Retailers have always dreaded the added cost for accepting credit cards and have just been cleared to add a “Checkout” fee for credit card transactions allowing for a surcharge to cover the costs of accepting credit cards. It even allows for higher fees for reward and premium cards that cost more.
This summer a settlement was reached between retailers and nine major banks, Visa and MasterCard that allows retailers to add a surcharge for up to the actual cost for credit card processing effective on January 27th. These fees cannot be applied to Debit card transactions and continue to be illegal where state laws forbid such fees: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Surcharges are also forbidden by American Express merchant agreements and the case is likely to be appealed.
Furthermore, if a checkout fee is applied, it must be clearly disclosed at the store entrance, at the Point of Sale (on-line or in-store), and on the customer’s receipt.
I suspect few retailers will adopt this, at least at first. Retailers will find it hard to apply if competition doesn’t add the charge and in states bordering where it is illegal retailers will be fearful of sending business across state lines. Additionally, retailers face the cost of modifying their Point of Sale systems to calculate the surcharge. In fact, while our software could handle a negative discount on sales, our software can’t calculate a surcharge based on a tender amount (to accommodate split tenders). Of course, if the market demands it we will have to consider the change.
Yet, most consumers are unaware of how credit processing affects price and I think we all have quietly wished we could ask at least our better customers to consider cash or checks. Even the 3-4% paid directly for bankcard processing doesn’t include the investment a retailer must make to maintain a secure and PCI-DSS Compliant environment for protecting sensitive customer data. Most consumers would be surprised at how much more those “reward” cards cost. Ultimately, the cost is being pushed to the retailer who passes it to the customer, directly or indirectly.
Will you consider a checkout fee? Do you think it will catch on? Would you be better off to offer a cash discount? Should we consider a change?
