The recent rule issued by the world’s two largest processors of debit and credit card payments related to how merchants could charge consumers for using the latter type of account has drawn a lot of attention in the past few weeks, and now some New Jersey lawmakers are moving to stop it.
Beginning on Jan. 27, Visa and MasterCard began allowing merchants to add surcharges to the bills of consumers making purchases with credit cards as a means of defraying the interchange fees these companies charged, but the New Jersey state senate is moving quickly to stop those within its borders from doing so, according to a report from the Newark newspaper the Star-Ledger. A bill which recently moved out of the state’s Senate Commerce committee with a 4-2 vote will soon be up for vote, and if passed would fine retailers as much as $20,000 for imposing such a surcharge for credit card purchases in the state.
Further, it’s believed that the state’s other legislative body, the Assembly, will see a similar committee pass the same bill later this week, the report said. It should be noted, though, that both will allow gas stations to continue to tack on such a surcharge, which can typically add as much as 10 cents per gallon to the price of fuel.
If the bills were to be passed, New Jersey would become the 11th state nationwide to ban these surcharges. The 10 that currently do so include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas, and together account for some 40 percent of all credit card purchases made nationwide.
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The ability to add on such a surcharge was banned by both Visa and MasterCard for years, but was allowed under the terms of a settlement with a number of retail groups over what the latter called exorbitant interchange fees charged for a period of several years in the last decade. However, many within the retail industry say that it’s unlikely that any retailers would actually pass on the cost of these charges to consumers for a number of reasons. For one thing, if they applied them for Visa and MasterCard purchases, they would also have to do so for those with American Express cards, but that lender was not part of the settlement and still does not allow for surcharges.
Image: Ryan McVay