If you pay with a credit card, you may soon be charged an additional fee for the privilege.
There’s been a long-standing ban within the credit-card industry on passing credit card fees on to the customer. In a series of lawsuits, many retailers, including Kroger and Safeway, alleged that the credit card companies have been allowed to charge merchants whatever they want in usage fees, because they were forbidden to pass those fees on to customers.
The lawsuits were settled this week, and as part of the settlement, Visa and MasterCard are lifting their policies on passing credit card surcharges on to customers, or charging customers more for paying with credit versus cash. From Consumerist.com:
Earlier this week, we told you that a settlement in a huge lawsuit between merchants and Visa and MasterCard was in the offing and that it could open the door to retailers tacking on surcharges to credit card customers. Well, that proposed settlement has come to pass, meaning you may soon be paying more for the privilege of using your credit card.
But the biggest thing for consumers is that the settlement will alter the Visa and MasterCard’s longstanding policies against merchants adding a credit card surcharge or charging customers more than the price for a cash purchase.
According to the Electronic Payments Coalition, a group of banks, credit unions and payment card networks, any credit card surcharges will be limited to the amount of money the merchant pays to the credit card company. So if a retailer is charged $.35/swipe by Visa, the most it can pass on to you is $.35. Retailers who add the surcharge most post a fee disclosure to the consumer at the point of entry, point of sale and on the receipt.
In states where the law currently prohibits credit card surcharges, merchants will not be able to pass on the cost. Ironically, this case is before a U.S. District Court in New York, one of the ten states where surcharges are verboten. The others are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas.
Though American Express and Discover were not part of the lawsuit, neither of these companies have policies prohibiting merchants from charging extra to credit card users. Instead, their merchant agreements state that a retailer can not charge extra to use these cards if they don’t charge for using competitors’ cards. So now that Visa and MasterCard have opened the floodgates to credit card surcharges, merchants are free to tack on the surcharge for Amex and Discover purchases.