As of Jan. 27, retailers may impose a surcharge of up to 4 percent of the purchase price to customers paying by credit card, depending on the amount the merchant pays to the credit card company in processing fees. Merchants may now assess the fee under terms of a court settlement between retailers and the credit card industry.
Assessing the fee is optional, and individual merchants may choose not to pass along the costs. In fact, many retailers have said they will not impose the fee on consumers who pay with a credit card. However, those retailers that do levy additional fees must follow specific disclosure rules.
Therefore, Attorney General Dustin McDaniel issued this consumer alert today to inform consumers about the issue, and also offer advice for shopping with credit cards.
"While most retailers so far have chosen not to pass along more fees to consumers using credit cards, those that do so must make clear to the consumer what the additional cost will be for paying with a credit card," McDaniel said. "In those instances, consumers may prefer to pay with cash, check or debit card, or visit a retailer that does not charge those extra fees."
Banks typically assess processing fees of between 1.5 percent and 3 percent to retailers each time a credit card is swiped. The fee may be higher for "reward" cards, as merchants typically incur higher charges when those cards are used. Under terms of the settlement, retailers may recoup the exact amount of those costs, up to 4 percent. Retailers in 40 states, including Arkansas, are permitted to do so (10 states have laws prohibiting retailers from passing along these fees to consumers).
Retailers who implement the fees must provide clear disclosure to consumers at the store's entrance, at the point of sale and on the sales receipt. The receipt must indicate the amount of the fee and make clear that the fee assessed to the consumer is not greater than the cost to the retailer to accept credit cards.
Online retailers must disclose on their website homepage that they are disclosing such a fee.
The fee cannot be assessed to consumers who pay with debit card. Fees on debit card transactions are limited by federal law. Additionally, American Express customers are not affected by the change.
Regardless of whether a merchant assesses a fee, McDaniel reminded consumers to keep these tips in mind when using a credit card:
*Credit cards are merely pre-approved loans. So, shop for the lowest interest rate on a card and keep in mind that some cards charge additional annual fees.
*Try to pay more than the minimum payment every month. Otherwise, interest will continue to accrue and greatly increase the effective cost of the items purchased with the card.
*Avoid costly penalties associated with late payments by always paying on time.
*Think twice before signing up for "over-the-limit" protections. It may be better to have a transaction rejected so that a less expensive form of payment can be chosen.
For more information about credit card processing fees, credit cards generally, or other consumer issues, visit www.GotYourBackArkansas.org or call the Attorney General's Consumer Protection Hotline at (800) 482-8982.