New N.Y. Law Mandates More Transparency in Credit Card Surcharges

A new law going into effect on Sunday will require businesses in New York to clearly post the cost of purchasing items with a credit card, including any surcharges being imposed, for customers before checkout.

The law, signed by Gov. Kathy Hochul in December, also prevents businesses from imposing more in credit card surcharges than what they are charged by processing companies.

Businesses can choose either to solely display the higher credit card price for the products or services they sell or to list both the credit card price and the lower cash price for the items.

The new disclosure requirements will “ensure individuals can trust that their purchases will not result in surprise surcharges,” Ms. Hochul said in a statement this week.

“Transparency is crucial in building trust between businesses and communities, and now patrons will be empowered to budget accordingly,” she said.

In New Jersey, Gov. Philip D. Murphy signed a similar law last year requiring merchants to notify consumers before checkout about the amount of any credit card surcharges to be applied. It also prohibited merchants from charging consumers more than the processing fee the businesses paid.

A national law prohibiting merchants from charging consumers extra for credit card purchases expired four decades ago. Since then, many businesses have come to rely on so-called convenience fees as a way to offset what they are charged by credit card processing companies.

Jeremy Cooney, a state senator, said in a statement that the law requiring the disclosure “helps consumers better understand the total cost” of the products they buy.

However, businesses were already required — by the state and by companies like Visa and Mastercard — to display credit card surcharge amounts at the entrances of their stores and at the point of sale, said Youssef Mubarez, the director of public relations for the Yemeni American Merchants Association.

“They’re making the merchants look like the enemies by calling it ‘hidden fees’ when they’re not,” Mr. Mubarez said. “The only thing they’re trying to do is save money so they can keep their business alive.”

Mr. Mubarez, whose family has owned a deli in Times Square for decades and who is the owner of a point of sale and service company, said that limiting the surcharge amount to be in line with processing fees is a good idea.

However, he said that the new regulations on displaying prices would add work to already stressed small-business owners. In recent weeks, Mr. Mubarez said he had to send his employees to help clients re-price items using a price gun that can print the different cash and credit amounts for purchases.

In addition, some of the rules from the state — such as that it is now illegal to simply put a sign at the register notifying consumers about the blanket surcharge applied to all products — is at odds with the guidelines from credit card processing companies, he said, confusing some of the merchants with whom he works.

“They make these laws thinking of the bigger businesses and just leave the small businesses to go figure out what they have to do,” he said.