Supreme Court orders new look at "swipe fees" law

The U.S. Supreme Court has delivered a unanimous victory to NY state merchants in their fight to allow surcharges on credit card purchases. The fees generally range between 2% and 3% and generate $50 billion in revenue annually.

The issue before the justices was whether the measure violates merchants' free-speech rights.

Ten other states, including California, Connecticut, Florida, Massachusetts and Texas, have similar laws that prohibit merchants from imposing surcharges to cover the "swipe fee" they pay credit-card companies, laws which in some cases have been interpreted to prevent merchants from using the word "surcharge".

Merchants say they could discourage card use - and reduce those fees - if they were allowed to explicitly impose surcharges on credit purchases. The state law outlaws this kind of display, the court said, because it forbids the charging of a credit card "surcharge". Roberts said the NY law regulates how sellers may communicate their prices, making it a speech regulation. Instead, it returned the case to a federal appeals court with instructions to consider the law in the framework of free speech, not commercial regulation.

NY is one of 10 states that limit how merchants can describe the lower prices they charge for cash transactions.

Retailers are forced to pay fees to credit card companies every time a customer buys with a card. "The court addresses only one part of one half of petitioners' First Amendment challenge to the NY statute at issue here", Sotomayor wrote.

"A merchant who wants to charge $10 for cash and $10.30 for credit may not convey that price any way he pleases", Roberts wrote.

The decided case was Expressions Hair Design v. Schneiderman.

  • Leroy Wright