Get Ready To Pay Surcharge Every Time You Pay With Credit Card

Visa and MasterCard know there is nothing that American consumers love more than fees and surcharges. That’s why the credit card companies are reportedly looking to do away with longstanding rules that prohibit merchants from adding on extra costs to customers who pay with credit.

According to the Wall Street Journal, it’s about time for the credit card networks and card issuers to settle lawsuits involving the swipe fees charged to merchants. As part of this settlement, which involves more than 50 suits filed during the last seven years, it’s possible that merchants will be allowed to tack on surcharges for customers who want to pay with plastic.

The plaintiffs — which include grocery biggies like Kroger and Safeway — allege that credit card providers have long conspired to collude on swipe fees, effectively removing any competition from the market and squeezing exorbitant fees from merchants, which they have then been forbidden from passing on to customers.

In 2011, the hotly debated Durbin Amendment to the Dodd-Frank financial reform legislation attempted to severely limit the swipe fees banks charged merchants for debit card transactions. In the end, the average fee was cut in half, but the amendment did not affect credit card transactions.

Analysts tell the Journal they expect the settlement to be reached before the case matter heads to trial in September, and could be finalized as soon as this week. Some say the most likely outcome is a cash payout to the plaintiffs, a temporary drop in swipe fees and a permanent removal of the ban on surcharges.

Could the elimination of the no-surcharge rule be a good thing?

Some argue that, by allowing merchants to tack on surcharges for credit card purchases, it would compel credit card providers to slash their swipe fees and actually compete against each other. The idea is that if the swipe fees were dropped to a more acceptable level for merchants, they wouldn’t then have to add a surcharge for credit card customers.

Credit card surcharges are illegal in New York, California and eight other states. It seems unlikely that this civil settlement will have any affect on existing laws.

Even though American Express and Discover are not part of this lawsuit, consumers with those cards will still be impacted. Neither company expressly forbids surcharges, but they both have rules stating that merchants can only charge fees for using AmEx and Discover cards if they are charging the same fees for all other cards they accept. So if a merchant begins tacking on Visa and MasterCard surcharges, the merchant would then be allowed to do so for AmEx and Discover.

Price of Plastic Going Up? Merchants May Get Surcharge Rights [Wall Street Journal]

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  1. chefboyardee says:

    Meh. This already happens. Local places here get away with it by giving “cash discounts”, which is the same thing as a credit surcharge, except worded in a way that makes it legal already. (IANAL and I don’t know if it’s actually legal, but the internet seems to think it is)

    • Sarek says:

      Same here, though I see it only at gas stations.

      Some mom & pop stores say they won’t take credit cards if the bill is under a certain amount (i.e. $20), so that’s probably a differently-worded exception.

      I wouldn’t mind paying cash more often at the under $30 level, but what if you’re buying something for hundreds. I don’t want to carry that kind of cash. I shun debit cards. Maybe this will be the return of the paper check?

  2. Coffee says:

    I’m just relieved that when those hidden swipe fees are removed from the transaction, supermarkets will do the sensible thing and incrementally lower the cost of their products so that in the end, consumers who pay with cash don’t have to shoulder the…

    *listens into his ear piece*

    What’s this? Mhm…mhm…not lowering prices? Mhm…increasing? What?!?…Mhm…

    *lowers hand from ear*

    Those mother|expletive deleted|

    • eirrom says:

      Nicely done +1

    • Blueskylaw says:

      For the life of me I can’t figure out what comes after the word mother. I just ran a 128 bit encryption program with the MD-5 hash generator powered by 2 D-Cell Energizer batteries and all I get is an error message saying that I need to contact my 12 year old cousin for more help.

      • Coffee says:

        Me neither! After watching an heavily-edited version of Die Hard 2 on Fox, however, I can only conclude that the hidden expletive is “falcon”.

        • 401k says:

          don’t even need to click on the link to laugh at that…almost as hard as I laughed when Larry found out “what happens when you find a stranger in the alps” (Big Lebowski)

      • Torchwood says:

        There is something about monkey-fighting snakes on a Monday-to-Friday plane.

  3. Loias supports harsher punishments against corporations says:

    This will only serve to harm credit card companies – if I’m paying the surcharge on my CC purchase, I’m likely to switch to cash. And how do we prevent retailers from charging consumers more than the cost of the CC swipe fees, and pocketing the difference?

    • bluevoter says:

      Whatever happens, the credit card companies will not suffer any harm. This is America, where the Supreme Court and the Republican nominee for President have said that corporations are people. However, you don’t get to prevent anything that corporations do. You can only try to fight back after the fact or to take your business elsewhere. Visa and MasterCard will test their options and see what sticks. They have lobbyists who will contribute to candidates and elected officials in California, New York, etc. that prohibit these charges to sponsor legislation to overturn those restrictions.

      • rmorin says:

        Corporate Personhood does not mean what you think it means. It does not mean that they are people with all the rights and responsibilities of a citizen, it means that groups of people (corporations) under a common goal (whether economic or ideological, or frankly whatever) get certain protections like free speech. This is a good thing.

        Corporations are not just Coca-Cola and Texaco, they are simply groups of people coming together. Occupy Wall Street was a corporation in most senses, The Greenpeace movement has many corporations. Should they not be allowed to use their resources to protest?

