There has been considerable consumer angst in the wake of a new rule that allows merchants to charge more to customers who pay with credit cards, but now a major national retail group says that it’s very unlikely that most businesses will actually take advantage of the new allowance.
Despite fears that the new rule could lead to prices as much as 4 percent higher for shoppers, it’s unlikely that the vast majority of businesses across the country, both large and small, will actually do so, according to a report from the National Retail Federation. There are a number of reasons that this expectation should hold true, and many have to do with significant restrictions already in place.
For one thing, 10 of the nation’s most populous states — which account for 40 percent of all credit card transactions across the country — already legally barred merchants from passing on this type of surcharge even before the new rule from Visa and MasterCard went into effect, the report said. Further, the settlement agreement that allowed for surcharging to take place is also restrictive in that it requires merchants to also apply the rule to transactions made with American Express cards, despite the fact that the lender expressly prohibits doing so. As such, if a store accepts AmEx cards, it cannot surcharge for Visa and MasterCard purchases.
“While there conceivably could be exceptions, merchants in general have no intention of surcharging,” said NRF Senior Vice President and General Counsel Mallory Duncan. “We have discussed the settlement with many of our members and other merchants, and not a single one has said they will surcharge.”
In addition, on those legal bases, it’s unlikely that national retailers would be able to apply the surcharges either, both because many will accept American Express, and also because it’s unlikely that they could adopt individual pricing plans for each state, the report said. Smaller companies, meanwhile, would have to go to a lot of trouble to even meet qualifications to begin passing on these fees, and further risk losing business due to upsetting customers.
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Swipe fees, however, remain problematic for many companies. Studies have shown that even very small merchants that accept credit card purchases may pay tens of thousands of dollars per year to cover these costs.