NEW YORK (WLNY) — Paying with plastic may now cost you — if you live in New Jersey.

On Sunday, a new credit card surcharge went into effect, meaning retailers gain the right to tack on a checkout fee of up to 4 percent for credit purchases.

As CBS 2’s Amy Dardashtian reported, the purpose from the merchants’ perspective is to offset the 3 percent swipe fee that the credit card companies charge retailers.

The businesses have a choice as to whether they wish to charge the fee — but now they’re faced with a dilemma. Do they eat  the cost, or pass it on to the consumer and risk driving away customers?

It’s a tough question for small business owners in places like Hoboken, where many are still struggling to get on their feet after Superstorm Sandy.

Some things to know about the new fee:

The fee applies only to credit cards, not debit or prepaid cards. Retailers must disclose surcharge fees on every receipt – both in-store and online – and they can offer a discount for cash and check purchases.

The change in surcharges is the result of a settlement following a 2005 lawsuit between a group of retailers and MasterCard, Visa and other financial institutions.

The retailers claimed those groups conspired to fix the added charges.

The checkout fee is no longer banned in 40 states, but it is still illegal in New York and Connecticut.

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