Who Will Charge the New Credit Card Surcharge?

Credit cards
Credit cards

Beginning this week, merchants may charge a 4% premium for people who use credit cards for their purchases. A settlement in a legal action between card companies and merchants has triggered that fee. Now, merchants will have to decide whether to take the risk of trying to collect it, or possibly drive customers to competitors who do not.

Consumer advocates have advised shoppers to use debit cards or cash to get around the fee. That is inconvenient for people who do not have them.

The trigger to the fees becoming widespread probably will be whether America's largest merchants charge them. If Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT) waive the option, smaller retailers will face the loss of customers if they charge the fee. According to TIME:

Ultimately, though, consumer awareness will be the strongest deterrent against widespread credit-card surcharges. Stores have to let you know with a sign on the door if they're going to add a surcharge — although they don't have to tell you how much it is until point of sale, when you're already at the cash register. And today's retail landscape is hypercompetitive, so many stores will be hesitant to risk alienating customers by charging extra for using plastic.

Filed under: 24/7 Wall St. Wire, Retail, Services Tagged: TGT, WMT