Are new swipe fees actually burdening consumers?

New rules went into effect Sunday allowing businesses to pass along directly a credit swipe fee to customers. In all likelihood, you haven’t notice a difference, as most businesses are choosing not to do that.

As part of a settlement this summer among Visa, MasterCard, several big banks and businesses, retailers can charge what’s being called a “checkout fee” to credit card customers. The rule does not apply debit cards.

Typically, that fee would be between 1.5 and 3 percent percent of your total purchase, according to Consumer Action.

The lawsuit started as a means for businesses, many of whom have been absorbing these fees, to try to find a way to manage the increasing burden.

“Bottom line, you’re not getting all the profits. You have to pay part of it to someone else,” said Nora Proctor, part owner of P&R Baked Goods and Desserts in Harrisburg.

But there are a host of challenges in implementing this rule, meaning the vast majority of consumers aren’t being impacted, according to the National Retail Federation.

Ten states forbid businesses from directly passing on swipe fees. Any business operating in those ten states cannot charge costumers the swipe fee in one state and not another. New York is among those states.

For example, it’s not permitted to charge a customer this fee at a Target store in Pennsylvania and not at a Target store in New York.

That largely leaves small businesses to decide whether they want to charge the fee. The National Retail Federation says many are choosing not to for several reasons. For one, most business owners don’t want to risk being the first in the neighborhood to do it.

“Who wants to do that? You want your customer to continue to come back, time and time again. And, if you start to pass on a fee to them, then they might think a little bit more about it before they come in,” said Proctor.

Beyond that, some find the paperwork and approval process too time-consuming. Businesses would also be required to clearly post signs saying they’re charging the fees.

State Rep. Adam Ravenstahl (D-20th), said the deal is bad for consumers.Even though most aren’t being impacted, his concern is another settlement could be reached and this practice would become more common.

He’s drafting legislation that would allow Pennsylvania to become like the ten states which ban checkout fees.

“I don’t know anyone who wants to pay in terms of fees and taxes. So, it’s certainly a consumer protection piece of legislation,” said Ravenstahl.

The ten states which ban checkout fees are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Managers of the National Retail Federation say they’ve asked member businesses across the country and haven’t found one that plans to institute these fees.

The NRF said several of the plaintiffs involved in last summer’s settlement have fired their attorneys and are trying to work out a new deal.

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