Thursday, January 10, 2019
However, because of an agreement reached on Jan. 8, 2019, by parties to the Expressions Hair Design v. Schneiderman case, proponents of surcharging took another step toward dispensing with restrictions prohibiting the practice.
The Expressions Hair Design case was argued before the U.S. Supreme Court in 2017. At that time, the Court determined the New York’s “no-surcharge” law was a regulation of commercial speech. SCOTUS left it to the appeals court to determine whether the law could survive First Amendment scrutiny.
The plaintiffs and the State of New York reached an agreement that, pending the appellate court's approval, would dismiss the case, allowing all businesses in New York to pass on credit card fees to customers so long as they make an additional consumer disclosure that shows the credit card price in dollars and cents.
Evan Weese, Marketing Lead at CardX, a technology company that automates compliance with credit card surcharging rules, provided an example of merchants can do this at www.cardx.com/compliance#popup-business-NY .
The New York case was the sole remaining legal challenge to a state-level surcharge ban, following recent landmark decisions in California, Florida, and Texas that struck down surcharge bans in those states as unconstitutional, Weese noted. He added that these four states combined are home to over 40 percent of the U.S. population, so opening these markets to surcharging has significantly accelerated the national trend towards passing on the credit card fee.
Jonathan Razi, CEO of CardX and a Harvard Law School graduate, authored CardX’s amicus brief in the Expressions Hair Design Supreme Court case. “With [the Jan. 8] resolution, we expect the New York law will survive, but in a far narrower form—and ‘no surcharge’ will simply mean ‘no surprise,’” he said. “Now, New York merchants are allowed to pass on their credit card fees so long as they make the required consumer disclosure.
Razi further stated he anticipates surcharging will be available to businesses in all 50 states in a matter of months. “We’re hearing from a number of enterprise merchants that they’re seeking to address the rising cost of rewards cards while also maintaining a uniform pricing strategy nationwide,” he said. “Once this pricing model reaches all 50 states, it will trigger a seismic shift—pushing America’s payments landscape further towards Australia’s, where 42 percent of all merchants, and a full 60 percent of large merchants, pass on the credit card fee.”
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