Fact Check

4% Credit Card Fees

Beginning on 27 January 2013, credit card users will be assessed an additional 4% fee on their purchases?

Published Jan 26, 2013

Claim:   Beginning on 27 January 2013 credit card users will be assessed a 4% fee.


FALSE: Beginning on 27 January 2013, all credit card users will be assessed an additional 4% fee on their purchases.
TRUE: Beginning on 27 January 2013, merchants in some states can impose a checkout fee of up to 4% on credit card purchases.

Examples:   [Collected via e-mail, January 2013]

Ok everybody starting Jan. 27, 2013 if you have a VISA debit card and you use it as a credit card be ready to be charged a extra 4% to your total purchase.

They just made an announcement that starting SUNDAY, when you use
your DEBIT/ATM card if you DO NOT PUT IN YOUR PIN (ATM) you will be
charged 4% from the VISA MASTERCARD company. Don't know how it will work
with credit card, but the 4% is per swipe. So you guys might want to ditch
the CREDIT CARDS, think about how many times a month you use it, 4% x ?
Can you afford it. This is part of some lawsuit they had where the
merchant was charged, but now it is directly on you. The stores will post
who is doing this and who is not. But bring cash or use your pin for your
ATM card. This is not the time to be adding to the bill.


Origins:   Although many customers are not aware of the practice, issuers of credit cards such as VISA and MasterCard charge merchants what are known as interchange fees for accepting purchases made with those credit cards. Interchange fees typically range from between 1.5% to 3.0% of the total transaction amount.

Until recently, merchants have been prohibited from passing along the costs of those interchange fees to customers who use credit cards by charging them higher prices (although some merchants have skirted the concept by offering discounts to customers who pay in cash). However,

due to a recent court case, beginning on 27 January 2013 merchants in many states will be allowed to pass along the cost of those interchange fees to their customers through the imposition of a checkout fee.

It isn't true, however, that every customer who uses a VISA or MasterCard credit card will be now paying an extra 4% at the cash register for every purchase. The passing along of interchange fees to customers isn't automatic; it's up to each merchant to decide whether or not to charge a checkout fee. Also, merchants will only be allowed to charge a fee that is equivalent to what they must pay for accepting a credit card, which as noted above is typically between 1.5% and 3% of the total transaction amount. The 4% figure is the maximum checkout fee merchants may charge, even if their interchange fees are greater than that.

There are some other restrictions on checkout fees: they are permitted only on credit and charge cards, not debit cards; merchants must provide customers with "clear disclosure" notices (at store entrances, at the point of checkout, and on receipts) of any checkout fees, and checkout fees may not be assessed in the ten states (California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas) that prohibit them.

Last updated:   26 January 2013

David Mikkelson founded the site now known as snopes.com back in 1994.

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