Credit card transactions are about to become more expensive

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After a pass on a $6 million settlement to merchants by Visa and MasterCard, retailers will now be able to add a surcharge to customers for selecting to use their credit cards during any transaction. The new laws will take effect in early 2013, and “is believed to be the largest ever settlement of a private antitrust case under the Sherman Act,” reports NPR

The settlement will be split by Visa, MasterCard and banks such as JPMorgan Chase and Bank of America to the group of plaintiff retailers, including supermarket chains Kroger and Safeway. These merchants will soon receive reduced swipe fees for credit card transactions, and be able to add their own additional surcharge per swipe.

“According to the Electronic Payments Coalition, a group of banks, credit unions and payment card networks, any credit card surcharges will be limited to the amount of money the merchant pays to the credit card company,” reports The Consumerist. This means if the credit card company charges the merchant 30 cents per transaction, that merchant can limit the surcharge at 30 cents max. Retailers will be required to post a fee disclosure much like non-bank ATMs do before you are allowed to make a transaction.

However, not everyone in the United States will experience these changes; ten states ban surcharges on credit cards, including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. While this may be good news on the customer’s end, merchants will still be stuck paying the price of allowing their consumers the convenience of paying with plastic which can often be quite high.

Although the lawsuit did not include American Express and Discover, neither of these companies prohibit merchants from adding a surcharge. This could mean that if retailers begin tacking surcharges to Visa and MasterCard transactions, they may begin to do the same for AMEX and Discover. Hopefully, instead of spelling out higher costs for consumer, the credit card companies may competitively work to lower swipe fees for merchants so when consumers have to use their cards to pay, they would prefer to use the one that has the lowest fee attached. At least, we hope this would be the case.