Washington may join 10 other states that now prohibit merchants from adding credit card surcharges to purchases.
The state House of Representatives expects to vote on HB 1870 today and send it to the state Senate.
But even the bill’s House sponsors say they’re uncertain the state Senate will vote on a bill that some state business groups consider unnecessary.
If made into law, the bill prevents Washington merchants from adding a surcharge to any credit or debit card transaction. The bill does not stop merchants from offering discounts for cash-only purchases.
One sponsor, Rep. Cyrus Habib, a Seattle-area Democrat, introduced the bill in response to a recent federal court ruling that allows merchants to add a surcharge of up to 4 percent of a purchase cost.
That surcharge option took effect on Feb. 1, but national consumer and business groups have said few merchants have opted to use it.
Jan Teague, president and CEO of the Washington Retail Association, said her group opposes the bill because there’s no need to make it a state law.
“None of our retailers in Washington impose a surcharge. In fact, those who use MasterCard and Visa are contractually prevented from doing so already,” Teague said.
“So, it makes no sense to try to turn this into law,” she added. “I know of no retailers here who are doing that.”
The new surcharge option took effect based on a preliminary court ruling in a New York lawsuit filed by retailers against the nation’s largest credit card companies.
The ruling said merchants could add surcharges, but they needed to post them at the point of sale and could not charge more than the actual “swipe fee” – the amount a retailer pays the bank for each transaction.
The National Retail Federation says few retailers are adding the charges; it also notes that the court ruling is preliminary and could be reversed when a judge makes a final ruling later this year.
The bill was approved on an 8-7 vote last week in the Business and Financial Services Committee of the state House. Habib and committee chairman Steve Kirby, D-Tacoma, were among the sponsors.
Spokane State Rep. Kevin Parker, a Republican member of the committee, voted against the bill.
Parker also called the bill unneeded and a concern best left to federal regulators.
“This is being dealt with at the national level and it makes more sense there,” Parker said.
Those in favor, however, argued that the bill is a “better-safe-than-sorry” approach that would maintain the current no-charge status that retailers are following in Washington.
They point out that if the federal ruling ultimately decides merchants have the surcharge option, it does not override laws adopted in 10 states forbidding credit card surcharges.
The major credit card companies got those states to outlaw surcharges to make sure businesses didn’t discourage credit card use, said Craig Shearman, with the National Retail Federation.
Ultimately, the card companies made it a part of their contracts that retailers who agreed to accept the cards also had to agree not to use a surcharge, Shearman said.