Small Business Finance News
New Rule Allows Companies To Pass Credit Card Fees Along To Consumers
Written by Tim Morral
Many U.S. companies are now legally entitled to charge consumers for credit card fees. But the big question is, will they?
Credit card fees are a cost of doing business. With so many of us relying on plastic to pay for online and offline purchases, businesses that aren't willing to satisfy customer needs by accepting credit cards are at a severe disadvantage in our nearly cashless society.
But now, a new law makes it possible for companies to recoup credit card costs by passing fees and surcharges on to consumers. The federal law (effective January 27, 2013) allows a consumer surcharge ranging from 1.5 to 4 percent, based on the amount of fees the merchant is required to pay the credit card company.
Stores and restaurants that decide to take advantage of the new law are required to post a notice about the surcharge at checkout, giving customers the ability to avoid the fee by paying with cash or debit card -- a payment option that is excluded from the ruling.
However, it's questionable whether or not many companies will actually pass credit card fees along to consumers, even though the law allows them to do so. Large retailers are already able to negotiate lower fees with credit card companies, reducing the cost of offering credit card payment options to customers.
Small businesses, on the other hand, lack the ability to negotiate reduced fees from credit card providers and are more likely to consider passing fees along to their customer base. But in a UPI report, Gerri Detweiler of Credit.com predicts that customer complaints will cause many stores to roll back the decision to charge credit card fees as a way to retain more business and stay competitive with larger competitors.
Small business owners thinking about passing credit card fees on to customers should also know that the new federal law might not apply in their area. Currently, ten states including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas prohibit businesses from charging credit card fees to customers.
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