January 12, 2018

“Jonathan Razi, Founder and CEO of payment processing company CardX and graduate of Harvard Law School, explains, ‘The Ninth Circuit decision means that the California surcharge ban is unconstitutional as applied to these plaintiffs and the specific pricing practice they’re looking to employ: a single sticker price with a percentage fee added when customers choose credit cards.’

Razi clarifies that the ruling does not apply to pricing that was not included in this case, such as dual-sticker pricing. But businesses that want to use the same single-sticker pricing that was challenged in this case would be able to do so in order to clearly communicate the cost of accepting credit cards. ‘Part of what we see in this decision’s set of facts, which any solution that complies with the card brand rules would do, is using signage to adequately disclose the credit card surcharge. In fact, a major interest behind this First Amendment challenge is that these merchants want to communicate very clearly about the high cost of credit card acceptance. If another merchant strayed from making these clear disclosures, and instead misled or surprised customers, then they may face a legitimate enforcement of the California law.

To California merchants, we’re saying that, if your pricing plan matches what these plaintiffs are doing, then this decision is authoritative and controlling.’

CardX and other processors that offer automatic surcharging in states where permitted can now serve businesses in California. Razi explains, ‘Under this authoritative, controlling precedent, we’re now serving all California merchants that seek the single-sticker pricing model—which, in real-world terms, would be quoted as, “$10, with a 3.5% surcharge for credit.”’”