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Paying more for plastic?

Published: Monday, Feb. 4, 2013 3:18 p.m. CDT • Updated: Monday, Feb. 4, 2013 3:28 p.m. CDT

A possible new expense for Bureau County shoppers seems to not be materializing.

On Jan. 27, retailers in Illinois and 39 other states were given the option of imposing a surcharge of customers who paid with a credit card.

The surcharge was part of a $7.2 billion settlement reached last summer between merchants and credit card companies. The surcharge could be anywhere between 1.5 percent and 4 percent of the purchase price.

The credit card companies have taken a mixed approach to the surcharge. MasterCard said it didn’t expect most retailers to implement the surcharge, while Visa has posted information alerting customers to the potential surcharges and advising them to pay cash if possible.

According to the information provided by Visa, consumers should be aware there are limits to the amount merchants can charge, and they cannot impose a surcharge for purchases made using a debit or prepaid card.

And retailers have to be sure to tell the customers what they’re doing. Retailers must notify customers before customers make an actual purchase at the store entrance and at the point of sale, and they must disclose surcharge fees on every receipt.

American Express customers aren’t impacted because the company’s contract with retailers forbids them from levying a surcharge.

The surcharge is optional, and initial response from retailers indicated not many would choose to pass the charge on to their customers.

Walmart, Target and McDonald’s were three of the largest retailers who publicly announced they would not apply the surcharge to customers.

The response of smaller retailers was harder to predict. Gerri Detweiler, director of consumer education at Credit.com, said the number of retailers would probably be small, at least at first. However, she said smaller merchants typically feel gouged by processing fees and are more likely than big chains to pass the cost along to their customers.

That cost can be significant. According to the Wall St. Journal, for many retailers, those fees represent the third-biggest cost of doing business, right after rent and payroll.

Locally, there has been little impact by the new surcharge.

“We are unsure what the impact will be, and (Princeton) tourism has heard nothing from card users to date,” said Princeton Tourism Director Joni Hunt.

Bill Walljasper, senior vice president of Casey’s General Stores, said Casey’s will not charge a surcharge for credit card use.

Kim Frey, executive director of the Princeton Area Chamber of Commerce, said none of the local retailers she has spoken with have any immediate plans to impose a surcharge. 

“Although these transaction fees have had a significant impact on a small business’ profits, my belief is that merchants would have a difficult time imposing a surcharge at the start date if they want to remain competitive,” she said.

But Frey warned the decision might not be permanent, particularly if more businesses start charging the extra fee.

“If the surcharge does gain traction, I don’t think it would take long for more businesses to implement,” she said.

Comment on this story at www.bcrnews.com.

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