What is the new law for credit card surcharge?

California Says Goodbye to Credit Card Surcharges

Californians can soon say goodbye to the annoyance of credit card surcharges. A new law, taking effect July 1, 2024, prohibits businesses from tacking on extra fees when customers choose to pay with credit cards. This means the price you see on the shelf or online will be the price you pay at checkout, regardless of your payment method.

For years, businesses in California and other states have added surcharges to credit card transactions to offset the processing fees they incur from credit card companies. While often presented as a small percentage or flat fee, these surcharges can add up, especially for larger purchases. This practice has often been criticized for lacking transparency and disproportionately impacting lower-income consumers who may rely more on credit cards.

This new legislation aims to simplify pricing and create a more level playing field for consumers. By eliminating surcharges, the law ensures consistent and predictable pricing, making it easier for shoppers to budget and compare costs. No longer will consumers have to calculate hidden fees or feel penalized for using their preferred payment method.

The change doesn’t mean businesses will absorb these processing costs entirely. Merchants are still permitted to offer discounts for cash payments, incentivizing customers to use alternative payment methods while maintaining price transparency. This crucial distinction allows businesses to manage their costs while preserving the consumer protection aspect of the new law.

While the law officially goes into effect in July 2024, consumers may start seeing changes sooner as businesses prepare for the transition. This shift marks a significant step toward fairer and more transparent pricing practices in California, offering a model for other states considering similar legislation. The move is expected to be welcomed by consumer advocacy groups and shoppers alike, simplifying transactions and ensuring a more predictable checkout experience.