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NJ seeks to ban checkout fees

By Janna Herron · Bankrate.com
Tuesday, February 5, 2013
Posted: 2 pm ET

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

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32 Comments
JulieG
February 07, 2013 at 3:35 pm

The cost of doing business is not how many small businesses take the credit card fees. Businesses that are not part of a chain like the local dry cleaner, a corner or neighborhood bar & grill or a town florist are just a few examples of what I have seen in the last 4 or 5 years, perhaps more having never really paid much attention until now. The local dry cleaner charges $1 which is a fee that can equate to an additional 10% on a $10 bill or 2% for a $50 bill. The neighborhood bar & grill charges an additional 6% onto the bill after sales tax has been applied. In most cases the sales tax is built into the cost of the drinks but not for the food. The local American Legion has always opened its doors to non-members yet has seen a 25% - 30% increase in patrons over the last 4 or 5 years.

Consumers are struggling already so why would local businesses do anything to push them to the chain stores? AMEX promotes small businesses (Small Business Saturdays) especially the ones who do business with them. AMEX also rewards consumers that do business with small businesses.

Banks also make it more difficult to use cash as do businesses. It is almost a catch-22 situation.

Before the spike in gas prices at the turn of the century, gas stations charged one price regardless if you used cash or credit. Then again, look who owns the stations...usually non-Americans from the Middle East or Africa. Paying cash makes it easy to skip out on proper reporting for taxes owed to the State or Federal Government. Makes consumers think there is more to the scheme by charging more for the use of a credit card.

Joe Grabowski
February 06, 2013 at 4:28 pm

Of course we as the consumers are already paying the cost of either using a credit card or not. My wife has a small business and we have to pay those fees as well. It is a cost of doing business. If we didn't allow customers to use their credit cards, we would forgo many sales, in fact a majority of them.

When a merchant sets a price, the cost of the manufacture, purchase, and research and development, and any overhead costs including distribution, is already figured in the item. It is a lot better for the merchant to make more sales, than lose so many customers who would go to other merchants because of a surcharge.

All businesses including gas stations should charge the same amount for either credit or cash. A lot of gas stations charge 15 to 35 cents per gallon if you wish to pay by credit card, and they also hide these increases. Sometimes you don't know until you get to the pump, and sometimes even after you pay.

To top it all off most of them do not even speak English. However they sure know how to count money and take it in. Beware when filling up. Most of these attendants top off your fuel tank which is no good for your car and can cause a lot of damage, which most people know nothing of unless you are a mechanic.