What appeared to be a clean 'n' sweet credit card fees deal may have opened a can of worms, in some States, and with convenience stores [low value transactions.]
Stores and e-tailers may not find it easier to charge shoppers fees for paying by credit card as a result of a $7.25 billion class action settlement with Visa and MasterCard, which might delay or sabotage its approval, an analyst said on Monday. And larger retailers are saying that they don't want to make extra charges.
The Proposed Visa Card and MasterCard settlement
The proposed settlement between retailers and the two biggest credit card companies would resolve class action stores' claim that Visa and MasterCard conspired with major banks to fix swipe fees, the amount paid to process debit and credit card payments.In addition to a $6.05 billion payment and temporary $1.2 billion swipe-fee reduction, the deal would also allow stores to start charging so-called checkout fees to customers who pay with MasterCard or Visa credit and debit cards, to defray their costs From Visa, MasterCard and Banks for using credit cards.
But retailers might not in reality get much help from the deal in offsetting the credit card swipe fees by charging customers more.
The settlement's much-touted credit card surcharging provisions actually have no real usefulness to merchants.For instance, if retailers force customers to pay more for using Visa or MasterCard, they essentially must charge consumers more when they pay using other credit card networks, such as American Express, according to Bouregois' analysis of the proposed settlement.[not part of the claim or settlement]
Because buried in the fine print of the agreement are provisions that undercut the stated intent of the settlement.
But American Express prohibits merchants from implementing policies that discriminate against its cards, like discounts designed to steer customers to different forms of payment. Although this may be unlawful I feel.
The credit card settlement is also subject to approval by a federal judge.
The surcharge rules will also not apply in the 10 states that prohibit that practice, including Texas, California and New York.
Credit Cards increase sales
This could undermine the settlement if merchants voice their objections to this provision during fairness hearings prior to the court's final approval.Some stores have said they will not impose extra fees for paying with plastic, even if they can.
One of the largest U.S. retailers, Target Corp., issued a statement Friday saying it did not intend to impose checkout fees, and calling it "bad for both retailers and consumers."
The National Association of Convenience Stores believes the deal does not address convenience stores merchants long-standing concerns over how Visa and MasterCard set credit card swipe-fee rates.
Credit Cards Fees: Retailers have a few options
The settlement would give retailers a couple of different options should they choose to pursue checkout fees.For instance, stores could choose not to assess the fees, or if they did, they could re-examine their agreements with competing credit card issuers or even drop those other cards altogether, he said.
The settlement agreement should now give freedom to merchants to make those choices that they think are in the best interest of their business and their customers.
Because the value merchants get from MasterCard acceptance is far in excess of the actual cost of acceptance, so merchants would not have to impose credit card use checkout fees, as the costs have been taken care of.
Source: Mr Mortgage
