For the Cumberland Times-News
CUMBERLAND — Maryland retailers can now charge a “checkout fee” of up to 4 percent of the purchase price when a customer pays with a credit card, according to the Better Business Bureau Greater Maryland.
The use of the fee, which was made effective Jan. 27, allows merchants to pass on costs that the retailer must pay to a creditor when a credit card is used for a transaction. Retailers pay an average of 2 percent for processing fees. Larger retailers with national clout are able to negotiate lower rates with banks.
Ten states have passed legislation prohibiting the checkout fee surcharge, but Maryland isn’t one of them, the BBB said.
“While the U.S. District Court ruling of the checkout fee may strengthen the bottom line of local retailers, this plan could backfire when consumers begin to search for strategies to avoid what may be perceived as a 2 to 4 percent nuisance fee,” said Angie Barnett, president and CEO, Better Business Bureau Greater Maryland. “If consumers actively chose not to use credit cards for purchases, this action could trigger a rollback of surcharges.”
Consumer behavior studies provide evidence suggesting consumers spend nearly twice as much when using a credit card as when they pay with cash.
BBB offers the following advice for consumers using a credit card for both in-store and online purchases:
• Avoid the fee by paying with a debit card. Look for retailers who offer a discount for cash and check purchases.
• The fee is not mandatory. Small local retailers are most likely to take advantage of the checkout fees. National retailers are unable to do so since the ruling stipulates that the fee can only be imposed if all 50 states opt in.
• Look for public notices. The regulations stipulate stores must fully disclose that they are going to add the surcharge by posting a notice at the entrance of the store. However, you may not know how much the fee is until you reach the cash register.
• Online retailers only have to disclose the surcharge when they begin to collect your payment information.
• Different credit cards may have different surcharges. Not all retailers will pass on these fees. Keep up with who is charging what. For example, American Express is not party to this ruling.
• Check your receipt. In Maryland, the retailer cannot charge sales tax on the surcharge. Therefore, the fee is not tacked on until the total price and tax are figured. Disclosure of this fee is required by terms of the new ruling.