Navigating New York's Credit Card Surcharge Law: What Businesses Need to Know

For New York businesses, understanding the nuances of credit card surcharges just got a whole lot clearer – and stricter. As of February 11, 2024, changes to New York General Business Law § 518 are in effect, redefining how merchants can communicate pricing when a credit card payment is involved. If your business uses a "dual pricing" model, where you offer a discount for cash payments, it's crucial to ensure you're compliant.

The Heart of the Matter: Transparency is Key

The new law boils down to one core principle: transparency. Consumers must know the total price they will pay upfront, especially when using a credit card. Gone are the days of simply saying, "That's $100, but it's $103 with a card," without proper disclosure.

The law permits a two-tier pricing system (also known as dual pricing or cash discounting). This means you can absolutely offer a lower price for customers paying with cash, check, or debit. However, the way you present those prices has changed significantly.

The "Posted Price" Rule: Flip the Script!

Here's the most important shift: your advertised or "posted" price must now be the credit card price, inclusive of any surcharge.

Think of it this way:

• Old (Non-Compliant) Way: "This service costs $100. If you pay with a credit card, it's an extra $4."

• New (Compliant) Way: "This service costs $103. Pay with cash, check, or debit and receive a $4 discount."

  
  

See the difference? Instead of adding a fee, you're now offering a discount for specific payment methods. This ensures the consumer always sees the highest potential price first.

What Does Compliant Disclosure Look Like?

To stay on the right side of the law, your business needs to implement clear and conspicuous disclosure at every step of the customer's journey.

1. Prominent Signage:

   
   

   • Place signs at your entrance, at the front desk, and at the point of sale (e.g., checkout counter).

   • These signs should clearly state that your listed prices reflect the credit card inclusive rate.

   • Crucially, they should then explain that a discount (e.g., "a 3% discount") is offered for payments made by cash, check, or debit card.

     
     

   Example Signage:

   
   

   Transparent Pricing Notice:

   
   

   Please be advised that all listed prices reflect our credit card inclusive rate. A 3% discount is offered for payments made by cash, check, or debit card.

   
   
   
   

   Verbal Communication: When discussing services or prices with customers, always quote the credit card price first. Then, offer the cash/debit discount as an option.

   
   

   Invoices and Receipts: Your invoices and receipts should reflect the compliant pricing. The total amount for credit card payments should be a single, integrated figure. Do not list the surcharge as a separate line item (e.g., "Credit Card Fee: $X"). If a discount is applied for cash/debit, show the discount from the higher initial price.

Important Reminders for NYS Businesses:

• No Hidden Fees: You cannot surprise a customer with a surcharge at the very end of the transaction. The full credit card price must be clear from the outset.

• Debit Cards are Different: The surcharge law specifically targets credit card transactions. Your cash/debit discount can and should generally apply to debit card payments as well.

• Surcharge Limit: The surcharge you "build in" to your credit card price cannot exceed the actual cost you incur to process that credit card transaction. You cannot profit from this difference.

Why Does This Matter?

Beyond legal compliance, transparent pricing builds trust with your customers. When consumers feel they understand the costs upfront, they are more likely to have a positive experience with your business.

If you operate a business in New York State and utilize dual pricing, take the time to review your current practices and update your signage and communication strategies to align with the new law. It's not just about avoiding penalties; it's about fostering clear and honest relationships with your clientele.

Disclaimer: This blog post provides general information and does not constitute legal advice. Businesses should consult with legal counsel to ensure full compliance with New York State laws.