Credit card users may soon pay more at checkout counter

INDIANAPOLIS (WISH) - A multi-billion dollar settlement between retailers and credit card companies and the banks that run them will have consumers making some important decisions.

When it comes to payment, a shopper choosing plastic over cash could soon pay 1 percent to 3 percent extra.

Up until now, all shoppers have been paying to cover the credit card fees that banks charge retailers. And until now, the retailer couldn't tell even tell shoppers about it. Now, under the terms of the settlement in a seven-year lawsuit filed by Kroger and other major retailers against banks and credit card companies, that’s changing.

"We'll be able to pull that [fee] out of that process and treat it separately as an add-on," said John Elliott, manager of public affairs for Kroger in the Indianapolis area.

The settlement is about to change the choices shoppers will have at the checkout.

"The customers will have to decide if the value of being able to use the credit card versus paying cash is worth it," Elliott said.

For the first time, retailers will be able to tell you how much extra a credit card transaction costs and charge you less if you pay with cash or a debit card. Rachel Smith, an associate professor of finance at the University of Indianapolis, said there's a chance your new choice could actually bring down costs.

"Consumers will be so outraged by the surcharge that they'll start putting pressure on the credit card companies, and they'll have to reduce their fees because they're going to see less volume of people using the credit cards," she said.

Smith said those fees run 1 percent to 3 percent, right now, adding up to $3 to every $100 you spend. But plenty of people worry that in this case, prices will stay the same and consumers will be asked to pay more in a surcharge.

Elliott said that’s not likely.

" I think that same transparency that is being forced on the banks that are managing these credit cards, the same transparency is being forced on Kroger and other retailers," he said.

In the settlement, charges for using credit cards are limited to what merchants pay card companies. Merchants also can't hide or lie about the surcharge and must post and list the fees at their store entry, the point of sale and on the receipt.

Exactly how those fees will end up in your bill isn't yet decided. The court still has to approve the settlement. Then, retailers like Kroger will have to work out their checkout choices.