Checkout Fees: Paying to Use Plastic

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A quarter here, $.45 there, these days it seems consumers are paying more to use plastic.

“I think it's ridiculous frankly but what can you do about it unless you're carrying cash?” Steve Festa said.

We all know about ATM fees, they've been around since the 80’s, but over the past year or so, there's been a spike in the number of stores charging you a small fee just to swipe your credit or debit card.

At AM/PM locations Valley-wide, you'll pay an extra $.45 on debit card transactions.

Same goes for the QT gas station on Hayden Road and McKellips in Scottsdale, where we weren't quite able to get a clear explanation on why the fee was being passed on to customers.

A nail salon on Scottsdale Road and Thomas Road charges an extra buck just for paying with plastic, and you may remember McDonald's charging an extra quarter when you swiped a credit or debit card, but that  practice has since ended.

“There are certain places I won't go specifically for that reason,” Jeff Lalich said.

“Some folks may shrug off small fees like this, for others it may just aggravate them,” Professor Dennis Hoffman said.

Hoffman with A.S.U.’s W.P. Carey School of Business contends that while these fees are fishy to some consumers, they are here to stay, as businesses attempt to recoup costs during a recession.

“What they're trying to do is balance out their cost structure, their stresses, with the imposition of a fee like this,” Hoffman said.

While the trend seems to be catching on, ten states have actually banned businesses from charging checkout fees. Arizona is not one of them.

“The people out there who are trying to work hard and earn money, they're having to make up for everything, for the downturn, and I don't think that we should have to do that, we still have families to provide for, we still have to pay our bills and every little bit here and there adds up,” mother Jamie Wright said.

So while merchants continue to keep their eyes on the prize, the money, Hoffman insists consumers must know their rights, and remember: purchasing power always prevails.

“They're free to charge you what they think you might pay, and if you don't want to pay it, go to the next one,” Hoffman said.

Many credit card companies discourage retailers from using checkout fees.

In a statement, Ted Carr, a spokesperson for Visa writes: “Visa does not allow merchants to charge consumers a fee for using a Visa card because we do not believe that cardholders should be penalized for using their cards. Checkout fees on purchases are harmful to consumers and unfairly shift the cost of electronic payments onto consumers. In fact, ten states ban businesses from the practice to protect consumers, including California, Colorado, Connecticut, Massachusetts, New York and Oklahoma. Merchants can gain great efficiencies by accepting cards, including on-time payment, streamlined account management and potentially reduced expenses compared to those that would normally be associated with cash and check handling. If Visa cardholders experience a merchant that is charging checkout fees, they should call the number on the back of their Visa card or 1-800-VISA-911 and provide the customer service representative with the name and location of the merchant. Visa works with merchants’ financial institutions to educate merchants about Visa’s rule banning checkout fees. Generally, when merchants are educated about Visa’s rule they stop charging them.”

In a statement, Lisa Gonzalez with American Express writes, “American Express discourages surcharging because it isn't consumer friendly. Merchants receive the benefits of consumers using plastic -- an efficient billings and dispute process, reduced fraud, and typically those using plastic make larger purchases. Therefore it's hard to justify that consumers should pay a surcharge when the establishment is receiving the benefit. As it relates to our discount rate, we don't break out discount rate information, except each quarter on an aggregate basis. We maintain direct relationships with merchants and negotiate and set prices on an independent, bilateral basis. Although we may sometimes charge a premium, our merchant pricing is based on the value we deliver to them through our high-spending, loyal Card members, which typically spend, on average, 4-5 times more annually on their AXP Cards compared to Visa/MasterCard cardholders, and business insights to help our merchants grow their businesses.”

A spokesperson for ARCO gasoline & AM/PM convenience stores, Scott Dean, writes, “ARCO's low-cost approach to payment options is attractive to value-conscious consumers. That's why ARCO stations do not accept credit cards and only accept cash, pre-paid cards and PIN-based debit cards. A 45 cent convenience fee is charged on debit transactions to cover the cost of these transactions.”