Will merchants begin imposing credit card fees?

One provision of a recent settlement between merchants and the nation's largest payment processors, which has received preliminary approval, allows retailers to charge customers paying by credit card an additional fee. However, it's not entirely clear whether they will.

Later this month, the rule that allows retailers to charge credit card "check out fees" to cover payment processing fees charged by Visa and MasterCard goes into effect, but there is some confusion about just which retailers will opt in, according to a report from the advocacy group Consumer Action. Many experts believe that retailers, fearing a backlash from consumers, will forego the added fee, as they have been doing for years. Further, in some large states, the charging of these fees is already against the law. Still, it's believed that in some cases, these fees will be passed on to consumers.

"Over the last couple of years, there have been a lot of changes for consumers at the register," said Linda Sherry, Consumer Action’s director of national priorities. "A year ago, the Durbin amendment was implemented, which decreased the cost that retailers pay to accept debit cards, allowing them to pass on savings to consumers if they choose. Now consumers may face credit card 'checkout fees,' or surcharges, at the register. One of our goals is to make sure consumers know their rights when these changes occur, and have enough information to be smart shoppers."

What to know
There are a few things consumers will have to keep in mind when and if they face new higher costs, the report said. The first is that the 10 states in which checkout fees are already illegal are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. If a retailer tries to charge such a fee in these states, the shopper should take the time to contact the state's attorney general about the problem.

Second, it's important to know that these fees can only be applied to purchases made with credit or charge cards, while debit and prepaid card purchases should remain untouched, the report said. Further, the fee will almost certainly fall somewhere between 1.5 and 3 percent of the total purchase price, depending on the card being used; rewards accounts, or those issued to consumers with top-notch credit, typically carry higher processing fees, and would in turn likewise bear higher checkout fees.

Finally, merchants must disclose that they will charge the fee — typically through some sort of signage — somewhere in their store, the report said. And when it comes to receipts, those must list the total amount of the checkout fee itself, the fact that the merchant imposed it, and a message stating that fee doesn't exceed the card's individual processing fee.

Action to take?
There are a few steps consumers may be able to take when faced with this type of fee, the report said. The simplest is to choose to shop elsewhere if the fee is in any way disagreeable. However, this might not always be possible, or desirable, and therefore it's important to know the best way to avoid the highest fees. Finding cards with lower processing costs — usually those that do not come with numerous perks on the account — can be crucial at this time.

Further, because many merchants have already covered the fees they're now charging in addition to the normal purchase price by building the cost into what they charge for their normal products or services, the added fee might be a bit of a financial bonus, the report said. As such, it wouldn't hurt for shoppers to simply request a discount on their purchase. They might not always get it, but it never hurts to ask.

Finally, shopping around and putting together a mental list of the merchants in an area will help consumers to better understand which stores they should avoid and which will not charge them the additional fee, the report said. Again, many experts say that it's unlikely for most retailers to begin charging this fee because of how unpalatable most shoppers will likely find it, so the issue may not affect consumers as much as they might think.

Higher fees on purchases can obviously lead to more credit card debt, which in turn may push borrowers closer to their accounts' credit limits. And because this factor makes up 30 percent of a borrower's credit score, it's important to make sure to keep debts low. Consumers can also preserve their credit ratings by taking the time to order their credit reports and check them for unfair markings. If any are discovered, working with a credit repair law firm may help to clear up the issue expediently.