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More States Take Up Legislation to Ban Credit Card Checkout Fees

Eleven states are currently considering legislation that would prohibit merchants from charging a transaction fee when their customers pay with a credit card.  Ten states already have such laws on the books, including California, Colorado, Texas, New York, Florida and others.  Similar bans on so-called check-out fees are now being looked at by lawmakers in Hawaii, Illinois, Kentucky, Missouri, New Jersey, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont and Tennessee.  West Virginia, meanwhile, is expected to begin looking at a similar bill next month.

States have begun looking at banning check out fees because of a settlement between Visa and MasterCard and a massive group of retailers who had sued the credit card companies for the right to charge check out fees.  Prior to January 27th, both companies had prohibited merchants from charging the fees, usually a percentage of total sale price.  But in their settlement, both Visa and MasterCard lifted those bans, and states are looking to circumvent that settlement by enacting bans of their own.  American Express still prohibits check out fees on its cards, and MasterCard and Visa still do not allow them on debit cards.

Across the nation, lawmakers have taken up the fight against check out fees, saying they will hurt consumer spending, a vital part of the US economy that accounts for more than two-thirds of the overall gross domestic product.  While these fees are typically small, between 1.5 and 3 percent, analysts say the charges could have an effect, even if it means the average family make one less purchase each month.  Major US retailers, meanwhile, are not in any hurry to begin charging the check out fees, even in states where they're currently allowed.  Wal-Mart, Home Depot, Sears and Target are among dozens of retailers who have said they will not start charging the fees anytime soon.

With retailers in no hurry to begin charging the credit card fees, some critics have said the push to enact legislation to ban them is a waste of time for state legislatures.  Instead, these critics say that attention should be paid to hidden charges such as credit card swipe fees which the credit card companies charge to merchants, affecting prices in the process.  The settlement allowing merchants to charge checkout fees is not final yet, as the court in which the case was filed is scheduled to make a final ruling on the settlement later this year.