You can now be charged extra for using a credit card

Closeup of a credit card

We may see some changes in the checkout line.

Retailers are now allowed to charge you extra if you pay with a credit card.

The question is, will they?

Last year, Visa, MasterCard and the big banks that issue their credit cards unexpectedly settled a 7-year-old lawsuit filed by the retail industry over swipe fees — the charges stores pay the banks to have a credit card transaction processed.

The settlement, whose terms took effect today, puts an end to rules that forbid stores from charging a fee for using a credit card.

You've never gone to a restaurant, whipped out a credit card and discovered an extra fee to cover the cost of processing the transaction.

Any business that tried such a thing would have violated the terms of its contract with Visa and MasterCard and been cut off from accepting credit cards for any purchases — something few merchants could afford to have happen.

But that doesn't mean you're not being charged for using that card.

Q&A: Checkout Fees

Question Answer
Will all businesses charge this fee? No. It's up to each merchant.
Where are these fees illegal? Checkout fees are outlawed in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
What can retailers charge? A fee equivalent to what they pay the processor, typically between 1.5% and 3% of the purchase.
How will I know if a business charges this fee? The retailer must provide "clear disclosure" at the store entrance, at the cash register, on their website if it's an online merchant and on the receipt.
Can the fee vary per credit card? Yes. You may be charged more to use rewards cards and premier cards, but the fee cannot be greater than what it costs the retailer to accept the cards.
Source: Consumer Action

The card processors charged merchants 1.5% to 3% of your bill to process a transaction. That adds up to about $23 billion a year, which the business passes on to you — even if you pay cash.

But now stores and restaurants will be free to charge you different prices based on how you choose to pay.

How many merchants might add a fee for using credit is unclear.

The National Retail Federation told The New York Times that its members aren't enthusiastic about charging customers.

And swipe fees can still be regulated by states.

The NRF points out that swipe fees are still illegal in 10 states and that national retailers with outlets in those 10 states can't apply surcharge fees anywhere.

We’ll be waiting to see who might be first and how they will explain the new charge.

Since the surcharge is already baked into the price of goods and services, will some lower their prices to accommodate a new fee?

And what about debit cards?

The settlement doesn’t deal with them, meaning these so-called checkout fees cannot be applied if you swipe a card tied to your checking account.

But retailers won their first big victory in their fight with the credit card industry when Congress ordered interchange fees on debit card purchases lowered as part of the Dodd-Frank financial overhaul act of 2010.