Posts Tagged ‘ check out fees ’

States looking to ban merchants from charging “check out” fees


pink wallet with cards photo

We recently posted information about merchants being able to add surcharge fees on credit card transactions (“Be Aware of Credit Card Surcharges, posted here on 1/10/2013). The following update is reposted with permission from the Pennsylvania Credit Union Association. It originally published in CUNA News Now (February 11, 2013 edition):

MADISON, Wis. (2/11/13)–The Credit Union National Association (CUNA) continues to monitor bills introduced in various states to ban merchants from charging “checkout” surcharge fees on credit card transactions. The state bills now total 11, in addition to two other states said to be drafting similar legislation.

Last week Vermont, Kentucky, Missouri, South Carolina, Utah, and Tennessee introduced bills in their state legislatures to ban the surcharges, and an earlier measure banning surcharges made progress in the New Jersey legislature.

Six other states–Hawaii, Illinois, Mississippi, New Jersey and Rhode Island–had introduced similar bills earlier. Pennsylvania and West Virginia also are said to be drafting similar bills. Since 10 states already have laws on the books banning the fees, if these states’ measures also became law, a total of 23 would have bans.

However, Maine–one of the original 10 states with a surcharge ban already enacted–is considering repealing that law. Last week legislators introduced a bill seeking to repeal its existing surcharge ban.

The flurry of bills are the result of a provision in a $7.2 billion industry court settlement that merchants negotiated with Visa and MasterCard and banks in an antitrust lawsuit. The settlement allows merchants to charge a checkout fee that must be equal to what the merchant pays to accept the card, which is typically 1.5% to 3% in the U.S. and not to exceed 4%. The surcharge provision of the settlement took effect Jan. 27. The surcharge does not affect debit cards.

CUNA is monitoring the developments because any surcharge on credit card transactions would affect all financial institutions, including credit unions, as well as credit union members. Here’s a rundown on last week’s activities:
• Vermont S.B. 87 specifies “a Vermont merchant in any sales transaction shall not impose a surcharge on a person who elects to use a credit card in lieu of payment by cash, check, or similar means,” said the Association of Vermont Credit Unions (Newslines Express Feb. 8). The ban would take effect in July. A bipartisan group introduced the bill: Judiciary Committee Chair Richard Sears (D), Economic Development Committee Chair Kevin Mullin (R), Committee Chair Timothy Ash (D) and Sen. Philip Baruth (D).
• A New Jersey bill making it illegal to impose a surcharge on credit card transactions passed the full Senate Thursday and the Assembly Financial Institutions and Insurance Committee, said the New Jersey Credit Union League (Daily Exchange Feb. 8).
• The new Missouri bill, H.B. 495, would amend state laws to ban surcharges “on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means.” Its sponsor is Rep. Randy Dunn (D-Kansas City).
• Utah S.B. 67, sponsored by Sen. Curtis S. Bramble (R-Provo), does not make the distinction between credit cards and debit cards but “prohibits sellers from imposing a surcharge on a transaction paid for with a financial transaction card.”
• Tennessee’s H.B.0897, sponsored by Rep. Jason Powell (D), prohibits sellers and lessors, as well as “any entity issuing credit or charge cards” from imposing a surcharge on credit card payments.
• News Now also verified state laws prohibiting credit card surcharges have been introduced in Kentucky (HB 256 and HB 259) and in South Carolina (H. 3477), but details were not available.

The 10 states with laws already on the books are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Be Aware of Credit Card Surcharges


As a result of a legal settlement to resolve claims brought by a group of U.S. merchants, merchants in the U.S. and U.S. territories may add a surcharge to certain credit card transactions starting after January 27, 2013. This surcharge, also known as a checkout fee, is an additional fee that a merchant can add to your bill of sale when you pay with a credit card. U.S. merchants that surcharge are required to limit the surcharge fees to credit cards only, meaning they cannot surcharge debit and pre-paid cards. They must also limit the amount of the surcharge to the applicable merchant discount rate for the credit card transaction surcharged. A cap of 4% is currently in place, but that may vary. Additionally, companies must disclose the actual dollar amount of this surcharge on every receipt and disclose the fact that they charge a surcharge fee at the point of store entry and at the point of sale. Most likely, you will not see this change until February because of the 30-day notification and registration process that is required.

How will you know if a business is charging the surcharge? Merchants may charge this fee at their discretion. When you’re in a store, look for signs or postings when entering the store and at the cash register that warn you of the merchant’s fee. If you see this notification, consider using your Members 1st Visa Debit Card or a Members 1st Pre-paid VISA instead of your credit card. Unlike credit card transactions, merchants cannot charge any surcharge fees on debit or pre-paid credit card transactions.

If you suspect you’ve been hit with excessive surcharges or that your debit or pre-paid card was charged, visit www.visa.com/checkoutfees and complete a “Report a Merchant Violation Form.” Alleged surcharging will be investigated.

This new law only applies specifically to “credit card” products. Continue to use your VISA Debit Card as CREDIT at the merchant – you want to continue to earn your monthly Swipe 5 cash-back rebate. A debit card is a debit card whether you use it as “debit” or “credit.” If merchants attempt to charge you this fee when you are using your debit card as “credit”, they will be in violation and may be subject to a fine. If anyone has any issues with this moving forward, please report them to our Card Services Group at (800) 283-2328, ext. 6035.

Currently 10 U.S. states have surcharging restrictions including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Consumers who are subjected to checkout fees in states where those fees are prohibited by law may want to discuss this with the retailer or report the retailer to their respective state’s attorney general’s office. Keep in mind that Members 1st is not the entity charging these surcharge fees on your credit card purchases.

For additional information about payments and surcharging: www.visa.com./checkoutfees or call our Card Services Group at (800) 283-2328, ext. 6035.

%d bloggers like this: