New fee possible on card purchases
Checked your credit card receipts today?
On Sunday, merchants in the United States got the green light to charge customers who use credit cards a "surplus" or "checkout" fee for the convenience of using their cards. But some Mitchell stores aren't in a hurry to add the fee.
Up until Sunday all fees associated with using a credit card had been shouldered by merchants.
A 2012 U.S. District Court ruling, which allows merchants to tack on a fee of up to 4 percent for the use of a credit card, is the result of an antitrust court settlement national merchants reached with credit card companies last summer.
"This allows merchants, if they choose to, to impose their own surcharge -- an additional surcharge the merchants asked for and will be allowed to charge -- as part of this $7 billion settlement," said South Dakota Bankers Association President Dave Everson.
It would be inaccurate to say that merchants who impose the surcharge are passing on "swipe" or transaction fees they are charged by card companies, said Everson, since the two fees are different.
But it's also clear the surcharge will allow merchants to recoup some expenses.
Merchants who add the surcharge must post notices stating that they intend to do so, and they must disclose the fee on every receipt.
The surcharge applies only to credit cards. It cannot be applied to gift cards or to transactions made with debit cards.
A spot check with Mitchell merchants shows that some are in no rush to tack on the additional fee to transactions.
"I think you'll see some retailers taking a hard look at the fee," said Bruce Haines, director of operations for Porter Stores, which owns McDonald's restaurants at 1704 N. Main St. and 1521 S. Burr St., in Mitchell.
"It will be controlled by buying power," Haines said. "If a buyer says, 'I'm not going to patronize stores that charge the new fee,' I think merchants will be slow to impose it."
The New York Times reported in November that Walmart Stores Inc. had opposed the $7.2 billion settlement because it provided meaningless relief for merchants saddled with an estimated $30 billion in ongoing annual swipe fees. Walmart was among 8 million merchants in the settlement with Visa Inc. and Mastercard Inc.
Mitchell residents Jesse and Katie Royston checked their sales receipt Sunday after shopping at the Mitchell Walmart and found that indeed no fees had been added to their bill.
A Walmart manager later confirmed that no surcharges are being added to the bills of credit card customers during checkout.
"I'd think twice about going to a store that charged me for using my credit card," Jesse Royston said.
Haines said McDonald's will continue accepting credit cards without adding the extra fee. He theorized that smaller businesses or large volume businesses that work on tight profit margins -- like food stores and gas stations -- might be more inclined to take the new fees under consideration.
That won't be happening at County Fair Food Stores, said Jim Stewart, vice president of operations for the Mitchell-based grocery chain.
"We haven't even talked about it," said Stewart, who added with a laugh, "County Fair will not be leading the way in imposing any new fees on shoppers."
Ten states will not be affected by the new ruling.
Surcharging will continue to be outlawed in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Brenda Olesen, owner of Einstein's Costume & Prop Rental in Mitchell, said the "swipe" fee credit card companies charge merchants for using their card services is a hidden charge.
"A lot of people don't have any idea that if you pay with a credit card that the merchant has to pay a fee when you use that card," she said. "But the merchant is also paying for security of the transaction. As soon as you swipe the card, you've got the money."
Haines said his restaurants no long accept personal checks and the security provided by credit card transactions far outweighs the hassles of trying to collect on bad personal checks. "If the machine says the card is good, you're going to get your money," he said.
Swipe fees are typically negotiated by the merchants with specific credit card companies and rates can vary greatly.
"There are no hard and fast rules on swipe fees," Haines said, noting that McDonald's large volume transaction clout allows the company to negotiate its swipe fees on a national basis. Swipe fees range from a low of 1.5 percent to nearly 4 percent, he said, with the higher fees typically charged by credit card companies with the most popular cards.
Most merchants see credit card fees as a cost of doing business and some bump prices to handle the expense.
Olesen said she won't be raising her prices to compensate, and she will continue taking plastic.
"I'm going to be doing what I've always done," she said.