This past weekend an important piece of regulation went into effect that impacts everyone that uses a credit card. As of this past Sunday, Jan. 27, 2013, merchants who accept Visa and MasterCard will be allowed to add a service charge to the purchase price. Based on a lawsuit brought by retailers, merchants are now allowed to charge you a fee up to 4% on your purchases to recoup the fees they pay to the card issuers. In the past Visa and MasterCard restricted retailers from charging an additional fee to use a credit card, causing the merchants to build the card costs into their business model. Now things are about to change.

The question remains which retailers will follow through with passing along the fees, but there are new rules that appear to limit their implementation. For starters, select states ban credit card surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. This presents good news for shoppers at national retailers. Visa and MasterCard’s rules do not permit varying credit card policies, which means if Target has a store in California, and does not charge card surcharges, they can not in other states.

In addition, card issuer policies state that if merchants elect to charge a fee for using a Visa or MasterCard, they also have to charge a fee with American Express and Discover cards. The good news here is that AMEX and Discover do not allow merchant fees on their cards, so again, retailers will not be allowed to charge a card premium.

What I would expect to start to see is merchants may start to regress in their acceptance of AMEX and Discover card. If a merchant could add 4% to the bottom line, by accepting only Visa and MasterCard, it seems to be a simple solution to stop accepting AMEX and Discover, especially when their fees can be higher.

If merchants start no longer accepting AMEX and Discover, that makes a major blow to those issuers, who have worked extremely hard over the past years to get more places to accept them (i.e. Small Business Saturday).

Some of the additional things that merchants can now control include requiring a $10 minimum on credit card purchases; a discount for paying with cash, check or PIN debit or for using a specific network-branded card; and discounts for paying with non-rewards cards versus rewards cards.

A common thing that has been going around for months is people purchasing Vanilla Reload gift cards, and then transferring them to the AMEX BlueBird card to pay for expenses that may not normally be able to accept credit cards (i.e. mortgages). While most retailers have started to disallow credit cards on these gift card purchases, now with a minimum $10 purchase requirement, their use may be shut down completely. I never dove too much into actually using the Blue Bird card though (who has time with kids).

Want to avoid paying more at the register?

Debit cards are not subject to the transaction surcharges. Of course, neither is cash.

The bad news is that your favorite reward earning credit card now could end up costing you a significant amount to earn those miles or points. As an example, if a new credit card earns you 50,000 miles for making $3,000 in purchases, and merchants charge the full 4%, you could be paying $120 for those miles. That assumes you only shop at locations that elect to charge the full fee, which clearly seems the impacts may be limited. In addition, even at $120 for 50,000 miles, it is still worth the cost, just an added cost consumers need to realize. This may have more of an impact on small town America with limited, and more local shopping resources.

To read some more detailed information on the new policy, head over to www.electronicpaymentscoalition.org/. While the policies are in place, they appear to only have preliminary approval and are still subject to final ruling, let alone possibly years of challenges to the settlement.

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