Shoppers may pay fees for using plastic

Retailers hoping to offset fees they pay to Visa and MasterCard may soon be able to charge shoppers for paying with plastic instead of cash.

Kai Ryssdal: You've heard this question before at the grocery store, I'm sure: Paper or plastic? Not much of a difference cost-wise at the Safeway.

Perhaps quite a big difference when the question is whether you're paying with cash or credit. Stores can't charge you more when you use a credit card, even though they have to pay Visa and MasterCard a fee when you swipe your card.

Depending on how an upcoming court case in New York turns out, though, stores may soon be able to charge a fee of their own to you for choosing plastic over paper. Marketplace's Stacey Vanek Smith explains.

Stacey Vanek Smith: It may pay to Discover, but soon you may have to pay to Visa or MasterCard. Merchants like Payless Shoes and Safeway are suing to be able to charge consumers a fee to offset the expense of taking the cards. A settlement is expected this summer.

Bert Ely: Consumers should not panic. 

Banking consultant Bert Ely says even if so-called surcharging is allowed, most business will be careful about adding on fees.   

Ely: I just don’t think we will see an explosion across the board of surcharging. Instead, I think we’ll see some experimentation and kind of a question of what will the market bear.

The U.S. wouldn’t be the first country to let businesses charge customers for plastic privileges. Marc Abbey is a managing partner at First Annapolis, a payments industry consulting firm.

Marc Abbey: The big test case has been Australia, where several years ago surcharging became permitted.  

Abbey says businesses have been all over the map in terms of what they’re charging.

Abbey: It can be $5 to $10. In some cases higher, often lower. But a lot of variation, mostly driven by competition between merchants.

Australia did have to place limits on surcharges after a some businesses went a little fee crazy. Qantas Airlines started charging a $30 card use fee for international bookings. One cab company charged a 10 percent fee. How have Aussie consumers reacted?

Abbey: There hasn’t been a obvious change in consumer payment behavior. 

Abbey says card companies aren’t too concerned because, at least down under, the convenience of a card seems to have trumped any outrage over fees.

In New York, I’m Stacey Vanek Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.
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I never had a problem to pay the fee for the plastic bags, I heard for the first time about such kind credit card fee when I traveled to Spain a couple of years ago to check the space needed to install boxes from http://www.elitetoolboxes.com/ in a car service. This measure will not change the consumer payment behavior, it`s really not a big deal to pay for a small ecotax.

In LA gas stations have been doing this forever. Funnily enough, the ones with the lowest prices on gas, would hit you with that fee to use the plastic. But I had to use cash anytime I went to get gas, cause those low prices were soooo appealing. http://www.thebestestever.com

I've got 2 words for anyone concerned with paying fees for Paper or Plastic:

Reusable Bags.

Of course, the first comment about paying with coins is kind of genius too!
For more of my wisdom here: http://www.bluepelicanloans.com/

when the baggers ask me 'Paper or Plastic?', I just say that it doesn't matter; I'm bisactual. What do I say when they ask debit or credit?

In New Jersey some gas stations have a cash and credit price posted. At other retailers, there may be a sign stating the minumim charge or debt transaction permitted. So my question is if it is unsafe to carry cash and some places do not want to deal in cash (large transactions), and some places don't take checks, credit cards, or debit card what are you suppose to do? Every form of payment has a cost attached to it. Some even charge both the business and the consumer fees. If retailers want the business they should take all forms of payment or clearly say which form of payment they won't take but there should not be any extra charges to the consumer. The price on the shelf should be the price went you get home and read your statements.

In Australia you can ask the "cash price" if paying with cash to pay less at the register. I hope that it wouldn't be the stores that would charge you for swiping, it'd be the card companies. If I drive up to Canada for the weekend, pay for everything with my Visa card, when I get back to the US and check my balance I see fees for each individual swipe. If the cards behaved like that prices could go down in stores, and instead of credit cards offering cash back rewards (ie, they're over charging the stores for their services) they'd compete over lower fees.

A cautionary tale for all the "cashless society" Pollyannas' out there: If cash and check payment choices ever go away, people will be at the mercy of the bankers - who have no mercy, by the way - and whatever fees they force upon us. Remember, all ATM's were initially free, and no-one ever paid to see a teller.
"If there is anything that links the human to the divine, it is the courage to stand by a principle when everybody else rejects it."
Abraham Lincoln

This story caught my attention because there is at least one chain of gas stations here in Portland that is doing this NOW. The station requires you to go in and pay at the cashier and when you swipe your card, the swipe machine asks for you to ok a transaction fee of some sort. If you answer no, it cancels the transaction. It was very maddening when I first came across this. I never went back to that station but unwittingly stopped at another station owned by the same company and the same thing occurred. Is this company doing something wrong?

The report didn't differentiate between credit and debit. In light of recent reductions in debit card swipe fees by the Federal Reserve, surcharges on these would be a slap in just about everybody's face.


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