Credit Card Fees New York State Guidance for Businesses

In New York State, businesses need to be aware of the credit card fees they're charged. This can range from 1.5% to 3% of the transaction amount, depending on the type of card used.

The state requires businesses to clearly disclose these fees to their customers. This means including a clear statement on receipts and invoices about the credit card fee.

Businesses must also keep accurate records of their credit card transactions and fees. This is to ensure compliance with New York State's financial regulations.

In New York, businesses can pass on credit card transaction fees to customers, making costs more transparent and allowing businesses to manage expenses more effectively.

The state's guidance on the Credit Card Surcharge Law emphasizes the importance of clear communication with customers. Businesses must state their policy or price clearly and in advance.

Here are some compliant practices:

Note that debit card users have fewer protections than credit card users, as they are accessing their bank account directly.

In New York State, businesses have guidance to follow to remain compliant with the Credit Card Surcharge Law. The Division of Consumer Protection issued guidance to assist businesses with the new law.

To recoup the credit card transaction cost while complying with the law, businesses have several options. One way is to clearly list both the credit card price and cash price on invoices and advertisements. This transparency helps customers understand the difference in prices.

Another option is to list the higher credit card price for items and services and offer customers a discount for paying with cash. This approach is a common practice in many businesses. By doing so, businesses can recoup the credit card transaction cost while complying with the law.

A third option is for businesses to charge the same price for cash and credit transactions. This approach eliminates the need for a surcharge, but businesses may still need to recoup the credit card transaction cost in other ways.

Here are some examples of compliant practices:

In New York, credit card surcharging is currently interpreted as illegal, but it's worth noting that the state has a unique law that conflates surcharging with cash discount models.

As of February 11, 2024, New York merchants are not allowed to separately list the pre-surcharge subtotal or the separate line item surcharge amount.

Connecticut, Maine, Massachusetts, and Puerto Rico also have laws that prohibit credit card surcharging.

Local governments in New York are authorized to enforce the law and keep the proceeds from fines, which can be up to $500 per violation.

Here are the states and territories where credit card surcharging is currently illegal:

Merchants must comply with specific rules when implementing credit card surcharges in New York. Major credit card institutions like Visa and Mastercard set forth rules and regulations for merchants to follow.

To be compliant, merchants must clearly state their policy or price in advance. This can be done by posting signs at the door and at the register, as well as on receipts. A good example of a compliant sign is one that states an additional 3.9% surcharge will apply for credit card purchases.

Merchants cannot force customers to handle the math involved to determine the price of an item if they pay with a credit card. This means that prices must be clearly displayed, and customers should not be surprised with additional fees at the end of the transaction.

Here are some examples of non-compliant practices:

The amount that can be charged to the customer as a credit card fee is capped. Businesses can only charge the actual amount they are assessed by credit card processors, ensuring fair treatment for consumers.

To remain compliant with credit card fees in New York, you must complete an annual compliance questionnaire regarding the way your office handles credit card information. This is a requirement of the Payment Card Industry Data Security Standard (PCI DSS).

To simplify the process, you can use a legal payment processor like LawPay, which offers a user-friendly, custom-built PCI compliance program for customers. This questionnaire typically takes just five to 10 minutes to complete and is available at no extra charge with a LawPay account.

You must also notify major credit card institutions, such as Visa and Mastercard, about your intent to surcharge in writing. If you use a legal payment solution like LawPay, their support teams can initiate this process on your behalf.

The credit card institutions require clear communication strategies, including updating your point-of-sale systems and training staff to disclose credit card fees transparently to customers. Failure to comply can result in penalties and damage to your business's reputation.

Listing surcharges as separate line items on an invoice is a crucial aspect of compliance. This practice reinforces transparency and makes it clear to clients that they are being charged an additional fee for using a credit card.

According to the rules set forth by major credit card institutions, each surcharge must be listed separately on your invoice and labeled clearly as a surcharge. This ensures that clients are aware of the extra fee and simplifies the reconciliation process for lawyers.

Failure to comply with this rule can result in penalties and damage to the business's reputation. For example, posting signage making consumers aware of an additional fee does not make it compliant with the law.

Here's a simple way to illustrate the importance of listing surcharges as separate line items:

By listing surcharges as separate line items, you can ensure that your firm is in compliance with the rules and regulations set forth by credit card institutions and local authorities. This practice also helps to maintain a positive reputation and avoid potential penalties.

Notifying the institution is a crucial step in the compliance process. You must notify major credit card institutions in writing about your intent to surcharge.

You can write a letter to your financial account representative or file paperwork provided on the credit card's website. Some credit card processing solutions, like LawPay, can initiate the notification process on your behalf, saving you time and effort.