As if we weren’t paying high enough, a recent settlement by large credit card conglomerates have left us open to an additional charge for using a credit card. What? Yes, you could be officially paying for the merchant’s processing fees (ranges between 1.5% to 3.5%) if you were to use your credit card for the purchase?
Are we going back to the green bills? Not yet, but you must be aware of the fact that some merchants may be imposing a surcharge for credit card use. What is a processing fee? Well, you may not be aware but every time you swipe your credit card, the business that is selling you the merchandise coughs up around 1.5% to 3.5% of the purchase price as processing fees. That’s what it takes for the merchant to route the funds to a payment processor and get it deposited into its bank account.
Wait, but why I should I pay the “credit card extra charge”?
Well, that is the multi-billion dollar question where lobbyists, small business owners, consumers, and large players have been clashing for a very long time. Finally, a multi-billion dollar settlement was reached that would allow businesses to pass on the costs of their processing fees as extra charge for credit card use or a surcharge.
Time will tell if the practice will prevail but for now it is being hailed as a victory by those who pursued the initiative.
Small businesses ask us: Can I charge customers for using a credit card?
Well, you would have to update yourself on current regulation, but in our opinion it is a bad business practice. Sure you would be passing on the extra costs associated with credit card use but by mandating a charge for using a credit card, you will be putting off your customers, limiting the use of credit cards (and hence total spend at your business), and even losing your customers to competing businesses that don’t pass on the extra costs to their customers.
Think about it again, seriously.
What merchants still cannot do (charge for using credit card)
In many states, merchants cannot push for a minimum spending amount if you want to use a credit card. Also, store owners (and other businesses) that accept credit cards cannot charge extra for credit card use in an amount over the processing fees. If you suspect that a merchant is lining up his bank account by collecting unreasonable surcharges, contact your local authorities and consumer protection bureau officers.
It is quite possible that you may already be paying these fees and not know about it. Businesses often use a variety of tricks to raise their prices and label them under different categories to make up for the lost profits and circumvent regulatory sanctions. But until recently, they could not label these surcharges as an extra charge for credit card use. Now they can, but within limits.
What you, as a customer, can do
As a customer, you can voice your concerns with the merchant, avoid shopping with the merchant that imposes a credit card surcharge (if a reasonable alternative is available), use other forms of payment, or shop for businesses online. It is much easier to do comparison shopping online.
You can also file a complaint against a merchant who imposes unreasonable fees as extra charges for credit card use.
Leave a Reply