Today, CardX filed an amicus brief in the U.S. Supreme Court to support the merchants in Expressions Hair Design v. Schneiderman, a case with the potential to expand credit card surcharging to all 50 states.
New York’s “no-surcharge” law permits merchants to charge a higher price when customers use credit cards rather than cash—so long as merchants describe the price difference as a “discount” for cash instead of a “surcharge,” or additional fee, for credit cards.
Because the New York law permits dual pricing but forbids merchants from choosing freely how to describe the practice, the petitioners contend that the law bars them from communicating truthfully about the cost of credit card acceptance, unconstitutionally restricting speech.
Petitioners and their amici—including Spirit Airlines, Walgreens, CardX, and the Cato Institute—argue that framing the price difference as a “surcharge” is more effective both for clearly communicating to customers about the costs associated with their payment choices and for applying competitive pressure to the prices charged by credit card companies.
As the only solution provider to file a brief, CardX was uniquely positioned to contribute industry expertise to these arguments. The CardX solution provides information to customers at the point of sale about the cost of the card presented for payment and passes on the cost of credit card acceptance to cardholders. CardX’s real-world experience shows that surcharging does not merely transfer, but in fact lowers, transaction costs, promoting market efficiency.
According to the CardX brief:
“To view the benefit of ‘dual pricing’ as simply a means of transferring the merchant’s burden (by passing the cost to the customer) draws the problem too narrowly. This case affects not merely the allocation of cost, but the quantity of that cost: the question is not only who will pay, but also how much will be paid.
At the point of sale, only the customer can make the choice that reduces the transaction cost, because the customer chooses what form of payment will be used. Surcharging creates efficiency for the market as a whole, because it steers customers from credit cards to debit cards (which cost significantly less to accept) as well as to cash.”
The Supreme Court’s decision is expected by June. To read the full CardX brief, please click here.