As of Sunday, merchants are now allowed to charge up to an extra 4% when you use a Visa or MasterCard credit card to pay for your purchase. This change comes as part of a settlement reached last year between merchants and Visa and MasterCard over the fixing of credit card and debit card fees. The fee is supposed to represent the extra cost incurred by the merchant for processing the credit card transaction, which is typically between 1.5 and 3.5%. Under the settlement agreement, this “checkout fee” is capped at 4%.

Don’t expect many merchants to add the fee
Although the news may sound alarming to consumers at first, it’s important to note that it is up to each merchant to decide whether they want to add the surcharge or not–and the reality is that very few merchants will take advantage of it. Not only do they stand to lose business from those who like the convenience (and rewards) of using their credit cards, but on average, credit card users tend to spend more than cash buyers.

Even prior to this agreement, merchants could effectively have different prices for cash and credit by offering a “cash discount,” yet that practice was still primarily limited to some gas stations.

The places you’re most likely to see these fees be used are at mom-and-pop stores. As of July 2010, merchants were allowed to require a minimum purchase of $10 in order to use your credit card, yet this rule is typically only enforced by smaller stores. It seems likely that these are the same type of stores that would add the new surcharge.

10 states prohibit credit card surcharges by law
If you live in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, or Texas, you don’t have to worry about this change at all. By law, those states prohibit merchants from adding surcharges to credit card transactions.