bottomÂ line is that very few retailersÂ would be able to surcharge under theÂ settlement, and that the vast majorityÂ don’t want to surcharge even ifÂ they could,’ Sherman said.
‘In the brick-and-mortar world, no one whoÂ does any sort of volume business is going to want to surcharge because it willÂ drive their customerÂ crazy and slow down transactions,’ agreed Ed Mierzwinski,Â Director of Consumer Programs at U.S. PIRG.
With the exception of small retailers, creditÂ surcharges are not a major issue for most businesses.
Still, over time they could become popular asÂ a way for stores to make extra money.
That’s because stores already factor in theÂ cost fo processing a credit care when they price their merchandise. Unless theyÂ dropped their prices,Â second charge would be double-dipping at the loss ofÂ the consumer.
‘We shouldn’t have gotten to the point, butÂ unfortunately because of theÂ court settlement we have,’ said Edgar Dworsky,Â founder of ConsumerWorld.org. ‘There’s no one standing upÂ for consumers andÂ saying that this is really bad.’
He notes that in Australia, where surchargingÂ originated in 2003, extra charges have boomed to the point where one-third ofÂ retailers charge extra to use a credit card.
Advocacy group ConsumerÂ Action warns shoppers to watch their receipts and argue any fees that don’tÂ belong.
Source: The Daily Mail