        The supreme court ruling I believe you are referring to was NEVER about debating corporate person hood, if you understand anything, please understand that. It was about election law which banned speech in the form spending money on political advertisements by corporations, including non-profits and unions (a recent ruling last month takes some of the power away from how unions can secure funds, but they still have the ability to exercise free speech). The supreme court decided that you can not prohibit people from using their pooled resources to exercise their free speech in advertisements promoting their political allegiance. How can you possibly say this is a bad thing?

        http://en.wikipedia.org/wiki/Corporate_personhood

        http://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission

        People like yourself trot out terribly inaccurate, overtly simplified and politically charged arguments to make yourself feel good, but you are so far from helping situations like consumers being charged credit card fees it’s incredible. Please educate yourself and not listen to so many sound bites!

        • JJFIII says:

          There are two misconceptions in your argument

          1. Money does not equal speech (until CItizens United)
          2. Corporate “personhood” is a ridiculous concept anyway. If a corporation is entitled to free speech, then you are saying they want the good of personhood, but none of the responsbilities (like personal bankruptcy when their business goes under)

          Quite frankly, I would happily accept corporate personhood, if shareholders of a bankrupt company were required to pay the bills of the corporation. A corporation is made up for one reason. TO PROTECT SHAREHOLDER MONEY. That is it. They should not be allowed to pool their money with other like minded companies (trade associations), AND most importantly, every every publicly traded company should be REQUIRED to tell every stake holder where they spent money on politically.

          • longfeltwant says:

            I would be much more willing to accept corporate personhood if it were applied more widely. Oh, really, a corporation is a “person”? Well, great then, it has to pay taxes like the rest of us “people”, which means the same tax rates as everyone else plus no deductions for business expenses (I can’t deduct my rent, why can a business?). Also, it has to go to jail when it breaks the law (either the CEO can serve the sentence, or the business can suspend all operations for the duration of the sentence).

            Of course, that would be absurd, because the entire notion of corporate personhood is absurd. Personhood was a part of the decision in Cit United, but personhood isn’t the reason why Cit United was a bad decision. The reason is, because the court specifically rejected the argument that unlimited, secret monetary donations to political candidates was equivalent to bribery. On that issue, the court got it wrong: unlimited secret donations is pretty much literally the definition of “bribery”. Thus, the court decided that bribery is free speech, and on that issue I simply think they are wrong. It is unfortunate that we will have to live for a hundred years with that terrible decision, before an enlightened court overturns it.

            • rmorin says:

              Again, you are operating off of sound bytes. Corporate person hood is much more complex and important provision of American law that is important all the way down to the ability to simply have any contract with a business be valid. Please, please, please at least read the wikipedia article. It is not as simple as “Hurr Coca-Cola can’t be a person!” and is simply how we define law when groups of people are working together instead of independently.

              http://en.wikipedia.org/wiki/Corporate_personhood

              • George4478 says:

                You’re wasting your breath. It’s so much easy to shout ‘the Supreme Court says corporations are people!!’ than to actually read what they said.

                You can’t talk facts to the “Rethuglicans are evil!” crowd.

          • rmorin says:

            1. NO! Please don’t tell people they are wrong when you can’t bother to research the topic! Citizens United only had to do spending money on elections, NOT speech in general. Beforehand, and continuing corporations can spend money to deliver whatever messages they so please, Citizens United only had to do with the Federal Elections Commissions laws that prohibited political messages relating to upcoming elections.

            http://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission

            2. Again please, please, please research this topic. Corporations are not afforded all rights, hence do not have all responsibilities. Corporate personhood is essential towards our system of laws and regulations.

            http://en.wikipedia.org/wiki/Corporate_personhood

            You are advocating things like unions to not be able to spend money on signage, protest signs, advocacy etc. Unions are corporations too! Just because there are “bad” corporations does not mean that you should be willing to take away the rights of the “good ones”.

            • castlecraver says:

              It’s clear you believe you’re the voice of reason in this thread, but you are incorrect. CU had quite a bit, perhaps everything to do with free speech; please read the court’s opinion if you disagree. In fact, there are quotes that strongly support this interpretation in the very article you linked. Anyway, you conceded it had to do with free speech in your earlier comment, so I’m not sure if you’re admonishing someone for agreeing with you or what.

              From the opinion’s abstract: “Although the First Amendment provides that “Congress shall make no law . . . abridging the freedom of speech,” §441b’s prohibition on corporate independent expenditures is an outright ban on speech, backed by criminal sanctions.” Further on, the opinion gives several examples of speech that, in the absence of their ruling, could have in theory been prohibited by the statute (this line of questioning during the argument is thought by many to have sealed the case’s fate). The line from Scalia’s dissent in Austin (one of the rulings explicitly overturned by CU) “there is no such thing as too much speech” very much forms a philosophical keystone of the majority opinion.

              Of course, the end result of CU involved much repealing of established precedent and duly-passed election reform law, so to say it “only” had to do with the issue at hand before the FEC (“Hilary” the film) would be to ignore Roberts’ and Kennedy’s wrangling to bring the case back to the court and re-argued so that they might rule on the much broader issues rather than the specific case. It would be an remarkably naive position, one that you seem to have embraced despite your appeals for research.

              • rmorin says:

                I don’t understand, what you are telling me I’m wrong about. Are you looking at what I responding to?

                I responded to the completely simplistic and incorrect: 1. Money does not equal speech (until CItizens United). This is simply not true. Pooled or simply directed money and resources from corporations being used to promote speech existed legally before the CU ruling. It was that in FEC regulations, they barred political messages related to upcoming elections. Unions and corporations were completely free to direct or pool money towards speech (regardless of content) as so long as it did not violate that tenet. Even after the ruling corporations and unions can still not donate to candidates. They have to have their on corporation, with is the central tenet of this all. That people can get together to pool their resources to promote their speech and the government is not allowed to infringe upon that. Again I am not sure where you are missing what I am writing.

