Thanks to a settlement between retailers and Visa and MasterCard, retailers are now allowed to pass along the swipe fees they pay to the credit card networks to consumers.
Should consumers be worried? No, says Erik Larson, CEO of online financial resource NextAdvisor.com.
"I think it's extremely unlikely many retailers will choose to do this, for a number of reasons," Larson said. "For starters, ten states still ban it, including California, New York and Florida.
That means chains and franchise operations would not be able to make it a nationwide policy since they couldn't be consistent. If they have stores in any of those ten states, those stores couldn't participate.
Here's another reason: if the business also accepted American Express, they would be prevented from passing on the swipe fee to customers using Visa or MasterCard.
Visa MasterCard settlement
The whole issue is the result of a settlement between retailers and Visa and MasterCard. Neither American Express nor Discover were party to the suit and are not covered by the settlement.
American Express has always had a policy of not allowing retailers to, essentially, give consumers a cash discount. They haven't changed. The rule that emerged from the settlement requires retailers to pass along the swipe fee to all credit card customers or none at all. If a business accepted all credit cards, they would be prevented from passing on the swipe fee.
So really, the only retailers who could charge this fee are those that do not operate nationally and who only accept Visa and MasterCard. Of those, mostly "mom and pops," Larson thinks they are highly unlikely to tack on the fee for competitive reasons. And really, there's no need for it.
Baked into the price
"These fees have been incorporated into prices for a long time," he said. "Today, stores anticipate their customers paying with a credit or debt card."
The companies that process credit card payments charge retailers a fee, based on the percentage of the purchase. The retailers sued, arguing that the fee was too high.
As part of a settlement last year, retailers got lower swipe fees, along with the right to pass them on to consumers if they wanted to. But to Larson, it's not really an issue that consumers will face.
Over-hyped
"It's absolutely been over-hyped," Larson said. "There are so many reasons not to pass on the swipe fee that most stores simply won't. Just because they can, doesn't mean they will."
In addition to California, New York and Florida, states that continue to prevent retailers from passing along swipe fees are Colorado, Connecticut, Kansas, Maine and Massachusetts.
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