Are Swipe Fees About To Be Made Illegal By The States?

The age-old question of whether physical stores can legally pass along interchange fees to shoppers may be settled by the states, with an organized group of banks and other payment players lobbying states to permanently end the practice. Utah has already passed a law banning such surcharges, and New Jersey may follow suit. In all, about 20 state legislatures are weighing legislation related to payment cards, according to the American Bankers Association.

The move for state laws is an extension of a decade-long fight between retailers including Home Depot, Walmart and Target, as well as JPMorgan Chase, Visa and MasterCard. This has been the heart of many lawsuits against interchange, namely that higher costs to retailers will ultimately get passed down to consumers. Critics have long argued that laws prohibiting making such pass-alongs blatant (as in "$5.95, cash price only") will merely get those price increases applied to all shoppers universally, rather than encouraging shoppers to use cash or checks.

Banking groups say the push for state laws isn't a coordinated campaign by the industry, reports Bloomberg. Instead, Trish Wexler, a spokeswoman for the Electronic Payments Coalition, a trade group for card issuers and networks, describes it as an "organic" process of bills arising in states at the same time.

What is behind this is a class-action settlement that went into effect in January that gives retailers more flexibility to impose surcharges for using different types of cards. "Legislators heard about it from consumers, read about the settlement, and pushed it," Wexler told Bloomberg.

For more:
- See Bloomberg story

Related Stories:

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Visa To Court: Tell Walmart We're Not Anti-Competitive

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