ABA Journal


The National Pulse

Merchants say loss of credit card ‘swipe fees’ violates their 1st Amendment rights

Oct 1, 2013, 08:30 am CDT


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By AG on 2013 10 03, 3:57 pm CDT

This story entirely ignores the real cost of a cash business, which can exceed the 3-1/2 percent merchant charge that VIsa and MC charge.  With cash, you have to have an employee, or more likely two employees count it and deposit it, there is a risk of “shrinkage” i.e., employee theft, on top of which cash transactions tend to slow the merchant down.  With credit card sales, the money is deposited automatically in the merchant’s bank account, the merchant doesn’t have to wait for a check to clear, and no risk of large bills being counterfeit.  But the party that really loses out with cash sales is the State of New York because it is much easier to avoid reporting sales (and paying sales tax) and easier to avoid reporting income ( which would also be taxed). 

If the State had its act together, they would impose a surcharge on cash sales.

By Yenrab of Syr on 2013 10 03, 9:27 pm CDT

Just last week, Judge Rakoff granted the merchants’ preliminary injunction motion, which in effect, enjoins New York State from prosecuting merchants who charge a “surcharge” fee to use credit cards.

It is interesting to note that the law will likely be struck down in theory, however, practically, it may be harder than once thought for a retailer to simply implement such a fee without any repercussions.

For instance, a merchant in a retail sector that is comprised mainly of small businesses (e.g. wine and liquor stores) will be hard pressed to be the first store to actually implement such a fee - without fear of loosing foot traffic because of a competitor down the road that has not yet set up a surcharge policy.

By Evan E. D'Amico, Esq. on 2013 10 12, 4:53 am CDT

A “surcharge” means charging you more than what the price on the shelf said after you already have brought the item up to the counter; whereas a cash discount means you can get the item for less then the price on the shelf—therefore, they are not the same thing.
Prices should already have sales tax included in the price otherwise we are being tricked into spending more than we intended or can afford. I should not need to do math to figure out the price of a item.

By ProhibitionCausesViolence on 2013 10 26, 2:49 am CDT

When I was a kid, there was a merchant in the neighborhood who had a sign saying he’d give you a 10% discount if you paid in gold. I don’t know if anyone every took him up on it.

By Tyrone on 2013 10 28, 4:34 am CDT

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