Prohibits payment card networks from assessing penalties against small businesses or financial intermediaries who fail to comply with the credit card surcharge…

• Democratic6
• Republican1

◆ The sponsor's argument

Why Gustavo Rivera says this is needed

Every credit card transaction requires merchants to pay swipe fees to the bank issuing the card and the payment card network, usually between rates of two to four percent of each credit card transaction. All told, card networks and banks collect over $100 billion each year in swipe fees from merchants. Some small businesses report that swipe fees repre- sent the third biggest expense, behind only payroll and rent.(1) Merchants are technically able to pass on the surcharge to customers through the price of goods. Nationwide, American families pay roughly $1,100 in swipe fees per year, which is nine times higher than EU resi- dents and twice as high as Canadian residents.(2) In New York State, merchants must follow strict labeling requirements in order to pass on the swipe fee to customers. Items must either be labeled inclusive of the credit card surcharge, or merchants must list two prices for each item, posting the credit card price total above the cash price. A sign at the store's entrance displaying the surcharge on credit card trans- actions is not sufficient, according to state law. Complying with this directive is difficult for many small businesses, considering the number of products to label, fluctuations in the payment card surcharge, and confusion caused by Manufacturer's Suggested Retail Prices (MSRP) labels. In 2023, state law amended § 518 of the general business law to clarify that enforcement of the credit card surcharge notification requirement may be carried out by a municipal consumer affairs office, a town attor- ney, city corporation counsel, or other lawful designee of a munici- pality or local government, and that these entities may impose a civil penalty of up to $500 per violation. Payment card networks have begun a parallel system of enforcement for this section of law. They send "secret shoppers" to target small busi- nesses like bodegas and delis in urban areas to purchase low-cost items and search for minor discrepancies in pricing displays. By taking photos of single items among thousands that lack proper dual pricing, secret shoppers build cases that result in disproportionate fines. Payment card networks have charged more than $100,000 to small business owners across New York as a fine for failing to adhere to the state's credit card surcharge labeling requirements. Small businesses like bodegas, delis, pizzerias, and salons should operate in accordance with the law and should also be protected from duplicative enforcement. This bill would prohibit payment card networks from assessing fees on intermediary banks or small businesses that do not comply with the cred- it card surcharge labeling requirement. It would ensure that payment card networks and intermediary banks cannot charge merchants for violation of this section and that enforcement for this remains solely with local governments.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.