NC bill would cap surcharges

Lawmakers in North Carolina are debating legislation that would cap credit card surcharges at 2 percent. But if merchants get their way, the bill (HB 13) will never be enacted into law.

“Small business owners are already facing higher costs for labor, supplies, insurance and utilities,” said Gregg Thompson of the National Federation of Independent Businesses. “House Bill 13 would ad to that pressure by forcing many businesses to absorb credit card processing costs that are outside their control.”

Credit card surcharges are permissible in all but four states – Connecticut, Maine, Massachusetts and California. Merchants in New York technically can’t surcharge but they can offer a higher “credit price” and offer a cash discount.

Three states cap permissible surcharges: Colorado (which allows a maximum surcharge of 2 percent), Illinois (1 percent or the actual cost of processing, whichever is lower) and Nevada (1.5 percent).

Small businesses rail against bill

If HB 13 gets enacted, businesses that are found to be imposing surcharges would be fined $500 for each violation.

The legislation calls for upfront disclosures of surcharges. Signage would be required at point of entry and the point of sale for in-person transactions. For online transactions, the disclosure would be required on the home page and checkout page. A verbal disclosure would be required for transactions that occur via telephone.

“Businesses that impose fees or surcharges must carefully balance customer expectations against operating costs and competitive pressures,” a group of business associations said in a letter to state lawmakers. “Those decisions are best left to individual businesses and the customers they serve, not mandated by state government.”

The letter was signed by NFIB’s Thompson as well as representatives of the North Carolina Retail Merchants Association, the North Carolina Restaurant & Lodging Association, the North Carolina Chamber, and the North Carolina Petroleum & Convenience Marketers Association. “North Carolina has earned a national reputation as one of the best states in the country to do business because policymakers have generally allowed market forces – not government prices controls – to determine how businesses operate and serve their customers,” the letter states. “Consumers already benefit from transparency and competition in the marketplace.”

The letter continues, “The legislation would increase government involvement in private commercial transactions, interfere with existing contractual relationships, and impose new costs and liabilities on North Carolina employers without addressing the underlying drivers of payment processing expenses.”

It’s unclear whether HB 13 has enough support for passage by. While it has garnered committee approval in the state House of Representatives, there is no similar legislation in the Senate.

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