“CardX, a Chicago-based payment company that automates compliance with rules for credit card surcharging, was the only payments company to file a brief in the case, describing how surcharging affects a market when done at scale. Razi argued in the past that surcharging results in more transparency and lowering of merchant costs.
The opening of surcharging in New York follows similar approvals in California, Florida and Texas, leaving only six states that have surcharging bans.
After card networks lifted their bans on surcharging in 2012 as a carrot in an initial compromise to settle a decade-long antitrust lawsuit challenging interchange fees, the concept was met with mixed emotions by merchants. For the most part, merchants acknowledged many states also had bans, but they also were watching how a shift to interchange caps and merchant surcharging would work in Australia at that time.
In the same manner as Australia overcame some early consumer backlash, surcharging has settled in there as the tool it was meant to be — an option for merchants to lower costs and an option for consumers to avoid card fees if they are so inclined.
‘We’re hearing from a number of enterprise merchants that they’re seeking to address the rising costs of rewards cards while also maintaining a uniform pricing strategy nationwide,’ Razi said. ‘Once this pricing model reaches all 50 states, it will trigger a seismic shift.’
That shift will move America’s payments landscape further toward Australia’s, Razi added. In Australia, 42 percent of all merchants, and a full 60 percent of large merchants, pass on the credit card fee, Razi said.”
