Credit unions and other issuers could conceivably see a hit to their credit card interchange going forward if significant numbers of retailers start surcharging credit card transactions to cover their interchange costs.

Under the terms of the last year's credit card proposed interchange settlement, merchants were granted the ability to surcharge transactions paid by credit cards beginning this week.

The settlement goes into effect in stages even before it is finalized.

Merchants who want to surcharge credit card transactions must notify the card brand that they are surcharging and limit the surcharge to no more than the interchange rate they would pay on a given transaction and never more than 4% of the transaction value. 

They must also notify the consumer that they are surcharging the transaction. Retailers must post notices of the surcharge at both their store's front entrance and at the point of sale.

Further, 10 states – California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas – have banned imposition of the surcharge.

Plus, the bans are not superseded by the court decision so, for example, a national retail chain that decided to surcharge credit card transactions could impose surcharges on its customers shopping in Oregon but not on those customers shopping at its California stores right across the border.

Details like these, combined with competitive sales pressures have made leading retail trade associations express doubts that there will be any retailer anywhere in the nation which will surcharge credit card use and has helped fuel retailer opposition to the proposed settlement.