Credit Cards Blog

Finance Blogs » Credit Cards Blog » NJ seeks to ban checkout fees

NJ seeks to ban checkout fees

By Janna Herron ·
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

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
John Worth
February 06, 2013 at 2:48 pm

Sorry Kaylor, but I do not buy your statement that "... Consumers don't understand that us ( small business operator) pay a lot of credit card fee's, for YOUR convienance to use the card...."

You pay those fees for YOUR convenience. Otherwise, the customers that you feel you are doing a favor to will take their business somewhere else. Why else do businesses accept credit cards? So PEOPLE WILL BUY NOW instead of waiting for a point when they have the cash on them-- by which time they may decide not to buy at all.
It's a cost of doing business--and any business that claims that they have not already factored it into their business model is either foolish or not truthfull.That's why many businesses offer discounts for cash--because the swipe fee is already part of the price.

What's going to happen now is, businesses will keep the built in swipe fee AND charge the surcharge. Personally I will REFUSE to do business with a company that charges it.

February 05, 2013 at 10:45 pm

I too do not patronize the stores or gas stations that charge for me using my ATM.

William S. Vargas
February 05, 2013 at 9:16 pm

Nothing new,companies actualy pay people to think up of ways to squeeze another buck from the consumers. They are called think tanks. Personaly I think they hire people that are a bunch of shady characters, only a deviant mind can up with such crooked ways of stealing from the public, all the while saying that is legal.

Kaler Westfall
February 05, 2013 at 8:09 pm

I have been a busy owner for almost 30 years, different business's. Currently I operate an orchid nursery. ( business is going on 6 years) The costs to operate are high, and the fall out of the economy, especially here in Florida was challenging to survive.My business is not considered a vital need, when folks have to cut back on expenses. Consumers don't understand that us ( small business operator) pay a lot of credit card fee's, for YOUR convienance to use the card. I pay almost three % of total bill, + a monthly statement fee, .25 cents for every transaction swipe, wether the credit card is good or not.I pay for a balance statement, I pay for a federal merchant account each year of about $200. ( required of all business's accepting credit cards, thanks govt for adding this a couple years ago) some card companies charge us to 'batch' out each day ( print out a summary report) Amex. charges us 5%.( so we don't accept Amex.) The credit card machine cost $800, my last one lasted 2 years. Currently I pay about $500 a month in credit card fee's, it comes off my profit margin. Again, I'm paying those high fee's each month, so YOU, the consumer has the " convienance to use their card, as they most likly don't have the cash. Just think if you paid cash, I could use that $500 a month to pay down my other gov.t regulated tax bills for business tax, mortage tax, income tax, my interest fee for products and supplies. The health insurance I pay for 4 employees, I have a small profit marigin, so taking 4-5% of that off for a convienance fee, is a lot for a small business owner. I have to stay competitive, even though I grow uncommon products, everyone is looking at bottom price. So if other growers are selling the same product at $25. and I sell for $27, ( same quality) but the neighbor is charging you his credit card fee's, he pays, I'm charging more for product, because my credit card fee's are not charged.
Don't blame the business man, blame it on the credit card companies and banks. The economy would not be where it is now, with many business's struggling, had it not been for the fall of the big banks, and the bail out of gov.t. Then banks turn around and refuse to loan money to business people. Many months I break even, no profit, and I work about 90 hours a week, it is a lot of hard and long hours to break even. So don't blame the business for chargiing a fee, blame the credit card compaines and banks. Why should I pay a fee for you to use your credit card? I think it is all backward. The consumer is the one who should get the fee when the card is swiped, and charged by the bank. I should not be charged a fee for selling you a product, and ALLOWING you to pay with a credit card. I want all cash sales, and like the post earlier on here, some people are ridiculas, actually want to charge a $1 item, or $5 item. I don't do that, my minimum purchase is $20 if using a credit card. I also don't get bad checks, as someone brought up here as well. I scan the check, I'm told immediatly if the check is good or not, of course, I pay a fee for that info. too. So as a consumer, you think your being hit a lot for fee's, walk in a business man's shoes, then you will really know what fee's are like. :)

Shane M
February 05, 2013 at 7:28 pm

Cash discounts are great. The problem is credit card agreements or policies that prevent giving cash discounts. Build the cost of using a credit card into the price for those that use credit cards. Leave other avenues to avoid it. I'll gladly pay cash if it's cheaper for everybody.

February 05, 2013 at 7:21 pm

I suggest the Senators have their paychecks run through Visa and have the surcharge deducted from their wages.When it eats away at their living then they can ask for a raise to cover the loss.Also if a retailer should raise prices to absorb this surcharge then how is that fair to those who pay cash?

February 05, 2013 at 7:16 pm

this law just came into being and now lets waist more money to ban it. As a small business owner CC fees are a big burden, people charge a cup of coffe or a cookie, and the business must still pay CC fees. people just don't understand the cost to a business everytime a card is swiped, but we must take cards to compete. the CC companies will be the only one profiting with or without the law.

February 05, 2013 at 7:13 pm

Ah, the banks...those poor institutions that were "too big to fail," secured government bailouts and then gave their executives MILLIONS in bonuses...and why not? Those execs pulled a great scam over the American public.

The credit card fees are already built into the prices. If you want to charge consumers the credit card fees, then lower the prices. Businesses accept credit cards because they are more dependable than personal checks. If you don't want to take credit cards, enjoy the increase in rubber checks.

Jim G
February 05, 2013 at 7:12 pm

If the companies already have the fee built-in to there pricing, why would they need to add it as a surcharge? There are some in my area that advertise that they add 3% if you use a credit card. Guess who doesn't get my business... And it will be the same if most of them do it. I'll go elsewhere.

mike kodan
February 05, 2013 at 6:58 pm

And they wonder why people want to cheat the Credit card companies, what we need is a Robin Hood here, and cut off their manhood... that's if they have one !!!!!!