A New Jersey bill that bans retailers from charging a fee to consumers for using a credit card goes to a state Senate vote on Thursday.
The legislation is in response to a preliminary class-action settlement between retailers and Visa, MasterCard and major national banks that allows retailers to impose this so-called credit card checkout fee. Retailers were allowed to charge this fee starting Jan. 27.
The surcharge allows retailers to recoup costs that Visa, MasterCard and the banks charge them for processing a credit card transaction, called a swipe fee. Typically, these swipe fees range from 1 percent up to 4 percent of the purchase total. The settlement allows retailers to pass this cost onto customers directly, rather than just building the cost into the price of goods and services.
The bill -- which must be approved by the state Senate and Assembly and signed by Gov. Chris Christie before being enacted -- would make New Jersey the 11th state to prohibit such credit card surcharges, including neighboring states Connecticut and New York. That was one of the two reasons the bill was introduced, says state Sen. Nia Gill, who was one of the primary sponsors of the bill.
"Since New York and Connecticut already have bans on such practices, we would be potentially driving business out of the state of New Jersey if we didn't ban the activity," Gill says. "You could easily go to New York and purchase the same item as in New Jersey but not pay a surcharge."
The state senator also said that she wanted to protect consumers' rights as well. She called credit card surcharges "unconscionable" and said New Jersey citizens were "outraged" by the possible practice.
Retailers that violate the ban could be fined up to $10,000 for the first offense and up to $20,000 for any subsequent offense under the proposed New Jersey bill. However, New Jersey gas stations will still be allowed to offer cash discounts to customers paying with cash, says Gill. That is a long-standing practice and backed by the state attorney general's interpretation of current law, she says.
Gill says she will continue to monitor credit cards and fees and consider what input the state can have on those practices.
Do you want your state to ban credit card surcharges?
Follow me on Twitter: @JannaHerron