Credit card cash registerWill the cost of swiping plastic get more expensive starting this weekend? It depends on who you ask.

On Sunday, January 27, businesses who take Visa and MasterCard can begin imposing a surcharge on consumers who use credit. This new fee for consumers is being called a “checkout fee.” It can only be applied to credit cards, and not debit cards.

The surcharge can’t be more than the amount the business typically pays to accept credit cards. That fee ranges from 1.5% to 3% of the transaction amount.

While stores will have the ability to charge this fee, the National Retail Federation told me consumers don’t need to worry about this fee because the majority of businesses will not pass it on to the consumer. The Retail Federation called it “propaganda from the credit card industry.”

This all stems from a lawsuit settlement involving the retail industry and the credit card giants. The suit is still being debated in court, but these fees would start on Sunday. The retail industry filed the suit to bring down swipe fees. The NRF says the intent was not to pass the charge onto consumers.

“Surcharging therefore would run 180 degrees to the intent of the suit,” the NRF said in a statement. “While there can always be exceptions, merchants in general have no intention of surcharging.” According to the NRF, they don’t know any business that’s passing this charge along.

Business exclusions
Even if a business wanted to pass along the fees, the NRF said that would be difficult due to state and credit card laws.

The settlement won’t trump state law. In ten states, laws prohibit these fees. You won’t have to worry about these fees if you live in the following states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.

The second reason the NRF believes very few stores will charge these fees to consumers deals with the cardholder rules. In a phone conversation and prepared statement sent to me, the NRF said Visa and MasterCard rules require retailers to handle all credit card transactions the same way in all their stores. Therefore, a chain that operates in one of the ten states which prohibits the surcharge, won’t be able to apply the surcharge to any of its stores. The same would apply to regional chains with a store in one of the prohibited states.

Courtesy Visa

Courtesy Visa

However, Visa has a different view on how the state exclusions impact this fee. The Frequently Asked Questions section for Visa states the following, “If a merchant is prohibited from surcharging in one state, Visa’s rules do not prevent the merchant from surcharging in other states that allow the practice.”

I think if a merchant actually did this, consumers would be outraged. Those who live near the state line would simply shop in the other state. This could cause all sorts of problems for businesses and governments who might lose a tax base. I think there is far too much to lose for the big stores to create an unlevel playing field for consumers. Stores are already trying all sorts of marketing techniques to get consumers to spend their money in stores rather than online. This could be a disaster for a store.

The NRF said American Express agreements reduce the number of stores who could charge this fee even more. The settlement says that if you surcharge Visa and MasterCard the same must happen with AmEx. The NRF said the AmEx agreement prohibits the fee.

With all these exclusions, the NRF said very few stores could charge this fee.

I think the most likely candidates for this fee are mom and pop stores where these fees cut too deep into their bottom line. However, the NRF said they don’t even think that will happen because it will be too time-consuming and costly to to re-configure their computer system to accommodate the change. Time will tell. I think at best this will be hit or miss.

Disclosure is key
You will know if a business is charging a checkout fee. For retail stores, there needs to be a sign at the entrance and point of sale. If you are shopping online, the homepage will disclose the fee. The disclosure will have lots of fine print. For the consumer, the most important thing to look for is the amount of the surcharge. Your receipt will also disclose the dollar amount of the surcharge.

The settlement is still pending in court and appeals have already been filed.

If we ever even see these fees, they may be delayed. The stores need to give MasterCard and Visa 30 days notice.

If you see a store charging this fee, let me know on Facebook and Twitter. Would this fee make you shop somewhere else or use cash? Join the conversation by clicking “comment” below.