Credit Cards and Checkout Fees - Merchants Fees, Credit Card Processing Fees
Checkout Fee for Credit Card Payments
Last Updated: June 13, 2016
In what on the surface looked like a victory for merchants, allowing them to pass onto customers the processing fee being charged by banks every time we swipe our Visa and MasterCard credit cards at checkout.
That said, the law did little to significantly help merchants. In fact, it hurt those who chose to use the surcharge, as it was optional. In other words, customers who know to expect a credit card checkout fee from ABC merchant may choose to do business with XYZ merchant instead. The checkout fee could impact you so it's important to know what to expect, and why.
What is a Checkout Fee?
A checkout fee is a surcharge that merchants can now legally charge customers who choose to pay using a credit card.
What Gives Merchants the Right to Charge a Checkout Fee?
In July 2012, Visa and MasterCard reached a $7.2 billion settlement in which merchants were allowed to offset the cost of credit card processing fees (the fee charged merchants every time we swipe at the register) with a surcharge, or "checkout fee," essentially passing the cost onto their customers.
When Did the Checkout Fee Go Into Effect?
January 27, 2013
How Much is the Checkout Fee?
It varies, with merchants free to charge between 1.5 to 4 percent of your transaction. However, the amount charged cannot exceed the amount the merchant pays for processing the credit card payment.
Are Merchants Required to Charge a Checkout Fee?
No, charging the checkout fee is optional.
Will Most Merchants be Charging the Checkout Fee For Credit Card Transactions?
Probably not. Though they all have the right to do so, charging a surcharge for credit card use is not attractive to customers, for obvious reasons. Stores that bill themselves as having the best deals in town will probably opt out of the checkout fee option, like Walmart, Target and other big discount stores, as well as grocery stores.
Which Merchants Are Most Likely to Charge the Checkout Fee?
The smaller the business, the more likely they will choose to charge a checkout fee for payment by credit card. Small mom-and-pops have a hard enough time making ends meet. The checkout fee helps them offset the cost of processing fees charged to them by the credit card companies every time we swipe our cards at their registers. Service providers may also be among those most likely to take advantage of the surcharge, such as your hairdresser or your dry cleaners.
Are All Cards Subject to the Checkout Fee?
No, American Express customers cannot be charged a checkout fee. Debit cards from all issuers are also exempt. The only cards subject to the surcharge are credit cards issued by Visa and MasterCard.
How Will I Know if I am Being Charged the Checkout Fee?
All merchants who plan to charge the checkout fee are required to post it plainly at checkout, or in their online store. If you are not paying at a traditional "checkout" or online, then the merchant should be legally obligated to otherwise notify you of the surcharge.
Is the Checkout Fee Nationwide?
No, there are states where no surcharge law protect consumers and prohibit merchants from charging the checkout fee to customers who use their credit cards. You need not worry about the surcharge in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma, Texas, and Utah.