FAIRMONT — When customers use a credit card for payment, they could see an extra fee added to their total purchase cost.

As a result of a recent $7.2 billion court settlement between retailers and Visa, MasterCard and major card-issuing banks, merchants in the United States and its territories are now allowed to institute a surcharge of up to 4 percent on credit card purchases. This became effective Jan. 27 of this year.

 “Historically Visa has not permitted retailer surcharging, but allowing surcharging was a key provision required by merchants to settle long-standing litigation brought by a class of retailers in 2005,” usa.visa.com says.

The surcharge can only be applied to purchases made by credit card. Debit or prepaid cards will not be impacted. Retailers have the choice of whether or not to impose the additional fee on credit card purchases.

 Merchants that decide to implement the surcharge are obligated to let consumers know before they buy any items. Notifications should be shown at the entrance of the store and at the checkout, and the fees must be included on all receipts, Visa’s website states. Retailers must also inform Visa or MasterCard 30 days before they start imposing the surcharge.

According to MasterCard’s website on this subject, www.checkout facts.com, “The most important thing to know is that merchants are not required to add these fees to your bill, and many may choose not to. In fact, these fees are not allowed in 10 states.”

Merchant checkout fees are not permitted in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

For any shopping done online or using a smart phone or mobile device, information about the surcharge must also be visible before any purchase is made. Disclosures should appear on the first page online that mentions credit card payments, and should also be included on the electronic receipt, MasterCard’s website says.

The exact amount of the surcharge could be different depending on the type of credit card, as well as for rewards cards.

“Merchants are only allowed to charge a fee equivalent to what they pay to accept the credit or charge card, which in the U.S. is typically between 1.5 percent and 3 percent of the total purchase,” www.checkoutfacts.com states. “The fee may not be greater than 4 percent.”

If customers are returning purchases, they will be credited the entire amount along with the surcharge. Customers can contact their credit card company if they believe they are charged incorrectly or the fee is more than the maximum of 4 percent.

Bridget Lambert, president of the West Virginia Retailers Association, said this surcharge was part of the long process involved with the Visa-MasterCard settlement.

“The result is the fact that credit card fees kept increasing at a horrendous rate,” she said.

The state Retailers Association represents the retail industry at the local and state levels, and also at the federal level from time to time. The organization is the voice of more than 560 stores in West Virginia, Lambert said.

She doesn’t believe the surcharge is going to have an immediate impact because it will take time for merchants to start imposing the fee due to the 30-day notification rule. But she believes the small business person, rather than the large stores, would see the most benefit from adding the surcharge.

For some small retailers, the fees they pay to the bank for accepting credit card payments are more than the cost of utilities in their stores, Lambert said. They are just giving their customers more payment options, but are getting hit with fees in return.

“This will be most beneficial for the small merchants who are struggling under these fees,” she said. “I think it will allow small businesses in the future to continue to accept (credit card payments).”

Businesses would not be imposing the surcharge to make money – it’s about their bottom line, Lambert said.

“Prohibiting a merchant from surcharging for the use of credit cards is not the heart of this issue,” she said. “Unfair and hidden credit card fees that are charged to merchants are the problem.”

Jonathan Rider, owner of Rider Pharmacy in Fairmont, said the majority of his customers make purchases via credit or debit card.

“We always are paying for credit card purchases within the store,” he said. “Credit cards do cost a lot of money.”

The credit card rate – usually 2 or 3 percent – that Rider Pharmacy pays for everyday purchases is contracted out and negotiated through its processor. Those costs can be very expensive with all the credit card purchases made over a year period, Rider said.

He said Rider Pharmacy would consider the possibility of adding the surcharge to credit card purchases in the store.

Game Exchange in White Hall also has a lot of costs related to credit card purchases, said owner Ryan Richards.

“It seems like every year merchant services fees kind of go higher and higher,” he said.

But Richards said his store probably won’t add the surcharge on credit card purchases. Although merchant services fees are costly for businesses, it’s not the customers’ fault and he doesn’t think a surcharge is fair to them.

If a business is already profitable, that surcharge would just make customers mad and probably cause them to shop at a different store, Richards said.

Walmart and Target have both commented that they don’t intend to implement the merchant checkout fee.

Randy Hargrove, company spokesperson for Walmart, provided the following statement: “We are not interested in surcharging customers in order to allow credit card companies to continue charging unfair fees. The proposed modification to the no-surcharging rule for Visa and MasterCard provides no benefit to customers or merchants such as Walmart.”

“Target has no plans to surcharge guests who use credit and debit cards in order to allow Visa and MasterCard to continue charging unfair fees,” said Jessica Stevens, spokesperson for Target.

Email Jessica Borders at jborders@timeswv.com or follow her on Twitter @JBordersTWV.