A surcharge went into effect Sunday that allows retailers to charge consumers up to 4 percent when they use a credit card to pay for purchases.
Like to pay with credit? It may cost you.
A new surcharge went into effect Sunday that allows merchants to pass on a surcharge to consumers who pay with credit cards.
The new fee is the result of a settlement between the credit card companies and merchants, according to CNN. The multi-billion dollar settlement was announced in July and it includes Visa, MasterCard and nine major banks, CNN reported.
But what does it mean for you? Visa laid out exactly how the new surcharge will affect ordinary consumers' purchases:
- You will pay an additional fee when you use your credit card at retailers who decide to impose the surcharge.
- The charge is capped at 4 percent. CNN reported that retailers can only charge enough to cover the processing cost, which is usually about 1.5 to 3 percent of the total purchase.
- The charge will not apply to debit cards or prepaid cards – only credit cards.
- Any retail who imposes the new surcharge has to notify consumers somehow, either at the store entrance, at the point of sale or in an "online environment."
- You will see the surcharge on every receipt, whether you buy online or in a physical location.
Not all retailers will impose the surcharge. And those who do have the option of offering discounts to consumers who pay with cash, check or PIN debit instead.
Currently, 10 states prohibit surcharging. They are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Not all retailers were pleased with the settlement that led to the new surcharge, CNN reported. Target said last summer it wants no part in charging the fee "in order to allow Visa and MasterCard to continue charging unfair fees," CNN said. The National Retail Federation and several businesses asked a judge in November to reject the settlement, CNN reported.
Matt Kriebel is the owner of a small business in Philadelphia, Spectrum Scientifics. He said has no intention of charging the fee – "absolutely not" – and neither do most of the businesses he knows of.
"It pretty much doesn't make any sense for me as a retailer to charge that fee," he said. Kriebel said it would be like punishing his customers.
Kriebel went a step farther, dropping a company he ordered bags for his store from because it decided to implement the fee.
He said consumers concerned about helping out small business should pay using a basic credit card – "no points, no magic" – because cards with more elaborate point schemes end up costing retailers more.
Related from MSN: 5 ways to avoid credit card rip-offs
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