At Pomegranate & Company, a home goods boutique in Rockville, Md., Leigh Ky is putting Christmas ornaments on sale. But she says for her, it's far from a good deal.
“At the end of the day, if your item is on sale, you're actually going below the break even line,” says Ky, owner of Pomegranate & Co.
It's because banks and credit card companies charge her business a surcharge when shoppers use a credit card. It's a small fee - about 2 percent per sale - but it adds up. Ky says it adds up to between $500 and $1,000 a month.
But soon, Ky and other businesses will be able to pass that fee onto customers. It's the result of a recent settlement between merchants, banks and credit card companies to lift the credit card fee off of vendors.
Before the deal, businesses had to absorb the cost. And it meant billions of dollars per year nationwide.
Gas stations often give a discount for using cash instead of credit.
Eric Friedman, director of the Montgomery County Office of Consumer Protection, says vendors must notify customers about the extra fee. but that can range from a sign at the door to a note on the receipt.
“Many customers will be shocked when they see they have to pay an extra 1, 2 or 3 percent when they pay with a credit card,” Friedman says.
But back at Pomegranate & Co., Ky says she likely won't end up making customers pay the fee.
“It's not good etiquette. You basically eat it up and that's what it is,” Ky says.
For her, the risk of losing a customer is just too much.
Credit card fees are legal in all states except California, Kansas, Colorado, Oklahoma, Florida, Maine, Massachusettes, New York, Connecticut and Texas.