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Education

Credit card surcharges Constitutionally protected
free speech
opportunities, pitfalls await In Expressions Hair Design v. Schnei-
derman, the Court ruled that Sec-
By Josh Herndon tion 518 of New York's general busi-
ness law, which prohibits merchants
Global Legal Law Firm from imposing a surcharge for using
a credit or debit card, is regulated
he fees charged are one of the big selling points for professionals in speech, and the Court remanded for
the payment processing field. That's the case despite all the value- the lower court to determine whether
added services available, which in a business sense, would justify Section 518 is unconstitutional.
T the interchange and other fees that make the industry lucrative.
The Court's decision was fact specific
Over the years, some organizations have had success by allowing merchants to and limited to whether Section 518
surcharge their customers. But the risk of having one customer complain about was unconstitutional as applied to
surcharge fees and post a negative review, coupled with unclear laws and one specific type of pricing practice –
regulations regarding surcharges, have deterred merchants from implementing posting a cash price and an addition-
surcharge programs, thereby stifling their broad acceptance and stunted their al credit card surcharge, expressed
success. as either a percentage surcharge or a
dollars-and-cents additional amount.
A recent ruling by the United States Supreme Court clarified the options Essentially, this was a cash-discount
available to merchants who seek to impose surcharges. The Court held that program, where the price is lower if
a New York statute allowing surcharges amounted to free speech, which is paid by cash or check. The Court's de-
highly protected, and any attempt to limit free speech requires an extreme cision may not only result in Section
justification, such as protecting the public. 518 being struck down, it may also
impact the laws banning surcharging
that are currently in effect in Califor-
nia, Colorado, Connecticut, Florida,
Let Be Your EMV Expert! Kansas, Maine, Massachusetts, Okla-
homa and Texas.
Your EMV Eco-System Made Affordable! Cash discount programs have his-
torically been entirely defensible. A
eProcessing Network has the secure, payment solutions to help you stay current with the successful defense was mounted for
technologies that keep your merchants connected. And with real-time EMV capabilities,
retailers can not only process contact and contactless payments, Apple Pay and Android Pay, a merchant with such a program. The
they’re able to manage their inventory as well as balance their books via QuickBooks Online. program allowed for a discount for
debit-only transactions over credit
transactions, which tend to cost the
merchant more for high-dollar trans-
actions. The proprietary program
also allowed for credit-only and
credit and debit discounts. With le-
is EMV-Certified gal assistance, the program prevailed
against regulators in the state where
it does business, as well as won ap-
proval by demonstrating its confor-
mity with the card brand rules and
bank and processor's internal policies
and procedures.

The Expressions Hair Design case
further opens the doors for surcharge
programs.
Opportunities, pitfalls of
surcharge programs

1(800) 296-4810 The opportunities available to mer-
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