New Credit Card 'Checkout Fee' Arrives This Weekend

[TNHermit]

his Sunday marks the first day that consumers could start paying an extra fee just for using their credit card to make purchases. But don't panic: It's unlikely to kick in right away, especially at the biggest retailers.

First, a bit of background. The fee in question is widely described as a "checkout fee," and starting on Jan. 27, retailers will have the option of charging it on any purchase made with a credit card. The fee came about as a result of a settlement reached in July 2012 between merchants and credit card networks, and is intended to help defray the costs of the swipe fees charged by those networks. As such, it can't be higher than what the merchant actually pays as a swipe fee -- usually between 1.5% and 3% of the transaction.

The settlement was actually merchants' second swipe-fee victory in recent years. The first came in the form of the Durbin Amendment, which capped swipe fees on debit card purchases at 21 cents per transaction. The July settlement didn't cap swipe fees on credit cards, but it did give retailers the right to pass them on to consumers -- if they choose to.

"I don't think we're going to see a mass amount of surcharges come the deadline," said Ruth Susswein of Consumer Action, which has led the charge in educating consumers about the impending fee. Retailers, she says, are more likely to introduce the fee gradually. "It might creep into costs of shopping over time."

Indeed, it's still unclear whether the nation's larger merchants actually plan to take advantage of their new right to add surcharges.


"I would be very surprised if Walmart or Costco or Target or any of the other mega-discount retailers did something like this," said John Ulzheimer, president of consumer education for SmartCredit.com. "Their pitch is, 'Hey we're cheaper than the competition.'" Ulzheimer added that if a big retailer was considering charging the checkout fees, they would start out by testing them in a few select markets to see how consumers responded.

So if you do see checkout fees, it's more likely to be at smaller retailers, which tend not to be winning on price anyway. In fact, Ulzheimer noted, you've probably already seen small merchants charge a form of credit card checkout fee in the past, by offering lower prices to customers paying with cash -- for instance, at a gas station. Now that they're allowed to call the credit card surcharge what it is, more small merchants will try out variable pricing.

Tens of millions of customers will never see checkout fees, though. That's because 10 states have formally banned the practice, a list that includes California, New York, Florida and Texas.

If you don't live in one of those 10 states, though, you could potentially see signs alerting you about checkout fees as early as this Sunday. If you do, you can avoid them by paying with cash or a debit card -- or by taking your business elsewhere.




Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.





http://www.dailyfinance.com/2013/01/...starts-sunday/

[Belfrybat]

Well, thankfully Texas is doing something right for once and has banned the fees.

[wally]

Just pay with cash. No tracking what you bought and you dont have to pay someone to take your money.

[watcher]

Originally Posted by Belfrybat

Well, thankfully Texas is doing something right for once and has banned the fees.

So the state has forced a business to provide a service for free (its not really free someone else just has to pay for it)? What's the difference in that and Obama forcing businesses to provide free health care?

[katheh]

This is ridiculous. Businesses built the cost of accepting credit cards into their pricing LONG ago.

Even if you pay cash, you are sharing the cost of the prevalence of credit card payers.

Now businesses will get a double-dip. I certainly don't see them lowering their prices the % they went up back in the day to combat the cost of CC fees now that they can legally collect their costs back. I am not anti-business. We have a family business. But this is just not right. Just another game of 3-card Monte to fool consumers.

Ridiculous

[painterswife]

There are a lot of small businesses that have not built it into their prices and now will be able to take credit cards and not penalize those that do pay with credit cards but have a level playing field.

[unregistered353870]

Pricing is not that simple katheh. Theres no standard profit margin. Businesses have always charged as much as they can while still making sales and they occasionaly charge as little as they can afford for awhile to win new customers. Its a balance and this won't change it.

Consumers being fooled doesnt have much to do with it. It doesnt matter one bit to the consumer WHY the prices are different. They're either willing to pay what the price is or they're not and if someone else has it cheaper they can go there. You can lower your prices on cash purchases now and if your the only one who does it you will win more customers from other businesses but then they'll probably lower theirs to stay competitive with you.

[Callieslamb]

I pay for everything with my credit card. We get about $800 in gift cards back each year from them. Since we use the CC, the entire pay check gets put into our savings account rather than the checking account and DH transfers the funds as they are needed - leaving the money in the savings acct for as long as possible. We get a tiny bit of interest there too. We've never paid a penny of interest on our card since DH pays it off weekly. I'll absolutely HATE it if they start charging me a fee for using...but I doubt if that fee will equal the $800 we get a year.

[TNHermit]

Originally Posted by Callieslamb

I pay for everything with my credit card. We get about $800 in gift cards back each year from them. Since we use the CC, the entire pay check gets put into our savings account rather than the checking account and DH transfers the funds as they are needed - leaving the money in the savings acct for as long as possible. We get a tiny bit of interest there too. We've never paid a penny of interest on our card since DH pays it off weekly. I'll absolutely HATE it if they start charging me a fee for using...but I doubt if that fee will equal the $800 we get a year.

