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While cashing out at the store, you may want to think before you pull out the plastic. As of January 27, 2013 stores in most states may charge you a “checkout fee” for simply using your credit card.
These new fees are a result of a multi-billion dollar settlement that occurred between credit card issuers and merchants in July.
Nine major banks including Visa and MasterCard agreed to the 7.25 billion dollar settlement to fix credit card processing fees.
As part of this settlement, credit card issuers explained that they would reduce these fees paid by merchants to issuers, however, this would only be the case for the first eight months.
Another part of this new deal is that retailers have the option to charge a surcharge if a customer decides to in fact use a credit card. According to Consumer Action, the retailer is only allowed to charge enough to what would cover the processing costs, which is between 1.5 and 3 percent of the total purchase.
This new deal however, does not apply to those using debit cards. Also, charging this new fee is still illegal in 10 states including New York, California and Texas.
Many in the retail industry both and big and small have been having strong opinions about the settlement. Stores of all sizes have been disregarding the new agreement due to feeling as though it is transferring the mistake of credit card issuers and putting it onto consumers.
The National Retail Federation along with over a dozen retailers asked a judge to reject the new settlement in November. In a brief sent to a U.S. District Court Judge located in Brooklyn N.Y., the organization expressed that the new fees affected the merchants’ abilities to keep maintain low prices for their consumers.
Retailers such as Wal-Mart, JCPenney, Macy’s, Gap Inc. and Limited Brands are amongst those who feel as though this new fee is an unfair way put Visa and MasterCard’s wrongdoings onto the consumers.
This settlement leaves retailers in a tough situation, they can either paying the bill for swipe fees or transfer the charge to costumers with risk of a decrease in business in a highly competitive environment.
Last summer, Target expressed it was not interested in charging customers who use credit cards “in order to allow Visa and MasterCard to continue to charge unfair fees.”
MasterCard expects that merchants won’t put the fee into effect due to the risk of losing business.
So the next time you cash out in a store near you, maybe you should think to pay in cash.
This story contains information from CNN Money.