CUNA is taking the credit union case against payment card surcharges to the U.S. Supreme Court.
CUNA filed an amicus brief with the high court Wednesday in a case that challenges a New York law prohibiting merchants from imposing a surcharge for using a payment card, but does not prohibit cash discounts.
This, CUNA’s most recent move to protect consumers and credit unions from a merchants’ surcharge, follows action by CUNA on a state level in California, Texas and Florida and by the New York Credit Union Association (NYCUA) in that state.
“CUNA is resolute in our work to inform the judicial system about this issue. It is a push for a fee by merchants in an attempt to shift their costs of using electronic payments to consumers and financial institutions, while continuing to allow merchants to receive the benefits of participating in the system,” said CUNA President/CEO Jim Nussle.
Credit cards enable merchants to;
Credit cards help consumers:
The benefits from credit card use are especially vital to low-income consumers, CUNA reminds in its brief.
CUNA warns that allowing merchants to impose surcharges would give them a vehicle to raise prices, above what the card system costs them to access, because merchants could raise their prices while passing the blame for the increased price on to another party.
In addition, CUNA’s brief makes the important point that surcharging credit card transactions may lead to consumers using other forms of payments, which could force credit unions and other smaller institutions to re-evaluate their credit offerings and possibly exit the market. This would result in consumers having fewer credit cards from which to choose, forcing them to rely on only a handful of large issuers for credit and debit cards.
In September 2015, the 2nd U.S. Circuit Court of Appeals said ruled in Expression Hair Design v. Schneiderman that an anti-surcharging law was not a violation of free speech, a victory for credit unions. Eric Schneiderman is the attorney general of New York.
The Supreme Court agreed to hear Expression Hair Design v. Schneiderman, in June, with arguments set for Jan. 10.
CUNA has filed similar briefs in similar cases in Texas, where the state law was upheld, and California. NYCUA has filed a separate amicus brief with the Supreme Court in Expression Hair Design v. Schneiderman.
Seven other states have similar laws on the books: Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, and Oklahoma.
The Supreme Court could issue a decision in Expression Hair Design v. Schneiderman by this summer.