                Finally, CU had not a thing to do with corporate person hood, so people lumping the arguments together and saying we should ban what is a complex and entwined part of American law because they disagree with elections laws are completely throwing out the baby with the bath water.

        • hexx says:

          I’m Willard Mittens Romney, and I approve this message!

        • Vegetius says:

          IN THEORY, corporate rights are nothing more than the rights of the shareholders, exercised collectively. The problem is that most shareholders don’t give a rat’s ass what the hired help gets up to, as long as the stock price stays up and the dividend checks arrive on time. Absentee ownership is never a good thing.

          • rmorin says:

            I agree, but we must remember that we should not take away the rights of “good” corporations, because we do not like what “bad” ones do.

  4. AnonymousCommenter says:

    “Some argue that, by allowing merchants to tack on surcharges for credit card purchases, it would compel credit card providers to slash their swipe fees and actually compete against each other. The idea is that if the swipe fees were dropped to a more acceptable level for merchants, they wouldn’t then have to add a surcharge for credit card customers.”

    Because deregulation has resulted in lower prices for Phone Services, Airline Tickets, and other deregulated industries.

    • NeverLetMeDown2 says:

      “Because deregulation has resulted in lower prices for Phone Services, Airline Tickets, and other deregulated industries.”

      Can’t tell if you were trying to be sarcastic, but it 100% absolutely has led to dramatically lower prices for phone services and airline tickets.

      • longfeltwant says:

        Agreed. My guess is that AnonymousCommenter is trolling, but it’s possible that they are blinded by ideology. It’s hard to say.

        Cf. “Poe’s Law”

    • humphrmi says:

      First, they’re not talking about deregulation. This is about a civil lawsuit between card issuers and merchants, and the issuers voluntarily allowing merchants to tack on surcharges. Without this potential settlement, assuming it went to trial and the credit card issuers prevailed, there would still be no regulations regarding swipe fees or surcharges on credit cards.

      Second, I remember when a round trip flight between Chicago and, say, San Antonio TX or San Francisco, CA (places I used to fly regularly in the 1970′s) cost $2500 round trip, coach. Today? Even with baggage fees, seat fees, etc: about $800 (and I’m being liberal with the fees). Hopefully your comment was not sarcastic, and you actually meant that deregulation has resulted in lower prices. Now quality of service? That’s a completely different issue.

      • Blueskylaw says:

        “Second, I remember when a round trip flight between Chicago and, say, San Antonio TX or San Francisco, CA (places I used to fly regularly in the 1970′s) cost $2500 round trip, coach. Today? Even with baggage fees, seat fees, etc: about $800 (and I’m being liberal with the fees)”

        Well I remember when I bought a computer in 1986 with a 40 Meg hard-drive and less than a Meg of Ram for $4000 and now I get a computer 100,000 times more powerful for 1/10th the price. The reason it costs less now is because it literally costs less now. Just because something costs a fraction now of what it did 30 years doesn’t mean it’s now a bargain at $800

        • EvanMax says:

          It is an objective fact that as technology progresses, cutting edge parts fall dramatically in price, as well as becoming more powerful, due to advancements in the field and mass-production.

          What costs on the side of airlines have decreased since the 70s? Fuel costs are up. Average wages to workers in nominal dollars are no doubt up, just because nominal wages are up across the board in the past 40 years.

          I’m not seeing what makes an airplane cheaper to fly today than it did back then.

          • Blueskylaw says:

            “I’m not seeing what makes an airplane cheaper to fly today than it did back then”

            Airplanes. Their biggest expense is fuel and the aircraft efficiency gains in 40 years have been tremendous.

          • JEDIDIAH says:

            There are any number of bits of technological progress that have occured in the last 40 years to make doing business in general a cheaper thing. Every aspect of the business can be more efficient both in terms of physical resources and labor.

            Although the main difference in air travel now is that it is marketed to people that won’t pay $2500 for a ticket.

            Airlines may simply be content with smaller margins.

  5. benminer says:

    Economically speaking, allowing the fees to be passed on is fair. If there is a fee then some people will be less likely to use plastic, which should help drive competition and keep fees down because they credit card companies want people to keep using their cards.

    Having said that, I imagine some merchants would choose not to pass along the fee, either as a a competitive advantage or a desire to keep cash transactions to a minimum. (there are costs involved with dealing with cash to, as well as increased risk of theft)

    • az123 says:

      The problem with this is that the fee is already being passed along, all stores put their operational cost into their pricing, and credit card swipe fees are an operational cost. So truth be told the stores already account for this.. all they are trying to do is find a way to increase their profits and not change the price on the shelf, if they start charging a fee they can leave the price the same and then count that added cost they built in for the fee as more profits.

      • twodumbdogs says:

        This is just not true. All stores do not charge more. I am not allowed to adjust the wireless payments I accept in my store regardless of how they pay. If customer pays their bill with cash I get my agreed percentage. If they pay with a card I get less, because the cc fees come out of my commission, not off the carriers portion.

  6. Allan says:

    This will change my spending habits. Right now, no place that I shop has cash discounts. Some places do have a surcharge (such as the IRS), but generally speaking, the cash and credit prices are the same. And since I get 2% “reward” on every purchase along with a 30 to 60 day loan, it would be silly for me to use cash.

    Change the equation to having me pay an extra 2% for the convenience of using my credit card and my habits will likely change. I would rather have the 2% discount now than wait for it (even if the wait is as little as a month).

