High Credit Card Fees? Merchants Want to Pass Them on... - Legal News


Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Legal » High Credit Card Fees? Merchants Want to Pass Them on – to YOU!

High Credit Card Fees? Merchants Want to Pass Them on – to YOU!

The content is accurate at the time of publication and is subject to change.

We’ve written before about interchange fees – the fees charged to merchants by Visa, MasterCard, and other credit card issuers. Some merchants, especially gas station owners, have been up in arms about the fees for quite some time, saying they are being driven out of business by exorbitant “swipe fees” – as interchange fees are also called.

The latest development is a lawsuit brought against Visa and MasterCard by retail giants Kroger, Safeway, and Payless ShoeSource. They say that Visa and MasterCard conspired to set high interchange fees – usually about two percent of the purchase price – and strangle merchants with fees.

MasterCard and Visa have been in settlement talks with the merchants suing them, and Bloomberg reports that a settlement is in the works this week – a settlement that would allow merchants to pass those interchange fees on to the customer.

Cash Only!

Interchange fees are one of the big reasons that many small retailers don’t take credit cards at all – that swipe fee can make a difference to a small merchant or restaurant, leading some to have a “cash only” policy that sends customers with plastic running for the nearest ATM when the check arrives.

However, the convenience of paying with a credit card can’t be overstated – many people in this day and age just don’t carry cash at all anymore, relying on that fantastic plastic for everything from a candy bar to a tank of gas. Accepting credit cards – or not – can make a huge difference to a merchant’s bottom line.

Michael Germanovsky, Editor-in-chief of Credit-Land.com, says that businesses who don’t take credit cards “are doing themselves a big disservice. Even plastic cards are going the way of the dinosaur, as Google Wallet, Isis, and other mobile payment systems are becoming more viable. If a business doesn’t even take a credit card, how will they keep up when payments go completely mobile? Cash is on the way out.”

Don’t Panic

Matt Schultz, who writes a personal finance blog on InvestingAnswers.com, says that this lawsuit could be a “game-changer” and that he will start paying cash instead of using credit cards for all his purchases if merchant impose a surcharge on customers paying with credit cards. “If I have to pay extra for everything I buy with a credit card, there’s no point in collecting all of those frequent flier miles to try to earn big trips,” writes Schultz.

At Credit-Land.com, we advise people not to panic. In the end, this settlement could be a good thing for consumers. For one thing, merchants may give a discount to cash buyers, rather than imposing a fee on credit card users – leveling the playing field for buyers and leaving them the option of taking the discount or the credit card reward points.

For another thing, the result may be a temporary reduction in fees, which would give both merchants and customers time to adjust to the new rules and decide the best course of action. Chris Morran, of The Consumerist, writes of the impending settlement, “it would compel credit card providers to slash their swipe fees and actually compete against each other. [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.”

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Swipe Fee Settlement Struck Down Again
Swipe Fee Settlement Struck Down Again

Posted: July 25, 2012

Wal-Mart is the latest retailer to reject a settlement with Visa and MasterCard. The $7.25 billion payout would have been the largest ever antitrust settlement in history, but Wal-Mart and other retailers say that it doesn’t begin to fix… Continue reading

No Early Appeal in Visa/MasterCard Suit Settlement
No Early Appeal in Visa/MasterCard Suit Settlement

Posted: December 12, 2012

A bid for an early appeal of the preliminary approval of Visa and MasterCard’s settlement offer in an antitrust suit was turned down this week. Continue reading

American Express and Costco to Break Ties
American Express and Costco to Break Ties

Posted: February 17, 2015

American Express and Costco are ending their relationship, with the split slated to take effect on March 31, 2016. Continue reading

Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
For Excellent, Good Credit
Earn unlimited 1.5% cash back on every purchase, every day
For Average, Fair, Limited Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!