A change in credit card fees could have consumers switching from plastic to paper.
As of Jan. 26, stores all over the country can begin charging credit card users a “checkout fee” with every swipe.
“This is an attempt, in a low-interest rate environment, to make some money,” said Dr. Reza Hamzaee, professor of economics at Missouri Western State University. “In my opinion, honestly, it is a very stupid idea. This is not the time.”
The fee can range from 1½ to 3 percent of the total purchase price. The fee is based on a retailer’s processing costs to cover that particular transaction. The fee will not apply when customers use a debit card.
The additional charges stem from a July 2012 lawsuit and a $7.25 billion settlement where the credit card companies were charged with fixing their processing fees. The credit card issuers also reduced the merchants’ “checkout fees.” The truce lasted only eight months.
Now, merchants can pass those fees onto their customers every time they use plastic to pay. It’s somewhat uncharted territory.
“It used to be illegal,” said Dave Holland, who co-owns Dunkin’ Donuts, Fun Tan Salons and Arby’s in St. Joseph.
“We’re allowed to charge more for customers who use credit cards. But I don’t think it’s going to make a difference in business.”
Dr. Hamzaee said the surcharges will prevent people from using credit cards. “People will consider to write checks or pay cash. I know I’m not going to use my credit card.”
Mr. Holland said that when fees go up, ultimately the price of products will go up. The credit card company deducts their fees right off the top.
It still is illegal for merchants to charge the new fee in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
But merchants aren’t required to charge their customers the fee. In fact, several big name retailers are continuing to take on the extra costs.
Target, Walmart and J.C. Penney are just a few taking a stand against the credit card companies.
“We believe in doing what’s fair and square for the customer,” said Joey Thomas, media relations manager for J.C. Penney. “So we have no plans to impose credit card surcharges.”