New Jersey Passes New Law To Regulate Credit Card Surcharges
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New Jersey has adopted a law that prevents merchants in the state from generating profits from credit card surcharging. The law requires merchants to disclose the surcharges a customer will have to pay during a transaction.
New Jersey limits merchants from imposing credit card surcharges
The law in question was passed by the legislature in New Jersey, and it went into effect after being signed by the state’s governor, Phil Murphy. The law will allow merchants in the state to impose a credit card surcharge.
Consumers deserve safeguards against unfair credit card surcharges.
Today, I signed legislation prohibiting sellers from imposing surcharges on certain credit card transactions — boosting transparency and putting money back in people’s pockets.https://t.co/EslSrgGwgt
— Governor Phil Murphy (@GovMurphy) August 18, 2023
The law will also prohibit merchants from charging more than they should pay to process credit card transactions. The legislation was created in partnership with CardX, a Chicago software and compliance solutions provider.
The founder of CardX, Jonathan Razi, noted that the goal behind this law was to create a regulatory framework that would protect customers from any additional charges imposed by merchants. The law will also boost transparency and align with industry standards while offering the best practices to investors.
Razi also noted that similar laws were being passed in some states. As such, lawmakers in the state wanted to pass a law that passes on the processing costs to consumers. The offering will also ensure that the necessary guardrails are in place to protect consumers and align with industry guidelines and best practices.
“Surcharging laws are being passed in some states, and what New Jersey lawmakers wanted was a law that allows merchants to pass along their actual processing costs to consumers, but not have the ability to use surcharging as a profit center,” Razi added.
Protecting customers that prefer card payments
This new law will ensure that merchants in New Jersey do not generate profits at the expense of customers who pay using credit cards and not cash. The bill received support from top legislatures in the state, including Senator Gordan Johnson.
As aforementioned, this bill was tabled in partnership with CardX. The company has been working on similar legislation in other states. In most cases, the proposed legislation does not become law. However, in states like New Jersey, the bill realizes momentum to receive votes by the state legislation.
Razi noted that the company becomes involved in the process to provide an industry perspective. He further opined that the new law in New Jersey would offer a standardized approach to surcharging customers with no surprises, creating an ideal balance.
The bill was also supported by Assemblyman Paul Moriarty, who said consumers would learn more about credit card surcharges before completing a transaction. This allows customers to make informed decisions when choosing payment methods.
The amount paid in merchant surcharges varies, but card companies can regulate the maximum amount. This year, Visa lowered the surcharge ceiling from 4% to 3%. Moreover, surcharges are not acceptable in Connecticut and Massachusetts.
