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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
Mike G.
February 05, 2013 at 5:36 pm

Does anyone remember the days when a credit card transaction meant having to get your inserted into a manual imprinting machine? You were given a paper copy and the duplicate was mailed off to the credit card company. The fees were originally meant to cover the cost of the army of people needed to input data from these paper receipts. Now everything is done via computers and internet. I know there is a cost involved with the computer network, but not nearly as much per transaction as it had been in the past. So why the high swipe fee? Why is there a swipe fee at all?

Elizabeth
February 05, 2013 at 5:32 pm

I'm a caterer and I charge a fee for CC use. We have concidered raising our prices across the board and than giving a discount for check payment. I'd say in our business 97% of our clinets pay by check. Our margins are so small these days that CC fees really hurt our bottom line. Corporate cards are the worst, as they usually offer more benefits for using the card. Therefore, we the merchants are charged more to cover the benefits i.e. frequent flying mileage, etc. There is no such thing as a free ride, someone is paying for all the "freebies". It's hard being a small business these days and it's getting harder not easier.

Graham
February 05, 2013 at 5:29 pm

I run a small business retail store, I have never put the credit card transaction fee into my prices or charged the customer for using a credit card simply to stay competitive with nation corporations that buy in bulk and under sell us. All I ask is if you are buying something for less then $10 please have at least $10 cash to spend.

Meg
February 05, 2013 at 5:10 pm

If I believed retailers would then lower their prices (because they don't need to cover the cost of credit card transactions), I would be all for this. But you know that won't happen, so the credit card consumer is paying twice for the convenience (which is also very convenient for the stores, by the way). I don't think they should be allowed to surcharge the convenience. It is a cost of doing business and should be built into the prices they charge (figuring on the percentage of CC vs check and cash).

Bill
February 05, 2013 at 4:28 pm

Retailers take a lot of heat for so many reasons. It's a dam tuff world. I doubt we'll ever see retailers in general offer lower prices for cash payment but I think that would be great and would give those retailers a competitive edge.

Bob M
February 05, 2013 at 4:21 pm

Phil is right. Don't choke the mom and pop retailers being ripped off by the banks. Ban the banks from charging the fee in the first place.

Al
February 05, 2013 at 4:13 pm

Those fees have already been. Built into the prices retailers charge adding those fes at point of sale would just be a bonus to the retailer.

vic asadourian
February 05, 2013 at 4:10 pm

We all know that the retailer already factors fee costs into the goods. If they can also charge, you don't think for a minute that they will lower prices too ? Not on your life. Regards, Vic

Jim Duffy
February 05, 2013 at 4:06 pm

Would this also eliminate the surcharge you pay at gas stations for using a credit card?

phil
February 05, 2013 at 4:02 pm

What about a ban on fees the card companies charge the retailer? Don't they make enough off of card holders?