  7. Blueskylaw says:

    Seems like Cash and Personal Checks are due for a roaring comeback.

    The saying: Everything old is new again never rang so true.

    • Applekid says:

      Can there please be a law or something that you can’t be allowed to write a personal check in line if your hands can’t write more than 1 wpm? PLEASE???

      “Who do I make it out to? Safeway? Oh ok. Safe… safe…. safe…. S… afe… afe…. afe… A…”

      • Blueskylaw says:

        You do know that the registers will fill out
        everything for you now except for your signature.

        • elangomatt says:

          The problem is that most of the people that still want to use checks probably also don’t trust that new-fangled machine that puts everything on the check for you. My mother is one of those people…. Grrr! At least she does have the decency to write out most of the check before she gets to the cashier if there is any kind of a line.

        • kathygnome says:

          I know that, but the old lady that doesn’t even start to look for the checkbook in her purse before she is presented with the total doesn’t know or care. She has nowhere to go and nothing to do and all the time in the world,

    • Costner says:

      Cash yes… checks no. There is way too much fraud surrounding checks so I don’t expect them to come back. I hate them with a passion and I pray they die a quick painful death.

  8. ninjustin says:

    If I get hit with a surcharge everytime I use my card then I won’t use my card.

    The only benefit I get from my credit card vs cash is my cash back points but If I’m being charged then the benefit is gone. It’s really going to hurt my bank (Ally) because they rely on me using my card vs cash.

    • purepoppeople says:

      This is me too and why I don’t understand how this will benefit the credit card companies. Right now, they make money off me because even though I pay my bill off every month, I use my credit card for any purchase over the $10-20 in cash I keep in my wallet at any given time because I get nominal rewards points. If I start having to pay a surcharge that negates the points, I’m switching to cash and they’ll make nothing off me. I imagine many other people would be this way as well. Will this cause the cc companies to lower their surcharge enough so that all businesses, including small ones, can afford to not charge a surcharge fee and get more competitive rates? Maybe, but I’m not convinced.

  9. AustinTXProgrammer says:

    This change will harm me but I believe it will be for the greater good. I’ll use whichever payment method saves me the most money. Currently that is usually credit (and the card varies by merchant type), but if I have to move to pin based debit.. Fine. I will be hesitant to move to actual cash.

    Violent crime rates have been steadily dropping over the last decade or so (maybe longer, I’m too lazy to look it up). Has anyone done a study to see if this correlates with a move to plastic and today’s nearly bare wallets? If people start carrying more cash will this lead to a corresponding increase? Will anyone notice the correlation or will they blame TV, video games, and guns?

  10. elangomatt says:

    Does anyone know if swipe fees change when someone is using their debit card with their PIN or without their PIN? I’ve always been under the impression that the use of your PIN or not changes how the merchant fees work but I’ve really never known for sure.

    • Bladerunner says:

      If you don’t use your pin, it’s run as a Credit Card. You can only do that if you have a Debit Card that has a Visa/MC logo; there is a difference between Credit Card fees and Debit Card fees; Debit Fees are lower according to my local comic shop.

      • Not Given says:

        Which is why banks prefer to have them run as a credit.

        • HogwartsProfessor says:

          I do debit unless I’m in the gas station with a bunch of people standing behind me. The keypad isn’t very secure and I don’t want them to watch me put in my PIN.

    • jawbone says:

      Rates vary by processor and negotiated rates, but when we recently shopped for a processor we found that average rates were roughly

      1% plus 20-30 cents for debit cards
      2% plus 20-30 cents for regular VISA/MC (2.5% or more for rewards cards)
      3%-3.5% plus 20-30 cents for AMEX

  11. hills says:

    Does this mean my 2% unlimited cash back on my amex will be a thing of the past? I can see that getting cut….

  12. Tim says:

    If retailers don’t like not being able to charge surcharges, they don’t need to accept credit cards. They also don’t need to stick to Visa and MasterCard. Hell, nothing’s preventing them from creating their own credit card network.

    On the other hand, it’s probably hard for individual retailers to negotiate with these behemoths. And it makes sense on principal to allow this.

    But on the third hand, the chances that this would lower prices are about the same as the chances that “That’s a clown question, bro,” will live beyond this baseball season.

    • Scooter McGee says:

      I think we’re going to see more loyalty cards that can be linked to checking accounts. Two gas stations here, Speedway and Rickers (BP), do this. Rickers offers a 10 cent discount this way, but I’m not interested in giving somebody full access to my bank account.

    • longfeltwant says:

      I would be willing to take the bet that if card fees start being passed onto consumers in common transactions, that the card fees will decrease substantially. I have long advocated for this change, for exactly that reason. But, even if that didn’t happen, I would still advocate for that change, on the basis that it would end the subsidy of cash-payers to credit-payers.

  13. az123 says:

    “The idea is that if the swipe fees were dropped to a more acceptable level for merchants, they wouldn’t then have to add a surcharge for credit card customers.”

    Right, more like they will start charging a fee, then the card companies will lower the rates and the stores will think about all the money they are making and keep the fee exactly where it is.

  14. incident_man says:

    The big problem I have with these merchants wanting to offset surcharges the banks are charging them is that the merchants get to write the surcharges off on their taxes! It’s called the cost of doing business. If they don’t want swipe fees, fine, then don’t take the f’n cards! Why penalise those of us who don’t want to carry stacks of bills or a checkbook around to do their shopping?

