Credit card fees have always been troublesome for retailers, but a recent settlement between card issuers and merchants means those fees are about to become a bigger problem.
The settlement is the result of a massive anti-trust case brought by retailers against financial firms such as Visa and MasterCard. The card issuers were accused of unlawfully fixing “swipe fees” – the fees the merchants are charged every time a customer pays using a credit card. Merchants had hoped to see lower swipe fees, but the settlement only requires an eight-month reduction in those fees.
The settlement also allows retailers to pass those fees on to customers by adding a credit card surcharge if they choose. But since charging customers more for using their credit cards would be bad for business, most merchants aren’t happy with that alternative – leaving them stuck with the high swipe fees. Many retailers won’t even have the option, since those surcharges are illegal in 10 states – California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.
This new agreement most likely spells bad news for both merchants and customers, which means now is the perfect time to evaluate other options. For retailers, this means looking at alternative forms of cashless payment with no transaction fees, such as Quickcharge.