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Credit Card Processing Fees: There’s a Good Chance Your Bank Account Will Take a Hit at the Register

credit card processing feesNow that the backlash against new debit card fees, which prompted Bank Transfer Day in 2011, has finally settled, Visa and MasterCard users are now faced with a new nemesis: Credit card processing fees.

In addition to credit card rates and annual fees, cardholders may have to pay merchant credit card processing fees upon checkout. Last year, an antitrust settlement between merchants, big banks and credit card networks, Visa and MasterCard, debated over processing fees merchants were absorbing to accept credit card payments.

The result of the settlement led to $7.2 billion paid to merchants, a temporary reduction to their credit card processing fees and the right to legally impose a credit card checkout fee on paying customers as a way to negate the fee.

Impact of Credit Card Processing Fees

While the impact of this fee is not widespread across all retailers presently, they may cause a considerable dent to shoppers’ finances as more transactions are tallied up. Merchants who decide to tack on credit card processing fees to their customers’ totals are permitted to charge up to the equivalent processing fee that’s absorbed by the merchant — this can be anywhere from 1.4 to 4 percent.

In terms of percentage, this added fee might not seem too threatening. However, consider that a $200 transaction, for example, would cost an extra $8 just to use a credit card as payment.

Shoppers who use rewards credit cards are especially impacted with such a fee, as a 4 percent increase in cost will likely diminish the benefit of credit card rewards when making purchases.

Will Customer Credit Card Processing Fees Gain Popularity?

Even before this settlement was reached, merchants have found other approaches to handle the credit card processing fees they had to pay. For instance, gas stations often offer a discounted rate to drivers who pay with cash. Other solutions to cut down merchant credit card processing charges include increasing the price of the merchandise to accommodate the fee.

Presently, implementing the fee into checkout totals is only legal in select states. The following states do not permit such credit card processing fees to be applied to customers’ purchases: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Customers residing in other states will just have to wait and see whether local shops will take advantage of passing the cost onto shoppers.

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  • peterwarnock

    I get the cash price when I use the Shell MC at Shell Gas. I save 5% when I use the Target REDcard at Target. Use the right card at the right place and never pay fees, but always make sure you have the money you’re spending in the bank to avoid revolving debt.

  • Rich Yokel

    Everyone wants to rob the public as though we had deep pockets full of dough. My sewer rates went up to over $82 dollars a month to flush the toilet. Property taxes in Spokane county doubled; where do these greedy people think we R going to get the money for all this stuff we used to pay so much less 4? I think we’ll retire to the Philippines when I get done working, they don’t pay taxes there…

  • smarterthantheaveragebear

    SURPRISE!!! get everyone hooked on a method of doing business … then charge all of us. this is so typical between big business and government, i am sure the credit card companies will beef up their contributions to the mid elections…probably an increase of 4 percent or so.

  • Bryan F

    I agree with Rich. The price of everything always increases due to inflation, but the raises we see from employers don’t match the rate of inflation. If you do some research you will see the wage rates have dropped since things bottomed out in 2008. Have you noticed the price of goods and services dropping? Nope! Just another thing to increase the disparity between the rich and the poor, which will eventually remove the middle class that traditionally contributes the most to taxes in this country.

    • Barb

      Right on, Bryan!!

  • jburdjr

    Previously most merchants have had to pass their credit card processing fees on to everyone, even those who pay cash, by raising their prices overall. Now with this settlement, its finally legal to ask those who benefit from the credit transaction to pay for it.

  • jburdjr

    Shoppers with reward cards SHOULD be impacted by such a fee. How do they think VISA is getting the money to reward them with? By charging the merchant a transaction fee. Now its legal for the merchant to ask the credit users to shoulder that cost and not everyone else via higher prices.

  • Randy Lockdall

    Its silly almost mythical to believe that there is going to be even more incentives to use cash. More likely the charges will be used as leverage to require people to use credit cards (wholly credit cards not debit cards with credit card privileges) in efforts to maintain the ability of bank and big store sponsored credit card issuers to snare and charge exorbitant fees and charges in the long run to consumers.

    • Crotchety

      I don’t feel sorry for the merchants at all. The credit card processing fee is what the merchant pays in order to have the privilege of being able to accept cards. On average only 27% of in-person purchases (gas, groceries, clothing, car repair, etc.) were made with cash and that number is steadily decreasing. However, 30% of those same purchases are made with credit cards and that number is steadily increasing. If these merchants were to stop accepting credit cards they would stand to lose about a third of their customers. What would they do then, raise prices on their cash customers by 30% to make up for it? The least they can do is reward their customers for shopping in their establishments by not penalizing them for using credit to do so. They owe them that much.

    • Crotchety

      Sorry man that comment was meant for the main thread, not as a reply to yours

  • cheese101

    Credit cards can be evil.

  • A concerned citizen

    While I agree that I don’t want to pay for everyone else, it is part of what makes a community run. The part that makes even less sense is why they are allowed to charge their insane interest rates to begin with. It they cut the interest rate and added this to that, then I doubt anyone would care. As may have said, the rich don’t seem to care about the non-rich. We as a whole pay way more in tax and everything else than the rich do. There are more of us. If we all decided to stop using credit cards. They would be out of business very quickly. It is the same thing with fuel. if we were to boycott the largest of fuel companies, they would be driven out of business too. The man needs to stop messing with everyone else, period. Politicians and representatives, if you were in our boat, you would be upset too. Stop pretending to care and put some action to those promises and stop this stuff.

  • Crotchety

    I don’t feel sorry for the merchants at all. The credit card processing
    fee is what the merchant pays in order to have the privilege of being
    able to accept cards. On average only 27% of in-person purchases (gas,
    groceries, clothing, car repair, etc.) were made with cash and that
    number is steadily decreasing. Adversely, 30% of those same purchases are
    made with credit cards and that number is steadily increasing. If these
    merchants were to stop accepting credit cards they would stand to lose
    about a third of their customers. What would they do then, raise prices
    on their cash customers by 30% to make up for it? The least they can do
    is reward their customers for shopping in their establishments by not
    penalizing them for using credit to do so. They owe them that much.