    I use cards as much as possible because it’s easier for me to keep track of how much I spend and what I spend it on, and I don’t have to worry as much about theft. If I “lose” a card, I just call the toll-free number and get a new card. Plus my cards give me extra warranty protection on my purchases. Does cash or check do that for me???

    • SirWired says:

      Conversely: Why penalize those who don’t mind carrying around cash by charging them the same as customers who cost the business more? If surcharges are in place, if you don’t want to pay a swipe fee, don’t use the f’n card!

      If the benefits are important to you (warranty extension, expense tracking etc.), now you need to pay for them. How is this unfair?

      And I’m pretty sure that the merchant would much rather recover a cost by charging you for it… recovering a portion of the cost because it’s tax deductible isn’t the same thing.

      • cosmic.charlie says:

        You are assuming that it doesn’t cost the business money to deal with cash. This is false. The cost of double counting money, increased security and getting the cash two and from the bank account for a similar cost. Are they going to break it down and say if you have a cc it is a 2% surcharge, but if you use cash there will be a 1.5% surcharge?

    • longfeltwant says:

      “Why penalise those of us who don’t want to carry stacks of bills or a checkbook around to do their shopping?”

      I’d like to make the point that asking you to pay for your own services, is not “penalizing” you. You are costing the company money; they should pass that cost on to you. If they didn’t accept credit cards, you’d be in an even worse situation, unable to pay even if you cover your own costs.

      PS “writing something off on taxes” means you don’t pay taxes on those earnings. It doesn’t man you get all the money for free. It’s a tax deduction, not a tax credit or rebate.

      • incident_man says:

        Simply put and to re-iterate what I originally said, it’s a cost of doing business, pure and simple. If merchants don’t want the cost, then they don’t have to take the cards. People who are willing to pay with cash or check will still shop there; people who want to use a card will go somewhere else.

        This kind of bullshit (pardon my language) regarding passing the swipe fees off on the consumer is already occurring where I live. The businesses that want to charge me a fee for me to use my card get the merchandise left on the counter and me walking out the door, never to return again. I find it disgusting that businesses, in general, always want to pass off any and all price increases (or fee increases) to the consumer, one way or another. As always, there are exceptions to the rule, and those businesses will be the ones who I patronise.

        It’s really simple: If you want to be able to gain more business by taking more types of payments, then be prepared to pay a little more to get that business, otherwise people like me will just choose somewhere else to shop…..period. I doubt very seriously that I’m the only one who feels this way too. Hiding behind a credit/debit card surcharge is a cop-out and just might piss enough people off that they stop patronising said business.

        I’m not going to start carrying wads of cash around because some business owner decides he wants to pass off yet another cost of doing business on to me as a consumer. Wanna be greedy? Go ahead, there’s always other places to shop.

        Businesses, on average, get too goddamn many concessions and breaks as it is, be it in the form of special tax rates or incentives, property tax abatements or reductions, subsidies, special rates on utilities, bigger discounts and special treatment from telecoms, etc; it’s about freakin’ time we consumers get a break!

        /rant

  15. RobHoliday says:

    CC companies charge heavy swipe fees, but returns some of the fees to the customers via reward (points) programs. The retailers are the ones who lose. Quit with the “rewards” and charge a more reasonable swipe fee.

  16. kranky says:

    Not that I’m rooting for CC surcharges, but if it does happen it might actually spur CC issuers to beef up perks (but probably not cashback). I am perfectly happy to pay cash or write a check to save 2% (to pick a number). But I assume CC issuers aren’t going to simply watch massive profits vanish and will provide reasons to use a CC even if it results in a surcharge.

    Also, the protections that come with using a CC have a value like chargeback rights, and some issuers offer an extended warranty, concierge service, whatever. So using a CC could still be a strategic move. I just hope these benefits aren’t tied to an annual fee. It will definitely impact people who have a battery of different cards because there are no annual fees.

  17. SirWired says:

    Really, I have no problem with a merchant charging a credit card surcharge. Swipe fees are a very real cost, and I don’t see why the merchant should be forced to eat that cost.

  18. Jawaka says:

    Unless you have a bank with a few conveniently local branches the odds are that most people will pay a surcharge just to get their cash (ATM fees) if they decide to pay that way so it really ultimately doesn’t make a difference.

  19. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    It looks like the days of using Chase or Discover to get 5% cashback up to $75 on various categories during the year will go away if merchants start charging the customer a surcharge on transactions.

    I hate the thought of going to an ATM and withdrawing all that cash, putting in my purse, and then schlepping off to the grocery store and gas station. So far, my credit union doesn’t charge a “per check” fee, so I might have to go that route or I’ll have to use my debit card.

    RIP cashback rewards – at least I’ve earned almost enough to by my new TV. :(

  20. El_Fez says:

    it would compel credit card providers to slash their swipe fees and actually compete against each other.

    Yeah, that’s going to happen. . . .

    • 180CS says:

      Actually, it might. When you have consumers who don’t understand swipe fees the merchant is paying, they blindly use the card that gives them the highest cash back or nicest logo. Everyone is subsidizing the provider that charges 10%, even if their own is only charging 2, or if they’re paying cash instead.

      Now tell that consumer that because their provider charges 10%, they will pay 10% extra, unlike the other guy, who is only paying a 2% fee, or the guy with cash in hand, who is paying no fee. Suddenly, the company charging 10% is loosing business, so they have to charge a lower exchange fee.

  21. 180CS says:

    Personally, I wouldn’t mind this. A lot of gas stations will already give you a couple percent discount for paying cash, but I still like to use my card. If a store charges me a couple percent more for using my card, I wouldn’t mind either. In fact, I’d like knowing that the actual cost of the merchandise isn’t being raised, effectively making cash/check payees subsidize my card.

