As of January 27 retailers in 40 states in America will be permitted to add a 4 percent surcharge, or “checkout fee” to their bill if their customer chooses to pay with a credit card. The charge can be added to both goods and services charged to a credit card, but not to a debit card. This practice is still illegal in California, Texas, New York and seven other states.
Each business is allowed to make its own decision about whether or not to charge this fee, but if they do they are obliged to inform their customers.
The surcharge was instituted as a result of the largest anti-trust settlement in US history. In 2005 merchants joined together to sue the big credit card companies, including Mastercard, Visa, JP Morgan Chase and eight other companies, claiming that they conspired to fix the fees that stores must pay the credit card companies to accept credit purchases.
Negotiations to settle the case took years while the lawsuit was in the US District Court for the Eastern District of New York. Finally a settlement was reached in which the banks agreed to pay $6 billion to the suing merchants.
Part of the settlement included the provision to allow merchants to charge their customers a fee equal to the cost of accepting the credit card, typically between 1.5 percent and 3 percent of the purchase price.
Consumers can avoid the surcharge by using a debit card or cash to make a purchase. To avoid the surcharge on-line purchases can be done through PayPal or other electronic payment options.