Credit unions and other issuers could conceivably see a hit totheir credit card interchange going forward if significant numbersof retailers start surcharging credit card transactions to covertheir interchange costs.

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

The settlement goes into effect in stages even before it isfinalized.

Merchants who want to surcharge credit card transactions mustnotify the card brand that they are surcharging and limit thesurcharge to no more than the interchange rate they would pay on agiven transaction and never more than 4% of the transactionvalue.

They must also notify the consumer that they are surcharging thetransaction. Retailers must post notices of the surcharge at boththeir 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 – havebanned imposition of the surcharge.

Plus, the bans are not superseded by the court decision so, forexample, a national retail chain that decided to surcharge creditcard transactions could impose surcharges on its customers shoppingin Oregon but not on those customers shopping at its Californiastores right across the border.

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