Discounts for Using Debit Cards

Someday soon, price tags may become as complex as credit agreements. Well, maybe not that complicated. But in the coming year, shoppers are likely to notice that the price they pay depends on how they pay. This spring, the Federal Reserve is expected to issue new rules on the fees merchants pay when their customers use debit cards, paving the way for discounts if you pay by debit as opposed to credit.

Visa and MasterCard's recent settlement of a lawsuit brought by the Justice Department frees retailers to offer discounts for using one credit-card network over another -- say, Discover Card instead of MasterCard -- or one type of credit card over another -- a regular MasterCard versus one that offers rewards, for example. American Express did not settle with the Justice Department, so retailers that honor American Express are bound by its no-discounting rules until that case is resolved.

It remains to be seen whether -- and how much -- retailers will discount to steer customers to cheaper payment methods. Gas stations, which already discount for cash, might be among the first to promote debit purchases. Discount stores might knock down the price depending on which piece of plastic you reach for. High-end stores may not discount at all, but could bump up service with more sales clerks on the floor or free gift-wrapping. Might appliance stores offer free delivery for debit transactions? Or restaurants free dessert for using your plain-vanilla Visa? We'll see. Card issuers have hinted that they might curtail rewards to make up for lost fees. But for now, shoppers can look forward to savings.

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Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.