NJ shops can't profit from card fees

Murphy signs law that restricts surcharges

By: Daniel Munos
NorthJersey.com
USA Today Network - New Jersey

..... Restaurants and other businesses that tack credit card surcharges onto customers' bills can't profit from the charges, under a new bill Governor Phil Murphy signed int law Friday. [08/18/2023]
..... The measure also requires businesses to post information about the charges before a customer pays for a service. It takes effect immediately.
..... "As our post-pandeemic economy continues to grow and evolve, we, too, must adapt to best safeguard New Jersey consumers against unfair practices," Murphy said Friday. [08/19/2023] "all residents and visitors doing business in New Jersey deserve the utmost transparency with respect to their transactions, especially given the affordability challenges experienced by our low- and moderate-income families."
..... Credit card surcharges - which range from 1.5% to 3.5% of the transactions, according to NerdWallet - are tacked onto the customers' final bill. a prior version of the New Jersey legislation would have capped credit card fees at 2.5%
..... Those charges come from companies that process the credit card transactions, like Visa or Mastercard, which impose a processing fee every time customers use their card. Fees have more than doubled during the last decade, according to CNBC.
..... More businesses, hampered by higher supply chain and inflation costs coming out of the COVId-19 pandemic, have passed those fees on to customers. In 2022, Visa and Mastercard implemented changes that increase the amount someone pays when they use their card, says payments consulting firm CMSPI.
..... Mostly mom and pop shops - small businesses - have used credit card fees, said Greg McBride, chief financial analyst with BankRate.
..... Often, they "don't have the volume of larger retailers/merchants to negotiate lower processing fees with the networks, and don't have the scale to absorb the costs as easily as larger competitors," McBride said.
..... "Surcharge fees, while not new, have become prevalent in many industries as a way for businesses to recoup - not profit off of - some of the exorbitant fees placed on credit card transactions by credit card processing companies," said Dana Lancellotti, chief executive officer with the New Jersey Restaurant and Hospitality Association, a trade group.
..... The law as written is meant to provide some measure of relief to customers. It requires businesses to changer only the exact cost to process the credit card fee, so as not to profit from credit card fees.
..... "This law will ensure that sellers are only passing on the processing fees that they are charged rather than making a profit on someone using a card over cash," state Senator Gordon Johnson, D-Bergen, said Friday. [08/18/2023] "So few people carry cash anymore, and we understand these processing fees can be burdensome for businesses, but we also don't want them taking advantage of the situation."
..... It also requires businesses to post "clear and conspicuous" notification at the business entrance and point of sale, such as the cash register. Restaurants have to post the notifications on their menus.
..... The law grants the state Division of Consumer Affairs the power to inspect a business's books and records to make sure the establishment is complying wit the law.
..... Lawmakers approved the measure by a 74-3 vote, with three abstentions, in the Assembly and a 34-0 vote in the state Senate, both on June 30. [2023]

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