News from the Better Business Bureau

Passing the buck along: New merchant surcharges on credit purchases

[March 26, 2013]  PEORIA -- Most of us have gotten used to charging purchases, large and small, on a debit or credit card. Just swipe the card and avoid the hassle of carrying cash. Look carefully: You may notice a new fee on your receipt. Retailers are now allowed to pass along to consumers the cost of processing credit cards.

It's called "merchant surcharging" and it's permitted in most states. You can be charged up to 4 percent on each transaction and, similar to sale taxes, merchant surcharging can be automatically added to your bill. After a while, these charges can add up, so consumers may want to reconsider how they pay for goods and services.

Why now? Well, merchants have long been charged a processing fee by the credit card companies when consumers chose to charge their purchases. Previously, the fee could not be passed along to customers. However, as a result of litigation, merchants in the U.S. and its territories can pass that fee along directly to customers using credit cards (but not debit or prepaid cards).

What can consumers do?

• Use cash for smaller purchases. Some retailers may offer you a discount if you pay with cash.

• Look for notices about merchant surcharges. Retailers are required to provide the information so you can decide beforehand if you want to pay with a credit card.

• Use a debit card with "bricks and mortar" establishments you know and trust. Find trustworthy businesses at www.bbb.org.

• Use a credit card for online purchases when you need the greater protections that credit cards offer.

• Get into the habit of monitoring your bank account and credit card accounts online.

Several states have banned merchant surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. In other states, it's optional and will vary from store to store.

For more information on managing your credit, check out BBB's "Managing Credit -- Made Simpler" at www.bbb.org/credit-management.

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For 100 years, the Better Business Bureau has been helping consumers find businesses, brands and charities they can trust. In 2012, consumers turned to BBB more than 100 million times for reviews on more than 4 million companies and reports on 11,000 charities, all available for free at www.bbb.org. The Council of Better Business Bureaus is the umbrella organization for 114 local, independent BBBs across the United States and Canada, as well as home to its national programs on dispute resolution and industry self-regulation.

[Text from file received from the Better Business Bureau of Central Illinois]