Merchants in California, Texas and Florida reportedly have filed lawsuits to challenge laws that prevent them from imposing extra charges on credit card purchases. Credit card transactions tend to cost merchants more to process than other payment types.
Under network rules, merchants may charge less for payments made in cash under the heading of a discount, but they may not charge higher prices for credit card purchases labeled a surcharge.
“It’s just outlawing one label versus another,” lawyer for the defense Deepak Gupta told Business Week . “What this really is at the end of the day is an industry speech code.”
Behavioral economic research reveals the consumers react more strongly to the term “surcharge” than to “discount,” and they are more likely to act to avoid charges.
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