    Moreover, I would LOVE if merchants charged the actual fee they’re paying. Suddenly, when visa charges 10% for a transaction, but discover only charges 2, the ccard companies will be forced to compete. This alone would incentivise people going to the provider with the lowest swipe fees.

    • longfeltwant says:

      “if merchants charged the actual fee they’re paying”

      Yes. This is what should happen. Laws in each state should not only allow but specifically mandate that this be the case. The exact CC fee should be added to the purchase price, as a separate line item on the CC receipt: “CARD FEE $1.04″. Suddenly people would say “card fee? why is my Visa card fee a dollar, but my AmEx card fee only eight cents?”

  22. Kestris says:

    Well, this just means people will go back to using cash more than credit for things like groceries and gas.

    • 180CS says:

      Not necessarily. A lot of people like the protection and convenience of that plastic card. Around here, Shell stations will give you a nice 5% discount at the pump if you pay cash, and you don’t even have to go in to do it (the pumps can accept bills on their own).

      Nevertheless, most people still whip out their cards.

  23. dush says:

    Stores can already to a “cash discount” so what’s the big deal?

  24. TravistyRobertoson says:

    CASH is KING!

  25. krom says:

    “The idea is that if the swipe fees were dropped to a more acceptable level for merchants, they wouldn’t then have to add a surcharge for credit card customers.”

    People are either dumb as posts or think the rest of us are dumb as posts. Companies never reduce fees just because they don’t need them anymore. Why give up money? Remember when the FAA was technically unable to charge airlines a tax for a week a year or two ago? Did the airlines reduce their fees to compensate? Hell no!

    Maybe the CC companies will tweak their rules to allow only surcharges no greater than the swipe fees. That would be… well, nice of them. So it probably won’t happen.

    Once upon a time, accepting credit cards was a way for businesses to attract credit card customers. The swipe fees made up for the benefit to the business that accepting cards provided. Now it’s turned into a way for businesses to nickel and dime the customer and they see it as a burden instead of a benefit.

  26. Cerne says:

    Retailers in Canada can already do this and very few places chose to do so. Mostly you pay a swipe fee at mom and pop stores and for purchases under $10.

  27. nopirates says:

    just about every gas station in the NYC/NJ area already charges an extra 10 cents a gallon for credit card gas purchases

  28. BigHeadEd says:

    This is a common practice in Australia and New Zealand, but I must admit I was a bit put off the first time I checked out of a hotel and was informed that unless I paid cash, there was an addition fee of $25. Nice option, but I didn’t have $700A on me at the moment.

  29. PragmaticGuy says:

    As things stand, the merchant is allowed to deduct those fees from gross income so….if we have to pay a surcharge AND they get to deduct the fees as well, they’re doubling that part of their net income and I’m sure they’re not going to claim those fees as income on their taxes.

    • frank64 says:

      You are totally wrong. They would of course deduct any charge, as they would any other business, but they would record the fee they charge you as income. They would not be double counting it.

      It is like any other thing they buy and charge for. They deduct the cost of the sausage on your pizza, but they also charge you extra for it. The tax argument is totally bogus.

  30. hexx says:

    If a store starts charging me an additional fee to use a credit card I will stop shopping there. End of story. I do not carry cash and I will not stand for being charged extra because the store has to pay a transaction fee. Those transaction fees are the cost of doing business, so suck it up.

    • frank64 says:

      That CC fees are the cost of doing business doesn’t fly. It is a costs, that must be passed on, true, but how they pass it on should be their decision and not yours or the banks. Forcing them to pass it on to everyone just means that the banks can charge whatever they want and everyone has to pay it. There are many costs of doing business, and merchants should be allowed to reduce these costs. They are not allowed to here.

  31. 401k says:

    It is legal to present it as a cash discount.

    IANAL but I do work for a credit card processor.

    • longdvsn says:

      Yet gas stations don’t present pricing this way.

      My solution: if the price goes up when I insert my credit card, I put in only a couple drops of gas to make sure the store lost at least 25 cents on the transaction through fees.

      I’m fine with a cash discount…but the advertised price should be the highest possible price you could pay. The same should have to be true of all businesses if the surcharge model was adopted.

      • ZachPA says:

        Any gas station I’ve been to DOES present it with both cash and credit pricing. If the station says 3.149 cash, underneath in smaller print it may say 3.249 credit. Other stations that charge separate prices simply say 10¢ per gallon more for credit.

        I run a restaurant that sells pizza. I coupon all the time, and my coupons specifically say $11.99, and then in small type directly underneath ($12.99 credit). In reality, I charge the $1 fee for credit per transaction, not per coupon or special, even though my customers can use as many coupons and specials as they like. My feeling is that when my customer buys $12 worth of pizza, my margin isn’t high enough to absorb the 25¢ plus 1.4-2.2% card fee, but if they are using two or more coupons and they buy $30 worth of pizza, the $1 surcharge goes a longer way, it’s less of a hit to the customer, and the fact that I’m not getting $1 per coupon isn’t a big deal because the merchant fee is a smaller overall percentage.

        As a business operator, my ultimate goal would be to charge customers exactly what it costs me to process their cards. The problem is that I cannot tell at the time of the transaction just how much their swipe will cost me. Some Visa & Mastercard transactions cost as little as 1.4%. Discover swipes may cost me as much as 3%. American Express is all over the place, depending on the card. The bottom line is that I pay 25¢ per transaction, plus anywhere from 1.4% to 3.9%, and there is no way I can pass that along fairly, so I charge $1.

