Passing on Credit Card Swipe Fees to ConsumersA recent settlement between merchants and Visa and MasterCard will permit merchants to pass swipe fees to consumers. While Pennsylvania is not one of the ten states that prohibit swipe fees, it is the Bureau of Consumer Protection's assessment that a merchant must disclose beforehand whether the consumer will be charged a swipe fee.
In the Bureau's view there must be clear and conspicuous disclosure before a sale with any fees or surcharges attached. What constitutes sufficient disclosure will depend on individual facts and would include postings at the register and store front.
What is a Swipe Fee?
A swipe fee is a fee collected between banks for card based transactions. The bank from which the card is issued deducts a swipe fee, also known as an interchange fee, from the amount it pays the bank handling card transactions for the merchant. The bank that acquired the deducted amount on behalf of the merchant then pays the merchant, minus the interchange fee and usually other, smaller charges.
What does this settlement mean for a consumer?
Under the settlement, merchants are now permitted to pass swipe fee costs to the consumer where not prohibited by law. However, there are four disclosure requirements that govern whether a merchant can apply a surcharge to either the brand or product level. A merchant must:
The Attorney General's Bureau of Consumer Protection is here to help. If you need more information call the toll-free hotline at 1-800-441-2555 or visit the website at www.attorneygeneral.gov.
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