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Most Retailers Opt Not to Charge Credit Card Swipe Fees

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Most Retailers Opt Not to Charge Credit Card Swipe Fees
January
31

Last Sunday, U.S. retailers in all but 10 states got the chance to charge customers who use credit cards a fee that the merchant normally absorbs. But major chains say they don’t plan on tacking the charge on to card users’ bills for competitive and practical reasons.

The interchange fees, also known as swipe fees, have been at the heart of a long legal dispute between the credit card networks and retailers. The antitrust suit, which was brought against MasterCard and Visa by several major retailers in 2005, received preliminary approval for a $7.2 billion settlement in November. Fees typically are from 1.5% to 3% of each purchase and cost retailers millions of dollars each year.

Part of the settlement was implemented last weekend when retailers in 40 states were allowed to begin passing that charge on to customers.  Ten states were not allowed to do that though, due to current laws in those states restricting this practice.  And those 10 states account for 40 percent of credit card purchases, according to the National Retail  Federation (NRF). The states include California , Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Industry group says fees are unlikely

The NRF issued a statement yesterday saying few, if any, retailers are expected to pass the fee on to consumers for competitive reasons. But they also said that the settlement requires merchants who add the charge to Visa or MasterCard purchases, to also charge American Express customers. But the American Express contract bars merchants from doing that, so if the store accepts all three cards it can’t impose the fee.

Another obstacle is that Visa and MasterCard require retailers to have the same card acceptance policies in all of their stores, which stops major chains from implementing it because it is only allowed in 40 states, and the 10 that are excluded are all major markets.

Caveat emptor

The settlement requires stores to notify the card issuers 30 days in advance of imposing the fee, in addition to posting clear signage at the store entrance, point of sale, on their website for online purchases, and on the sales receipt, which would require planning and adjustments. Credit card users in states that can charge the fee should check their receipts to make sure no extra charges are being applied. If they are, they can choose to pay in cash, use American Express, or go to another retailer that doesn’t pass the charge on.

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