Generally CC charge a business 3-6% to use their cards. SO if you total up your years purchases and take 3-6% of that ,compare it to the 800.00 you will know about what you will lose if they start doing this

[watcher]

Originally Posted by katheh

This is ridiculous. Businesses built the cost of accepting credit cards into their pricing LONG ago.

Even if you pay cash, you are sharing the cost of the prevalence of credit card payers.

Now businesses will get a double-dip. I certainly don't see them lowering their prices the % they went up back in the day to combat the cost of CC fees now that they can legally collect their costs back. I am not anti-business. We have a family business. But this is just not right. Just another game of 3-card Monte to fool consumers.

Ridiculous

Many places add a fee for using plastic. Some stores have a minimum purchase before they will accept debit cards.

[nostawmama]

I feel like credit card use in our country should be dissuaded and giving a business the option to charge less for folks using cash is a good step. I am actually quite surprised that this went through since I thought that the agenda was to push us further and further into the weakened state of debt....

Callie- you are doing a good thing with your card, taking advantage of the benefits and not wracking up debt. It is too bad that most people don't do this!

[solidwoods]

I think FNC said it's passed in 40 states and it's up to 4%.
Forbes web site says its illegal in 10 states and up to 3%.
http://www.forbes.com/sites/mickeyme...y-a-surcharge/

Will we see a warning prior to purchase about the charge per store?

Will debit and cc transactions be separate (mine comes out of the same acct. difference is debit requires a p.i.n and allows cash back) ?
jim

[katheh]

Originally Posted by painterswife

There are a lot of small businesses that have not built it into their prices and now will be able to take credit cards and not penalize those that do pay with credit cards but have a level playing field.

I, too am a painterswife

My hub does not take CC through his business due to the exposure to chargebacks.

I do take them for my accounting business, though.

[TnAndy]

Originally Posted by katheh

This is ridiculous. Businesses built the cost of accepting credit cards into their pricing LONG ago.

Even if you pay cash, you are sharing the cost of the prevalence of credit card payers.

Now businesses will get a double-dip. I certainly don't see them lowering their prices the % they went up back in the day to combat the cost of CC fees now that they can legally collect their costs back. I am not anti-business. We have a family business. But this is just not right. Just another game of 3-card Monte to fool consumers.

Ridiculous

Yep. This is why we used CC's for years.....because the fee was already baked in whether you paid with cash or plastic. And with the plastic, we get a 1-5% rebate at the pump ( depending on the type of merchandise purchased on the card ).

NOW, we'll probably only use the card at BP for gasoline, as I don't expect them to add a fee on THEIR card for THEIR gas ( If they do, the card gets cut up ) and those places that DON'T tack on another fee.

[Trisha in WA]

As a merchant (we run a guest lodge) we only this last year started taking credit cards...and only because of a special situation. We are taking it in the shorts on the fees. Since we will not have a large number of cc transactions our per transaction fees are outrageous!
I for one am glad I'll be able to pass that along to the customer. I still am happy to take a check or cash too.
Incidentally, we have NOT raised our prices in order to accept credit cards. Please don't lump ALL businesses into one category.

You know. The more I think about it the more I see many of you having a double standard. You want something for nothing (ie the convenience of using a cc with no fee), but get all bent out of shape when someone else wants something for nothing (welfare, unemployment, food stamps).

[Ozarks Tom]

If a merchant isn't taking into account all their costs, product, freight, cc fee, they're not figuring their margins right. If it's part of your base product cost, you have to mark it up. If it means taking a shorter mark up, that's part of doing business, but cc fees are part of the sale, not overhead.

We used to rebate 3% to customers paying cash, if they asked for it.

Large companies, and most well run small ones, already have the fees included (with mark-up) in the sale price. I doubt anyone will be showing a new charge now.

[Liberty'sGirl]

Does this include bills that I pay to companies using my debit card such as the gas or phone company?

[Callieslamb]

Originally Posted by TNHermit

Generally CC charge a business 3-6% to use their cards. SO if you total up your years purchases and take 3-6% of that ,compare it to the 800.00 you will know about what you will lose if they start doing this

We have never paid any fee with our card over the 15 years we've had it.

[unregistered353870]

Dont know if debit fees can be passed on but if they can the most it will be is 21 cents for debit. Not a percent like credit cards.

[Callieslamb]

Originally Posted by watcher

Many places add a fee for using plastic. Some stores have a minimum purchase before they will accept debit cards.

when I go to a specialty store, like a yarn store. I always ask them what form of payment is best. surprisingly, not many say 'cash'. I always them the opportunity to avoid any banking fees most tell me that it doesn't matter. It would matter to me. I'm surprised that people always want me to take pay pal. I see the safety factor...but they want a percentage of my money.