As of January 27, 2013 several Credit Card industry changes were made because of a class action litigation settlement against MasterCard and Visa. The settlement requires MasterCard and Visa to give business owners an alternative to paying high transaction fees. Suddenly business owners were allowed to “offer cash discount (s) to customers who pay with payment forms less expensive than Bank Debit cards”. This is the basis for cash discounting and surcharging on a federal level. Each state has adapted this to mean different things but all follow the same basic principle. Business owners can now pass on credit card processing charges to customers.
Before the class action settlement, these credit card processing fees were constantly increased every time Visa and MasterCard decided to offer more incentives on rewards cards. This austensibly made business owners a slave to whatever prices Visa and MasterCard decided on. This seen as a distrubance of the second ammendment. The alternative was to allow the cost of processing to be passed over to the customer thereby overriding charges completely. Business owners no longer have to pay these hefty fees according to the new cash discount and surcharging laws.
Industry wide changes, of course, also effected American Express, Discover etc once changes were made on the federal level. These changes effect all types of cards.
In New York, the regulations state that as long ass all card types are being treated equally, meaning no card gets assessed less of a discount (more of a customer service fee) than the process is legal. In other states such as New Jersey, customers electing to use Pin Debit Cards would be given the same discount as those paying with cash. Again, each state is different. SWYPING is aware of these differences and has set out to create programs that meet standard regulations accordingly.
The federal law change that followed the class action settlement was writtten directly into the Durbin Ammendment (part of the 2010 Dodd-Frank Law). This states that business are allowed to create an incentive for customers to use cash or check by way of a discount.
Some basic rules set into play by these federal changes that apply to all states are:
1. Clear and visible signage is required by law to be displayed to make customers aware of how the program, how it works and what exact fee they will be assessed. Essentialy, ” if a customer chooses to pay with cash or check the service charge is discounted”.
2. The customer service fee or discounted amount must be present on any generated receipts from the transaction. SWYPING software provides customer receipts that clearly outline
- Base cost
- Cash discount
- Total Sale