New Checkout Fee’ On Credit Card Usage May Push Your Bills Higher
Since Sunday last, you have been charged an extra fee for every credit card swipe you have made. This is termed as a checkout fee and henceforth every time you use your Visa and Mastercard you will charge this amount. This is charge comes because of a multi-billion dollar deal in July between merchants and credit card companies.
MasterCard (MA, Fortune 500), Visa (V, Fortune 500), and nine major banks have entered into an agreement to pay $7.25 billion as credit card processing fees. As per the deal, credit card issuers would reduce the “swipe fees” paid by retailers to issuers albeit only for eight months. With this deal retailers get the option to levy a surcharge on a customer who purchases with a credit card. The charge will be made to cover the processing costs, and may be anywhere around 1.5% to 3% of the total purchase.
Big wigs in the industry are crying hoarse over the deal. Retailers believe with this deal card issuers have cleverly managed to shift their wrongdoings onto the consumer. They are of the opinion that “raising consumer prices by adding an ‘interchange tax’ can never provide a solution to the continual abuse perpetrated by the monopolistic mindset of Visa and MasterCard.
Though implementing the additional charge is left to merchants, most of them have opined that they are not very keen on this. This is because by doing so they risk transferring the cost to customers which may not be a wise decision in a competing environment. Last summer, Target had made it clear that it does not intend to charge customers who keep whipping out their credit cards just to help MasterCard and Visa continue charging unfair fees.
However, this fee doesn’t apply to purchases made with debit cards. Also, it would be illegal to levy the new fee in 10 states, including California, New York, and Texas.