MADISON, Wis. (2/11/13)--The Credit Union National Association continues to monitor bills introduced in various states to ban merchants from charging "checkout" surcharge fees on credit card transactions. The state bills now total 11, in addition to two other states said to be drafting similar legislation.
Last week Vermont, Kentucky, Missouri, South Carolina, Utah, and Tennessee introduced bills in their state legislatures to ban the surcharges, and an earlier measure banning surcharges made progress in the New Jersey legislature.
Six other states--Hawaii, Illinois, Mississippi, New Jersey and Rhode Island--had introduced similar bills earlier. Pennsylvania and West Virginia also are said to be drafting similar bills. Since 10 states already have laws on the books banning the fees, if these states' measures also became law, a total of 23 would have bans.
However, Maine--one of the original 10 states with a surcharge ban already enacted--is considering repealing that law. Last week legislators introduced a bill seeking to repeal its existing surcharge ban.
The flurry of bills are the result of a provision in a $7.2 billion industry court settlement that merchants negotiated with Visa and MasterCard and banks in an antitrust lawsuit. The settlement allows merchants to charge a checkout fee that must be equal to what the merchant pays to accept the card, which is typically 1.5% to 3% in the U.S. and not to exceed 4%. The surcharge provision of the settlement took effect Jan. 27. The surcharge does not affect debit cards.
CUNA is monitoring the developments because any surcharge on credit card transactions would affect all financial institutions, including credit unions, as well as credit union members. Here's a rundown on last week's activities:
- Vermont S.B. 87 specifies "a Vermont merchant in any sales transaction shall not impose a surcharge on a person who elects to use a credit card in lieu of payment by cash, check, or similar means," said the Association of Vermont Credit Unions (Newslines Express Feb. 8). The ban would take effect in July. A bipartisan group introduced the bill: Judiciary Committee Chair Richard Sears (D), Economic Development Committee Chair Kevin Mullin (R), Committee Chair Timothy Ash (D) and Sen. Philip Baruth (D).
- A New Jersey bill making it illegal to impose a surcharge on credit card transactions passed the full Senate Thursday and the Assembly Financial Institutions and Insurance Committee, said the New Jersey Credit Union League (Daily Exchange Feb. 8).
- The new Missouri bill, H.B. 495, would amend state laws to ban surcharges "on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means." Its sponsor is Rep. Randy Dunn (D-Kansas City).
- Utah S.B. 67, sponsored by Sen. Curtis S. Bramble (R-Provo), does not make the distinction between credit cards and debit cards but "prohibits sellers from imposing a surcharge on a transaction paid for with a financial transaction card."
- Tennessee's H.B.0897, sponsored by Rep. Jason Powell (D), prohibits sellers and lessors, as well as "any entity issuing credit or charge cards" from imposing a surcharge on credit card payments.
- News Now also verified state laws prohibiting credit card surcharges have been introduced in Kentucky (HB 256 and HB 259) and in South Carolina (H. 3477), but details were not available.
The 10 states with laws already on the books are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.