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Surcharge Bans Continue to Gain Momentum
MADISON, Wis. (4/2/13)--The number of states considering bans on imposing a surcharge on credit/debit cards is gaining momentum. At least 18 states are considering such proposals, with one measure reaching a governor's desk. That's in addition to 10 states with laws already on their books.

The Credit Union National Association and state leagues continue to monitor the bills, introduced since a $7.2 billion antitrust lawsuit settlement that merchants negotiated with Visa, MasterCard and banks.  The settlement allows merchants to charge a checkout fee equal to what the merchant pays to accept the card--typically 1.5% to 3% in the U.S. and not to exceed 4%.  The surcharge provision became effective Jan. 27, and does not affect debit cards (News Now Feb. 11).

CUNA's state legislative staff is tracking the state developments, saying that any surcharge on card transactions would have an impact on all financial institutions, including credit unions, as well as their members.

If the state proposals should become law in the states, surcharges would be banned in 28 states. Ten states already had laws on the books when the settlement occurred. Since News Now's Feb. 11 story, seven states introduced or began drafting bills banning merchants from charging "checkout" fees on card transactions.

The newest states are: Arkansas, Indiana, Maryland, Michigan, Nevada, and New Mexico. A seventh state, Mississippi, introduced a limited ban on surcharges on credit cards issued by the state (American Banker March 28). They join proposals in Hawaii, Illinois, Kentucky, Missouri, New Jersey, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont and West Virginia.

Utah Senate Bill 67, sponsored by Sen. Curtis S. Bramble (R-Provo), passed the state legislature on March 22, and is on the desk of Republican Gov. Gary Herbert, according to the state legislature's website.

It would "prohibit sellers from imposing a surcharge on a transaction paid for with a financial transaction card." The bill defines "financial transaction card" as "any card, code or other means of access to a person's account issued to a person that allows the person to obtain, purchase, or receive any of the following:  goods; services; money; or anything else of value." The card includes a credit card, credit plate, bank services card, banking card, a check guarantee card, a debit card, a telephone credit card, and "a device for access."

In Arkansas, S.B.291 would prohibit collection of credit card surcharges from a buyer if the card is "used for an extension of credit instead of cash, a check, or other means of payment."

In Michigan, S.B. 240, introduced by Republican Sen. Jim Marleau, and House Bill 4255, introduced by Republican Rep. Jeff Farrington, would prohibit credit card surcharges. The bills have not advanced, according to michiganpolicy.com (March 14).

Ten states that had laws on the books before the antitrust settlement, are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas (News Now Jan. 29). Maine has a bill that would ease is existing ban on credit card surcharges, according to the Banker.
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