Credit Cards: Starting Jan. 27, Retailers Can Charge You 'Checkout Fee'

Credit Cards: Starting Jan. 27, Retailers Can Charge You 'Checkout Fee'It has nothing to do with the fiscal cliff or any reform legislation, but retailers can charge you a “checkout fee” starting Sunday – a fee equal to what they pay to accept the card – typically 1.5 percent to 3 percent of the entire purchase.
Retailers don’t have to do this, and most are not expected to charge an extra fee that penalizes customers just for using plastic.
But consumers should be on the lookout for signs at their retailers that provide a warning about this new fee. Businesses are required to put these signs up where you can clearly see them.
This new fee  – which applies to both in-store and online transactions – comes from a recent $7.2 billion settlement between retailers and the payments industry over so-called interchange fees or “swipe fees.”  That’s industry lingo for the fee that a store pays your bank when you use a credit card at checkout.
The settlement allows retailers to pass their credit card costs onto consumers. Not all merchants will charge this checkout fee. It’s up to individual business owners.
Checkout fees are only permitted on credit and charge cards, and not on debit cards.
Ten states don’t allow these types of fees: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Retailers are allowed to charge only the amount that is equivalent to what they pay to accept the card, which in the U.S. is typically between 1.5 percent and 3 percent of the total purchase, although a maximum fee of 4 percent is allowed.
To avoid surprising consumers with the new fee, retailers must provide “clear disclosure” – such as clearly visible signs that must be located at the store entrance; at the point of sale; and offline and online on customer receipts.
Gerri Detweiler, director of consumer education at Credit.com, tells ABC News that smaller merchants are more likely than big chains to pass the cost of accepting credit cards to their customers. They feel a bigger hit from the fees.
Detweiler suggest that consumers tell their merchant if they object to the new charge.
“If enough consumers complain, a merchant will fear losing business and won’t choose to pass the charge along,” she said. “I don’t think people are going to like being penalized for paying the way they want to pay.”
The settlement over the swipe fees is a long-sought victory for retailers against alleged anti-competitive practices by the two card networks, Visa and MasterCard,  and the card-issuing banks, including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, Capital One and others.
The lawyers representing the merchants said last year that they expect the settlement’s reforms to put pressure on Visa and MasterCard to limit or reduce interchange fees, resulting in lower prices for consumers. However, “checkout fees” would pretty much kill that notion for customers using retailers who exercise that option.
Here’s a good overview of the new “checkout fees” from the Electronic Payments Coalition.

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