A PYMNTS Company

US: Credit Card surcharges OK’ed in NY

By  |  January 10, 2019

New York has banned the ban. In the wake of court filings this week that effectively ended a challenge to surcharges on credit card transactions in New York, merchants in the Empire State can indeed embrace those fees, contingent upon stating those costs to consumers up front.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    The merchant plaintiffs and the state of New York filed motions on January 8 to dismiss a challenge to such charges, seemingly capping a battle stretching back years. Now, merchants must disclose those surcharges as part of “total” prices in dollars and cents. The requests from those parties to dismiss the case came after an appellate court in the state ruled that merchants have the right to levy the charges, and the tally of states with such bans in place has now dropped to six.

    The case traces its genesis to 2013, when several businesses joined a group and, headed by hair salon Expressions Hair Design in New York, filed a suit in federal court against the state ban on surcharges. The merchants were allowed to offer discounts for cash payments on goods and services, but could not let customers know how much they would pay for credit card transactions, and the suit challenged the ban on First Amendment grounds.

    The federal court sided with the merchants, but then, through a series of appeals, the case wound up before the Supreme Court at the beginning of 2017. The Supreme Court sent the case back to the Second Circuit, deciding that the case was a regulation of commercial speech. The appeals court bench ruled in October of last year that, by listing the total dollars and cents price, merchants could call the difference between card and cash prices “anything they wish.” What’s in a name, then? The court ruled that such terms could range from surcharge to “extra cost.”

    Supplemental briefs were required to be filed last month, but the motion by the plaintiffs and the state this week means that the case may be dismissed, pending approval of the court itself. The striking down of the ban in New York comes on the heels of similar challenges that eliminated bans on passing along credit card fees in Florida, California, and Texas.

    In a statement emailed to PYMNTS, CEO Jonathan Razi of CardX, a payments technology company that automates compliance with rules for credit card surcharging, said that “with today’s resolution, we expect the New York law will survive, but in a far narrower form—and ‘no surcharge’ will simply mean ‘no surprise.’ Now, New York merchants are allowed to pass on their credit card fees, so long as they make the required consumer disclosure.”

    Full Content: PYMNTS

    Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.