Home / Credit in the News - Up to date News Flashes / Should you freak out about the new 4% credit card surcharge? Probably not

There's a new fee attached to credit cards that's causing a bit of a stir amongst plastic users and retailers alike. The fee - which allows retailers to charge a "checkout fee" of as much as 4% on credit card purchases - is a newly-legal option for merchants that's more than half-a-decade in the making. The fee is legal in 40 states, though analysts are already predicting that most merchants nationwide are likely to skip the 4% fee.

In fact, representatives of big-time retailers like Wal-Mart and Target have already said they plan to skip the surcharge, and MasterCard itself told FoxBusiness.com that it predicts very few merchants will add the surcharge.

So, should you freak out about the new 4% surcharge option on credit card purchases? The answer is, 'Probably not.'

First, there are 10 states - California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas - that have state laws prohibiting such credit card surcharges. So if you live in any of these states (quite the mixture of 'red' and 'blue' in there, by the way; who knew surcharges were so bipartisan?), you're forgiven if you go ahead and just skip the rest of this article.

(Update: The surcharge will apply to MasterCard and Visa cards only.)

And yet, even if you don't live in the aforementioned 20% of American states, the general feeling behind this newly-legal option - which, by the way, is the product of a class-action lawsuit filed by merchants claiming collusion against MasterCard and Visa in 2005 - is that most merchants and big retailers will forego the surcharge. (And the "checkout fee" won't always be 4%, either; that's just the highest it can go.) 

Why? That's mostly due to the impending blow-back such a charge is likely to cause, since retailers that do choose to impose the new "checkout fee" would have to notify consumers and label the surcharge as such on a receipt. That's likely to cause a general discomfort with consumers that, quite honestly, many merchants are unlikely to welcome.

That said, now that the option of a checkout fee is on the table in most states, there's certainly reason for concern as it sets a new precedent for credit card-related fees.

Only time will tell how this one plays out, but in the meantime we would hardly recommend freaking out in regards to the new surcharge option for merchants and retailers.