6 Reasons the Recent Credit Card Deal Won’t Hurt You

Photo (cc) by Philip Taylor PT

My heart skipped a beat last weekend when I heard about the proposed $7 billion settlement that may allow merchants to impose a surcharge on Visa and MasterCard purchases. I earn a tremendous amount of points, miles, and cash back by using reward credit cards, and I was scared that I might soon have to pay for the privilege.

But the more I learn about this settlement, and considering how the credit card industry works, the less concerned I’ve become. In fact, I’m resting easier tonight knowing that it’s extremely unlikely I’ll ever have to pay a surcharge to use my credit card.

Here’s why..

1. Retailers are used to eating the cost of accepting cards

The proposed settlement will allow retailers to add a credit card surcharge to recoup the 1.5 – 3 percent expense they incur for accepting credit cards. But why would they? This expense has long been factored in to their cost of doing business. Recouping these fees at the register would be seen for what it is: a blatant attempt to increase a store’s profit at the expense of its customers.

2. Surcharges are illegal in many states

California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas all have state laws that prohibit credit card surcharges. These states include more than 113 million people – more than a third of the U.S. population.

3. Consumers are a powerful lobby

If retailers start adding credit card surcharges to purchases, people in the states that allow this practice might clamor for new laws to protect them. When you imagine the uproar that will occur when a major retailer announces “checkout fees,” last year’s outrage over bank fees will seem mild by comparison.

4. Retailers don’t want to discourage credit card use

Retailers gain from credit card use. They’re convenient for customers, transactions occur quickly, and buyers have the ability to finance purchases. At the same time, merchants incur little risk of fraud relative to accepting checks.

5. Surcharges will discourage sales

According to The Wall Street Journal, the settlement will require stores to “post notices at their store entrances and at their cash registers that they apply surcharges, and the dollar amount of the surcharge must appear on the customer’s receipt.” I can’t imagine prominent notices like these will help sales. If I saw a sign like that in a store, I’d probably go to a competitor’s.

6. The settlement may not be approved

This is a proposed settlement to a lawsuit involving many parties – but not all of them have agreed to its terms. According to The Wall Street Journal, the National Association of Convenience Stores has already rejected it.

Bottom line…

Any merchant would like to increase their profitability by passing along credit card processing fees to customers. But now that Visa and MasterCard may finally allow them to do so, most will probably find it’s not in their best interest.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
15 of the Most Outrageously Overpriced Products
15 of the Most Outrageously Overpriced Products

Retailers mark up products by hundreds of times their cost — but you don’t have to pay the premium.

Why Half of Retirees Now Owe Taxes on Social Security
Why Half of Retirees Now Owe Taxes on Social Security

Growing numbers of seniors are paying taxes on their Social Security benefits, but you might be able to avoid this fate.

How Much of My Social Security Can My Ex Take?
How Much of My Social Security Can My Ex Take?

A man wonders if his ex-wife will siphon away his Social Security benefit.

60% of People With This Disease Don’t Know They Have It
60% of People With This Disease Don’t Know They Have It

Millions of people overlook this potentially potent condition that tends to strike women and older adults.

10 Things That Really Are Free on Amazon
10 Things That Really Are Free on Amazon

These freebies are available to anyone — no Prime membership necessary.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

This iconic dinnerware is prized for everyday use as well as reselling for profit.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

7 Home Improvements That Cost a Lot More in 2021
7 Home Improvements That Cost a Lot More in 2021

These projects will take a bigger bite out of your budget than in the recent past.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

Never Buy These 10 Things on Amazon
Never Buy These 10 Things on Amazon

Just because you can purchase something on Amazon doesn’t mean that you should.

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.