More businesses are charging fees to customers using credit. Are debit cards next?

HIAWATHA, Iowa (KCRG/Gray News) – As more customers are seeing fees from businesses when using credit cards, consumers are asking whether the same might apply to debit cards.

According to Pew Research from 2022, more than 40% of people in the U.S. do not make cash purchases in a given week.

Marie Chalhoub, owner of Oscar’s in Hiawatha, said she sees the shift to cashless payments daily.

“People use credit cards a lot,” she said. “At least 85% credit cards, maybe 15% cash.”

However, with credit transactions come credit card fees.

“That small percentage payment guarantees the merchant that they’re going to receive payment from your bank,” Dan Kramer, for SHAZAM Financial Services, said.

Debit cards, however, pull money directly from bank accounts like cash.

Kramer said almost every debit card is issued by either Mastercard or Visa, and businesses cannot charge fees for those transactions. They are treated differently under the payment network rules currently in place and expected to continue.

“Visa and Mastercard have very specific rules,” Kramer said.

According to Kramer, the systems retailers use to process cards are responsible for ensuring retailers follow those rules.

“They have fees and penalties in place to oversee that because the merchant runs the risk of having their license for processing the Mastercard and Visa revoked,” Kramer said.

Kramer noted that customers should not be seeing a debit card fee when using their bank card and that consumers should ask the business to remove it if they are indeed being charged extra.

If the business refuses, he said those customers should call their bank and dispute the charges.

Chalhoub said she does not pass any credit card fees onto her customers.

“We pride ourselves on being a family restaurant. That means a lot more to me than a processing fee,” she said.

However, the family admits they do feel the impact of those fees at the end of the day.

“It’s frustrating,” Chalhoub said. “It takes out of your bottom line.”