This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

You Could Soon Be Paying Checkout Fees For Credit Card Use

Back in August, we reported that "you could soon be faced with a stark choice: pay a lower price or use your credit cards" in many bricks-and-mortar and online stores. At the end of January 2013, that prediction is set to become a reality for many as a result of a settlement reached between merchants, and a number of major banks and payment networks.

What's changed

Up until now, merchants have been banned from charging extra for processing credit card transactions, even though these typically cost them in "swipe" fees anything between 1.5 and 3 percent of the value of a sale. That money is collected by payment networks (American Express, Discover, MasterCard and Visa), which keep a bit of it, but remit most on to credit card companies.

The settlement, signed on Nov. 9, frees merchants to pass on that cost -- though only precisely that cost -- at the checkout to a consumer paying with a credit card or a charge card, but not a debit card.

This is set to apply in 40 states. The 10 that have existing laws banning the practice are:
  1. California
  2. Colorado
  3. Connecticut
  4. Florida
  5. Kansas
  6. Maine
  7. Massachusetts
  8. New York
  9. Oklahoma
  10. Texas

Fair warning?

According to a useful fact sheet, recently published by Consumer Action, those retailers that choose to levy the new fee must comply with "clear disclosure" requirements. Presumably, this is most likely to take the form of prominent signs at both the entrance to the store and points of sale. Online retailers should make a fee-charging policy clear on their websites' home pages. Customer receipts must itemize checkout fees, showing their exact value.

Different retailers may pay -- and different credit cards may attract -- different swipe-fee rates, which makes the whole process more complicated. Don't be embarrassed to ask at the checkout how much will be charged for using the various cards in your wallet. You may well find the amount is higher for rewards credit cards, and you'd be better off paying with another piece of plastic.

How to minimize your checkout-fee costs

Many retailers may soon have a right to charge checkout fees, but they aren't obliged to exercise it. Indeed, many may choose to leave things as they are because they're scared they could lose trade if their competitors decide not to pass on swipe costs. You can encourage that fear by shopping around and buying from stores that haven't introduced the levy.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs