What if the next time you took a credit card out of your wallet to pay for a few groceries, you found out there would be an additional charge to use it?
That?s what could happen now that a $6 settlement has been reached in federal court involving major banks along with Visa, MasterCard and retailers all over the United States. The settlement centers around swipe fees or interchange fees, which merchants must pay credit card issuers every time customers like you pay with plastic.
This month?s agreement allows businesses to collectively bargain on changing credit card interchange fees (currently around 2.5%) and awards retailers $6 billion dollars for unfair practices. It would also allow retailers to add a surcharge on to credit card transactions.
That means a store could pass the cost of a swipe fee on to you.
But will it really go down like that?
You?ve probably already run into some instances where there is a minimum you have to spend in order to pay with your credit card.? Maybe you even know of a business like a gas station that offers discounts when you pay with cash.
But how would you feel if you had to pay 2.5% extra on your purchase just for swiping your Visa card? Most people would be pretty unhappy. And most people don?t walk around with a wallet full of real money any more or carry a checkbook in their back pockets.
If retailers actually started doing this, it could push more people to use cash and checks as a form of payment. Then again, it could just cause a huge backlash from consumers. Retailers who charge extra for using credit cards could lose business to the ones that do not have a surcharge for swiping.
What?s likely to happen is that most businesses will not charge people extra for paying with credit. You?re just going to ruffle too many feathers if you do.
What is even more likely to happen is what has always happened. Merchants will raise their prices to cover the cost of interchange fees.
Of course, the problem there is that people who pay by check or use cash are helping to pay for swipe fees even though the retailer doesn?t have to pay a fee for those types of transactions.
That?s why it?s a much better idea to reward customers who pay with cash or even with personal checks. Choosing positive reinforcement just seems like a better deal for everyone. Plus, it would seem like a fairly simple thing to program a button on a cash register that auto-magically deducts 2.5% from a total.
You also need to consider online shopping. It becomes a pretty big hassle for both the shopper and the website if you want to use something other than credit or debit to pay. So does that mean the price of buying something online will often be more competitive than making a purchase at a brick and mortar store?
Right now?we?ll just have to wait and see how it all pans out.
The settlement still needs to be approved by a federal court. If it is approved ? businesses could start implementing a credit card surcharge as early as December. Just in time for Christmas!
Check out the video below from WSJ.com for more on this topic.
+Kasey Steinbrinck writes about personal finance and the economy for Check Advantage. When you order checks from CheckAdvantage, you?ll find more than 1600 designs of cool checks and matching address labels.? Check us out today!
Related posts:
- Will Mobile Payments Kill The Credit Card?
- Servers Help Pay Credit Card Fees ? Is This Fair?
- Get Rewarded When You Shred Your Credit Card
- New Credit Card Rules and What They Mean
- Credit Card Rates Soar to New Heights
Source: http://blog.checkadvantage.com/2012/07/18/charging-to-use-credit-card/
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