Jan. 29, 2013 – NAFCU Director of Regulatory Compliance Steve Van Beek is urging credit unions to educate members about potential credit card surcharges now that merchants are permitted to impose such fees under a class action settlement.
Writing for today's post in the NAFCU Compliance Blog, Van Beek says the surcharges will not directly impact credit unions, but they impact credit union members. Credit unions should consider including information about the surcharges on their websites and in communications with members, he said.
“Ultimately, it is unknown how prevalent merchant surcharges will be” says Van Beek, “but it is important to let members know of the possibility and what disclosures to look for.”
Under the terms of the settlement, announced last July, merchants were authorized to begin assessing surcharges on consumers for credit card use as of Sunday. The surcharge is supposed to equal the actual cost of processing the credit card transaction, which is typically 1.5 to 3 percent. Under the agreement, the fee is capped at 4 percent. The surcharge fee does not apply to debit cards.
Merchants that assess the surcharges must follow certain disclosure requirements. These include posting a sign at their storefront announcing the extra fee and disclosing the fee at the checkout counter and on the receipt. Merchants are not required to disclose the specific amount of the fee.
Ten states prohibit the credit card surcharges from being imposed: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
The settlement also requires banks and credit card companies to pay an estimated $6.05 billion to retailers, while Visa and MasterCard must reduce interchange fees for eight months by an amount equal to $1.2 billion.