More Stores Tack On Fees for Credit-Card Purchases
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Here's your Money Briefing for Friday, August 20th. I'm Charlie Turner for The Wall Street Journal, filling in for J.R. Whalen. More businesses are slapping fees on credit card users.
The idea that, you know, you go up to a register, you pull out your credit card, and you're being told that, well, we're going to have to charge you an extra 2% for that, that doesn't sit well with many people.
Coming up, our credit card reporter, Anna Maria Andriotis, tells us why businesses are doing it and what it could mean for your next credit card purchase. That's after the break.
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Next time you go shopping, you might want to check your receipt more closely if you use a credit card. More small businesses, and even some larger ones, are charging shoppers a fee for credit card purchases, or they're offering customers discounts when they pay by cash, debit card, or check. It's a bid by merchants to offset the transaction fees that card companies charge them.
What recent trend is causing more stores to add fees for credit-card purchases?
With more on this, we're joined by our credit card reporter, Anna Maria Andriotis. Anna Maria, thanks for coming on the show.
Great to be speaking with you.
First, from a consumer perspective, what are customers seeing with regard to these fees? How common are they?
So they're not very common yet, but they are increasing with regards to the number of merchants that are essentially making it more expensive to pay with a credit card. Currently, there are less than 5% of the 8 million card accepting small businesses in the U.S. that charge fees for credit card payments. This is according to a payments consultancy, the Straw Hacker Group, that tracks this data. And now this figure of less than 5% has been rising steadily in recent years. Five years ago, an estimated 2% or less of businesses were charging these fees. Separately, one company whose business model is focused on selling software to merchants to help them with these calculations to determine what dollar amount extra to charge consumers when they're paying with credit cards, this company is called CardX.
That company says that more than 6,400 merchants are using its surcharge calculating software That's up from around 4,000 a year ago and up from nearly 2,400 in 2019. In Kardec's case, most of them are online businesses in the U.S., but there are also some brick and mortar type of stores as well. So the numbers are still small, but they're rising. And the pandemic has certainly contributed to the reason why these numbers have recently increased.
Why are more businesses tacking on these surcharges for credit card purchases? Why has the number grown?
Over the long term, the total dollar amount of card fees that businesses have incurred has been rising. So if we look at how things played out from 2012 until 2019, the total dollar amount of credit card fees that merchants paid on Visa and MasterCard credit cards essentially went from being in 2012 nearly $33 billion to in 2019 being nearly $68 billion.
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