Texas Dodges Credit Card Surcharges; Local Businesses Pay The Price

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WACO (January 27, 2013)- As of Sunday, your credit card could cost you a little extra, unless you live in Texas.

Swiping your credit card at a business costs local merchants more than you think. Anytime you use your credit card at a business, your credit card company turns around and charges that business for processing the transaction.

Most merchants dub these fees "swipe fees."

But under a 7.2 billion dollar settlement reached between major credit card companies and merchants last summer, merchants can now charge customers who use credit instead of cash.

But ten states, including Texas, prohibit credit card surcharges. If you plan on traveling to any of these states in the future, you won't have to worry about it: California, Maine, Massachusetts, Kansas, Florida, New York, Oklahoma, Colorado, and Connecticut.

Charging customers for credit cards is a luxury many local business owners won't be able to partake in since Texas prohibits it.

Local restaurant owner Lionel Randolph thinks it's unfair.

"For every other merchant in the U.S. to be able to take advantage of that, and then come to find out I can't, it's not right," Randolph said.

Randolph has tackled a daunting task, turning an old laundry mat on LaSalle avenue in Waco into a Louisiana style restaurant.

"Swipe fees" can sometimes be the second or third highest cost for business owners. Randolph learned this first hand after opening his restaurant "Louisiana Catfish and Chicken" three weeks ago.

"It's a pain, like a nail in your foot," Randolph said.

"But things have been steady here at the restaurant so God is good."

Debit cards are exempt under the $7.2 billion settlement. Also, American Express customers are exempt as well.

Yet, some online stores not located in the ten states that prohibit credit card surcharges, could still charge you for using a credit card.

Under the settlement, merchants are supposed to post on their website or in their business, if they charge customers for using a credit card.