  32. soj4life says:

    Merchants already have the cost of credit card fees built into their prices. It is the same with the cost of their taxes and rent, these are expenses that pass along to the consumer. What is going to happen will be that stores will charge an extra couple of dollars when you use plastic, it is what gas stations do already.

    • twodumbdogs says:

      Really? You can prove this?
      I run a wireless store and we take payments in our location. I am not allowed to charge more for folks paying with a card. I get a small percentage of the payment as commission for accepting them. If they pay with a card, the fees cut my profit. It COSTS me money to accept cards.
      I think this ruling would be awesome.

      • Tim says:

        Correction: it would be awesome for you.

      • Difdi says:

        Then you’re a bad businessman.

        There’s a technical term for someone who is unable to calculate all the costs of doing business and set prices accordingly. The term is out-of-business. If you take in less money than your costs, or set prices that don’t reflect those costs, your business will suffer.

        • misterfuss says:

          Yeah, but he will make it up in volume!

          /s

        • twodumbdogs says:

          I am a bad businessman because the company I accept payments for doesn’t allow me to charge more if I add a cc surcharge? I am a bad businessman because I follow the rules, no matter what I think of them? Thanks for the lesson.

          • twodumbdogs says:

            Correction: I am a bad businessman because the company I accept payments for doesn’t allow me to charge more if I accept credit cards?

      • Smiling says:

        You don’t have to charge more directly (say by a credit card fee) because the prices are already set so that you can afford to accept credit cards. And, what are you, three? How can anyone possibly “prove it”? But, I would hope that anyone running a business would be intelligent enough to account for all of their expenses when pricing their products. Are you admitting that you were not intelligent enough to do that?

        • frank64 says:

          But do you charge everyone for the charges only some make or do you charge only those that use the service? It is much better to at least give the option to the merchants to make that decision, the same way they do for any other business expense.

        • twodumbdogs says:

          Always talk out of the uninformed part of your ass? I’ll give you a actual example and you see if your comment applies.

          I accept a $20 payment.
          I get 4.5% commission on said payment or 90 cents.
          If I take that on a card I pay .21 cents transaction fee and 1.69% of the $20.. which equals 55 cents.
          So if I take cash I get 90 cents, card I get 35 cents.

          Now lets say I take 1000 of those payments a month.
          All cash I make 900, card I make 350. $550 cost to make $350 profit? Why wouldn’t I want to pass those costs to the guy who doesn’t want to carry cash?

          I do not set the price on service payments so my intelligence isnt in question. However if you have any intelligence you might be able to see why I would favor this ruling.

          Sure I could resort to cash only but, but that could alienate some customers and increase my risk. A sign that says “we only accept cash” is a magnet for those who like to rob retail outlets.

          And lastly, If I put up a sign that says “Debit/Credit cards will be charged a fee” or a customer complains to the carrier, it is pretty easy to get caught.
          But maybe since you are obviously smarter than I am you can tell me what the solution is.

      • salamanderjuice says:

        Have you ever run into any places that offer a small discount for paying cash? There’s a lot of computer stores in the area that I used to live that did that. It suggests the prices are higher only because of credit card fees.

      • Republicrat says:

        You don’t understand what soj4life is saying. Since businesses are barred from charging customers extra for using a credit card, the reaction from businesses is to simply recoup the costs by increasing their sales prices for everyone.

    • poco says:

      Yep. We’re all nickeled and dimed everywhere we shop. It’s getting old, but what can you do about it?

  33. erinpac says:

    If online stores do not decide to add fees (since they wouldn’t be taking cash to compete with the cards), it sounds like a great way to drive a lot of impulse shopping to Amazon.

    I’d carry cash for what I need and a bit for emergencies… but I wouldn’t go to an ATM and back for something I hadn’t planned on.

    • frank64 says:

      But if the fee was reasonable, something like .25 most would pay, especially if they understood.

      Most likely though the banks would change how they do things. They want everyone to use cards, they would lower costs a bit to make it so merchants would not want to charge the fees.

      Merchants benefits from taking cards, they just don’t like the increased costs. This gives them a mechanism to fight back a bit. They will work it out.

  34. framitz says:

    A bigger problem when the container outweighs the goods.

  35. Peggee has pearls and will clutch them when cashiers ask "YOU GOT A WIC CHECK MA'AM?" says:

    I kind of wish the store I work at would start charging fees for plastic. We have coupons where you’re only supposed to be allowed one per day, and people throw toddler hissy fits until management lets them ring things up separately, meaning we pay multiple swipe fees. We lose a lot of money that way (not to mention what we’re losing by letting them get 40% or 50% off multiple items instead of one). It would be nice to have a penalty in place for screwing the system.

    • 12341223 says:

      It’d be nice in general if companies stopped letting people through tantrums to get their way. Its really annoying for those of us who are happy to follow the rules on the coupon and accept one item at 40% off.

      • Difdi says:

        The problem is that if the company stopped honoring tantrums, EECBs would stop working too. One man’s righteous demand for fair treatment is another man’s childish tantrum, after all.

  36. PaulR says:

    Interesting: My employer insists that I pay expensible restaurant bills by credit card…. What then?

    • Willow16 says:

      I’m pretty sure you would also expense the swipe fee. If your employer gives you no choice to use cash, then they must eat the swipe fee.

    • Tim says:

      I would assume your employer would reimburse you the fee too. It’s part of the transaction as a whole, which you had to do for work. So if the employer says you can expense restaurant bills, the swipe fee is fair game.

