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August 23, 2021 • Issue 21:08:02

Cash discounting, surcharging go mainstream

plays well in the court of public opinion. "The ugly truth
behind your fancy rewards credit card: America's poor foot
much of the bill for credit card points, miles and cash back,"
the headline screamed.

"It's true," Razi said. "We were sharing that a lot in Colora-
do," he added, referencing CardX's successful lobbying on
a bill authorizing surcharging in that state. The Colorado
legislation, signed into law in June, came just months after
a federal district court judge in Kansas struck down that
state's anti-surcharging statute. Razi, a Harvard-educated
attorney, successfully argued that Kansas law violated the
U.S. Constitution's free speech guarantee by allowing busi-
nesses to offer discounts for cash payments while banning
surcharges on credit card payments.

A New York law banning surcharges was effectively struck
down in 2018 when the U.S. Supreme Court ruled that
the law regulated the communication of prices, not prices
By Patti Murphy themselves, since discounts for cash were expressly per-
mitted. "Merchants should be able to freely communicate
f you're not doing surcharging or cash discounting costs," Razi said.
you're missing out, John Barrett, senior vice president
at Payroc, told ISOs and merchant level salespeople
I (MLSs) attending the Midwest Acquirers Association Just two states now have laws on the books that prohibit
surcharging: Connecticut and Massachusetts, and both
annual conference in July.
states' laws (similar to New York and Kansas laws) express-
ly permit cash discounts.
A few years ago such counsel would have elicited more
than a little skepticism. In some circles it may have even Razi said CardX is weighing its options to effect changes
been seen as heresy. But these days, after COVID shut- in Connecticut and Massachusetts. Options include lobby-
downs crimped already slim profit margins at businesses ing for legislative action, seeking favorable opinions from
across the spectrum, including ISO and MLS enterprises, state attorneys general (as happened in Oklahoma in 2019),
the notion of passing along to purchasers the cost of card
acceptance is gaining wide acceptance.

And for good reasons. Merchants see improved margins.
ISOs and agents, too. Plus, it can be a merchant retention Contributed articles inside by:
play. Consumers, meanwhile, appear to be amenable: most Tom Byrnes .............................................................................................19
merchants report few, if any, customer complaints.
Jeff Fortney .............................................................................................30
Jonathan Razi, co-founder and CEO of CardX, which has Monica Eaton-Cardone ......................................................................32
been leading the charge on surcharging, pointed to a June
3, 2021, article by Emily Stewart published by Vox as evi- TOC on page 3
dence surcharging (and its corollary cash discounting)

Continued on page 26