It started back in 2005 when a class action lawsuit was filed against MasterCard and Visa which argued that they were collaborating with banks to keep interchange rates higher than they should be. The lawsuit was successful and along with a proposed settlement of over $7 billion, it would give merchants the option to charge their customers extra if they’re using debit or credit.
The whole idea behind the extra charge would be so that merchants can make up for the rates they’re being charged from their merchant service provider. This practice is prohibited under current processing regulations. While this might seem as a great idea, there could be a lot of potential downsides. For one, a lot of small business owners started accepting cards because they found they were losing customers and sales without offering the option. If they start charging a fee, customers using their card might stop, impacting the benefits and profits associated with merchant accounts. Customers might very well go elsewhere and make their purchases from a business that doesn’t charge a credit card usage fee. Charging a fee for plastic would be a choice, adding a whole new level of competitiveness that wasn’t there before and the ones who would win would be big businesses, ones that can afford not to charge a fee.
Consumers could obviously be hurt by this too. In todays economy, adding another fee to everyday purchases is not a welcomed proposition. Imagine a situation where you had to pay extra for filling up your tank using a card. So you decide to use cash instead, but the ATM inside the gas station is Citizens Bank and you use Bank of America so that’s a fee too. It’s a lose-lose situation. Even though this proposition is far from being finalized, if business are given an option to save money by passing on their processing costs to the consumer, it could be a fairly safe bet that a lot of them will.
One of the reasons this fee hasn’t been imposed before is that the major card companies didn’t want to have a drop in credit card transactions. But now that a debit or credit cards have become so mainstream, that fear is disappearing.
Thankfully, there is a lot of backlash from both businesses and consumers about this new proposal. Target Corp. for one, went on record saying that these fees are “bad for both retailers and consumers” and will not impose any new surcharges, even if given the option to do so. This new surcharge would also not be able to go into effect in the ten states that already have such a fee outlawed, including California, New York, and Texas.
Compare Comparison of Fees, Rates Contracts
Are you happy with credit card processing from or Not Happy? Give/Post your Opinions and experience with merchant accounts for . How would you rate Good Impression or Bad Impression? Write up a comment or review and share your Satisfaction Level and Experience with of Sales Practices, Early Termination Fees, Chargebacks, Extra Fees, Transaction Rates, Contracts, Contacts, Support, Services . Find alternative low cost no contract service providers that are better then . Leave your customer rating and review of below.