Credit Card Surcharges, Who Wants to Pay Them?

Jan 26, 2024

By: Louis J. Terminello, Esq. and Jaci Flug, Esq.

Not New York businesses.

By now, we have all seen a small sign taped to the cash register at the liquor store, on the bottom of a restaurant menu, or printed across a bill at a bar saying in sum and substance, “THERE WILL BE A 4% SURCHARGE ON ALL PAYMENTS MADE BY CREDIT CARDS” or “4% DISCOUNT ON CASH PAYMENTS.” The move to push credit card surcharges onto consumers has spread so widely that in late 2023 New York State passed a law to address it.

Next month, on February 11, 2024, amendments to New York General Business Law Section 518 go into effect for all businesses that accept credit card payments, including on and off-premise licensed retailers. Section 518 prohibited merchants from imposing a credit card surcharge on customers, but now the prohibition is eliminated and replaced with a notice requirement. Merchants are now required to “clearly and conspicuously post the total price for using a credit card.” The surcharge added to the transaction may not exceed “the amount of the surcharge charged to the business by the credit card company.” The new amendments also permit two-tier pricing, as many of us see for gas prices. The cash price and the credit card price.

The amendment contains an enforcement provision, which is a civil penalty of $500 for each violation with concurrent enforcement powers to municipal consumer affairs office as well as town attorneys or corporation counsel. The penalties collected all stay with the municipalities, so enforcement efforts may be a new revenue stream.

To aid merchants, the New York State Department of Consumer Affairs has created the below guidance on how to comply with the notice requirement. There’s simply no better defense than strictly following state-issued guidance, so please see below.

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Credit Card Surcharges, Who Wants to Pay Them?

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