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Editorial: Card fee ruling a good thing for retailers, but be careful

On March 29, the U.S. Supreme Court ruled that merchants have the choice to let their customers know how much banks and credit card companies are making every time a credit or debit card transaction occurs.

The ruling stems from a New York case involving Expressions Hair Design, which wanted to implement a surcharge to its customers who pay by credit card to offset the fees the business is charged by banks and other credit card issuers. Doing so is illegal in New York (and nine other states), and the U.S. Court of Appeals upheld the law in its original ruling.

The Supreme Court struck down that ruling, sending case back to the Court of Appeals. The National Retail Federation lauded the decision, not because it is in favor of surcharges but because it is in favor of merchants being able to inform the public just how much it’s costing them to accept cards.

“While merchants don’t want to surcharge, having the ability to do so would be an important negotiating tool in convincing the card industry to charge reasonable fees,” said Mallory Duncan, the NRF’s Senior Vice President and General Counsel.

On average, banks charge about 2 percent of the transaction on credit card purchases and at least 21 cents on debit card purchases, the NRF reported. That equates to roughly $50 billion a year.

Retailers can tell customers how much they pay every time a patron pulls out that VISA or MasterCard. But should they?

Would a sign by the checkout stating such information make some customers feel guilty for pulling out their card instead of cash? Would they just buy online so they don’t have think about if they’re spending enough to warrant using a card?

Ultimately, this is a good thing for small retailers — the public should be aware of this information — however, merchants should be mindful of how and when they convey it to their customers.  

Until next time,

Zeke Jennings, managing editor

Originally posted Friday, May. 19, 2017

Tags: credit card, fees, taxes