      Of course, there are no laws saying what employers have to reimburse. But as its a work expense, they’re allowed to reimburse it. And if not, you can deduct it from your taxes as a business expense.

    • RvLeshrac says:

      OH NO, YOU HAD TO PAY THE $0.50 SWIPE FEE FOR YOUR OTHERWISE FREE LUNCH!

      THE HORROR!

  37. karlmarx says:

    I am not sure that this is a good idea, this will bring back check writing. I do not like carrying cash, its a safety issue for me.

  38. ned4spd8874 says:

    Sounds like it’s time for me to cut up my plastic and start using cash again.

    Party like it’s 1999!

  39. HogwartsProfessor says:

    Maybe we just won’t buy as much if we get hit with it, which means the merchants won’t sell as much, and they’ll ahve to work it out some other way.

  40. crummybum11 says:

    I was just reading about how everyone using credit cards has really cut down on armed robberies (because there’s so much less cash to steal.)

    Oh well, I guess the Free Market will figure this out eventually.

  41. SteelBacon says:

    Not regulating fees has worked so well for airlines. I can’t see this being much better esp since the last thing a store wants is to be fat with cash so the thieves (non-bankers) can actually get more than $26.37 when they rob a Wal-Mart.

  42. truthandjustice says:

    Truth be told . . . EVERYONE, whether currently paying by CC or cash or check, is ALREADY being charged a SURCHARGE for your purchases. That surcharge has ALREADY been built into the merchants’ pricing formulas, as a normal cost of doing business. Every product on the shelf ALREADY has a surcharge built into it’s pricing.

    So now, with these new surcharges, we will be getting surcharged TWICE. WOW — how incredibly well fairness and equity work in the free enterprise matrix. (/sarcasm on full throttle)

    • frank64 says:

      Not really, now EVERYONE pays for it, and we have no choice. This way they will be able to only charge the ones who use the cards. I think it was Home Depot that a month ago said it had reduced prices on its good due to decreased costs, and some of the reduced costs were the swipe fee reductions. Companies compete and lower costs many times means lower prices. Look how the price of electronics goes down.

      You must see that there is a lack of the normal pricing mechanism when the person who uses a service is not charged? The person used much more of the service, and the merchants has no way to reduce to fight price increases.

      There is collusion on the part of the banks, this change would help to reduce the effects of that collusion, it DOES use the free market to reduce this collusion. Merchants now are forced to not charge customers directly for this costs, but to add it to everyone bill, they either must do that, or not accept cards. Cards are so important now that they need to accept them. There are two main networks they go through, these networks were set up by the banks. They are competing not to lower prices to consumers, but to bring in higher fees for the banks.

  43. dcatz says:

    Cash is more expensive than credit cards. You have to count the cash. You have to continually audit the cash registers and the cash in the store. You have to pay a security company to haul the cash to the bank.

    This is nothing more than an attempt at fleecing consumers and I’ll have no part of it. Once again, government increases costs for the lower and middle classes by forcing credit card companies to allow surcharges. This is a private contractual matter; no store is forced to accept credit cards and any store owner is free to not accept a particular brand of card if they do not like the terms of the agreement.

    • frank64 says:

      Cash has costs, but probably not MORE than cash. The credit card fees have has double over the years, but it has not with cash. There needs to be the normal pricing constraints on banks for prices to come down.

      It is not us or the banks monopolistic Visa and MasterCard to tell merchants what their costs are and how to pass them on. Let treat the credit card fees like they treat all other business expenses. You want extra cheese on your pizza you pay more, thankfully there no similar monopolistic dairy exchanges to force pizza owners to offer extra cheese for free. The reduction in the power of Visa/MasterCard is best for all.

  44. Geekybiker says:

    End result of this is going to be stores keeping prices the same (which assume CC charges) and then charging you a few percent for CC transactions. Net result is that the consumer will probably pay a couple percent more for everything.

  45. frank64 says:

    http://www.nytimes.com/2010/01/05/your-money/credit-and-debit-cards/05visa.html?_r=1

    ” Competition, of course, usually forces prices lower. But for payment networks like Visa and MasterCard, competition in the card business is more about winning over banks that actually issue the cards than consumers who use them. Visa and MasterCard set the fees that merchants must pay the cardholder’s bank. And higher fees mean higher profits for banks, even if it means that merchants shift the cost to consumers.”

    Right now banks have all the control. Give it to the merchants and we have more control because we have control over the merchants.

  46. MPD01605 says:

    I think we’ll see surcharges on small transactions (or discounts on small cash transactions) under something like $15, but I don’t imagine many places that have a wide range of products doing this. Smaller stores, probably. Larger stores, probably not. Imagine buying a TV (or expensive computer) at [chain store] and being surcharged $100 or something.

  47. cynthiaj0ne5 says:

    If you want to make money using a camera, invest in some camera support systems. If you look online, you can easily find a deal on a DSLR rig. You may even find bargain deals on a DSLR shoulder rig.

  48. dcatz says:

    Funny how that doesn’t work both ways; I have never gotten a discount for asking something without cheese (I consider cheese to be one of the most vile and disgusting substances ever created so I always order everything without it).

  49. Jimmy37 says:

    I want those surcharges. I want the option to choose how I pay and what it costs me. Merchants are sucker-punched with these fees. How is it fair to use a debit card with a signature and the merchant gets hit with both a transaction fee and a percentage of the purchase? The money is in the bank. There’s no risk to the CCC for handling the transaction, unless they let the person overdraft. But that should be the CCC’s problem, not the merchant’s.