POS Charges and Fees: Point of Sale Overview

What are POS Charges?

Woman typing in pin number for payment.
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Retailers and online merchants use point-of-sale (POS) systems to complete sales and keep track of transactions. A POS can be as simple as a checkout register, or something more complex that is linked to other systems.

When most of us see the term POS, it refers to a transaction – usually a purchase you make with your debit card. On your bank statements (or online transaction history), the label might be applied to the amount you paid a merchant, or it might signal that you were charged additional fees for using your card.

POS Charges

If you’re trying to figure out what a transaction in your account history means, it probably refers to a purchase you made in-person at a retailer.

Charges that show up with “POS” are typically made with your debit card, where you chose “Debit” at checkout and entered your PIN on the retailer’s payment machine (as opposed to choosing “Credit” and signing for the purchase).

Online purchases and in-person transactions can both result in POS appearing on your statement.

Unauthorized charges? If you see charges that you don’t recognize, research the transaction as soon as possible. POS charges mean that somebody bought something using your card (they’re generally not automatic recurring bills).

Identifying charges: The name of the vendor or merchant should appear alongside any charges. However, sometimes the name isn’t helpful – the business might use a different name than the one you think of.

If you see something you don’t recognize, do a web search for the exact name that you see in your transaction history. In many cases, you’ll find out the more common name (because others, like you, wondered the same thing). If you’re still stumped, look back through your calendar and think back to all of the spending you’ve done to verify if you’re actually responsible for the charge.

Fraud in your account: If your card has been used without your permission, you generally have the right to get those charges reversed. But you have to act fast. Federal law says that you’re not responsible for certain types of fraud and errors in your bank account. Contact your bank within two days of discovering any suspicious charges – if you wait too long (more than 60 days), you may be fully responsible for paying the bill.

Credit cards are safer: For everyday spending and online shopping, a credit card is often safer than a debit card.

Debit cards have direct access to your checking account, so fraud and mistakes can instantly drain the account – causing you to run out of spending money and bounce payments. Credit cards, on the other hand, have a grace period, which allows you to pay up to one month later (or more, if you want to pay interest – which you shouldn’t do). Getting mistakes cleared up just means you’ll temporarily have a higher credit card bill – but your checking account will be untouched.

Additional POS Fees

A POS charge can also be an additional fee that your bank charges when you use your debit card. If you choose “Debit” at checkout and use your PIN, banks sometimes charge an additional fee (usually around a dollar or less).

Not all banks charge POS fees. Read the fine print at your bank before using your card. If your bank charges fees, you have several options:

  • Use a different bank. It’s increasingly rare for banks to charge these types of fees, so there’s a good chance you can find another bank that costs less. You can even keep your existing account and open an online checking account (with a debit card) that allows you to use plastic for free. Small, local credit unions are also a good bet.
  • Choose “Credit” instead. Banks earn less income when you choose “Debit,” so some try to make up for it by adding a fee. The fee may be minor, but it gives you a nudge to choose “Credit” next time. However, retailers may end up paying extra when you do that – making it harder for your favorite stores to stay in business and offer low prices.

    Unless you use cash or checks, somebody always pays a fee for processing payments.

    Banks and card processing networks charge swipe fees to retailers when you pay with plastic. The fees are lower when you choose “Debit,” which makes retailers happy. If you choose “Credit” instead, retailers pay higher fees (so you don’t have to), but you should expect those retailers to pass the costs on to you in the form of higher prices.

    For more details on the Debit vs. Credit decision, see How Interchange Fees Work.

    Retailers Charging Fees?

    Some retailers don’t build those fees into their pricing. Instead, they prefer to charge more only to customers who create the extra costs (customers who pay through the more expensive credit card networks). For example, they might charge a fee to customers who pay with credit, or they might impose a minimum purchase amount for credit card payments.

    Is that legal? Surcharges and minimum purchase requirements are allowed in certain states, but merchants sometimes charge consumers more than they're allowed to (and they may impose minimums when they're not supposed to). Even when merchants aren’t breaking the law, they might be breaking rules that they agreed to follow in order to accept plastic.

    To learn more about your rights when paying with plastic, read about credit card surcharges (and minimums) and debit card minimums.