Concerns credit card interchange fees and consumer protection.

A1921

ASSEMBLY, No. 1921

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblywoman ANNETTE QUIJANO

District 20 (Union)

Assemblyman ERIK PETERSON

District 23 (Hunterdon, Somerset and Warren)

Assemblywoman ELIANA PINTOR MARIN

District 29 (Essex and Hudson)

Co-Sponsored by:

Assemblyman Schaer, Assemblywomen Fantasia and Brennan

SYNOPSIS

���� Concerns credit card interchange fees and consumer
protection.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

concerning credit card interchange fees and
costs to consumers and supplementing Title 56 of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� The Legislature finds
and declares that:

���� a.���� The credit card
companies Visa and MasterCard and their member banks have market power over the
entire credit card industry, on a national level and within this State.

���� b.��� There is little
competition in the credit card industry regarding credit card interchange fees
because electronic payment system networks set the fees charged by their member
banks.

���� c.���� While the �Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010,� (Pub.L.111-203) acts
to regulate debit card interchange fees, the federal law does not address
credit card interchange fees.

���� d.��� Owing to the market
power of the two largest electronic payment system networks, merchants do not
have negotiating power with regard to the contract for acceptance of credit
cards and the cost of interchange fees for such acceptance.

���� e.���� As consumers
increasingly use debit and credit cards to purchase goods and services,
merchants must agree to accept these cards as a form of payment in order to
stay in business.

���� f.���� Accordingly,
interchange fees, particularly the unregulated credit card interchange fees,
can inflate the prices of goods and services as merchants often pass along the
costs to consumers.

���� g.��� Merchants have long
expressed interest in working with customers to provide discounts for using
certain credit cards, but currently are often blocked from doing so by the
terms or interpretations of the unfairly negotiated contracts to which they are
subject in order to accept credit cards.� Federal law provides merchants with
this discounting ability with regard to debit card transactions, but does not
extend it to credit card transactions.

���� h.��� As the costs of credit
card interchange fees are being unfairly passed onto all consumers, even those
consumers who do not use credit cards as a method of payment by way of inflated
prices for goods and services, it is all together fitting and proper to establish
restrictions which allow for more transparency in the pricing of consumer goods
and services and which promote competition with the credit card interchange fee
market.

���� 2.��� As used in this act:

���� �Electronic payment system�
means an entity, which is not a national bank, that directly, or through
licensed members, processors or agents, provides the proprietary services,
infrastructure, and software that route information and data to facilitate transaction
authorization, clearance, and settlement, and that merchants access in order to
accept a brand of general-purpose credit cards, charge cards, debit cards or
stored-value cards as payments for goods or services.

���� �Merchant� means a person or
entity doing business in this State which offers goods or services for sale in
this State.

���� 3.��� a.� No electronic
payment system may, directly or through any agent, acquirer, processor or
member of the system:

���� (1)�� impose any requirement,
condition, penalty, or fine in a contract with a merchant relating to the
display of pricing for goods or services for sale by the merchant;

���� (2)�� inhibit the ability of
any merchant to offer its customers discounts or in-kind incentives for using
cash or a debit card or credit card of another electronic payment system;

���� (3)�� inhibit the ability of
any merchant to decide not to accept the products of an electronic payment
system at one of its locations while still accepting the products of that
electronic payment system at other locations;

���� (4)�� prevent any merchant
from setting a minimum dollar value, provided the minimum is not set below $10,
or a maximum dollar value for its acceptance of a credit card;

���� (5)�� limit the number of
electronic payment systems through which a credit card transaction may be
processed to only one or only affiliated electronic payment systems; or

���� (6)�� inhibit any merchant
from choosing the electronic payment system through which a credit card
transaction is processed.

���� b.��� (1) A violation of
subsection a. of this section is an unlawful practice pursuant to P.L.1960,
c.39 (C.56:8-1 et seq.).�

���� (2)�� In addition to the
penalties provided by P.L.1960, c.39 (C.56:8-1 et seq.), an electronic payment
system found to be in violation of subsection a. of this section shall
reimburse all affected merchants for all chargebacks, fees, and fines collected
from the affected merchants directly or through any agent, processor or member
of the system during the period of time in which the electronic payment system
was in violation.

���� 4.��� This act shall take
effect on the first day of the fourth month next following enactment.

STATEMENT

���� This bill regulates credit
card interchange fees.� An interchange fee, commonly referred to as a �swipe
fee,� is a fee paid by a merchant�s acquiring bank to a customer-cardholder�s
issuing bank as part of an electronic payment card transaction.� The merchant�s
bank then passes this fee onto the merchant.

���� There is little competition
regarding credit card interchange fee pricing as Visa and MasterCard, the two
largest companies in the industry, set the pricing with their member banks and
smaller merchants have no negotiating power to change pricing. As consumers
increasingly use debit and credit cards to purchase goods and services,
merchants must agree to accept these cards as a form of payment in order to
stay in business, but often pass along the costs of the interchange fees onto
consumers which inflates the prices of goods and services.� Current federal law
regulates debit card interchange fees but does not address the fees associated
with credit card transactions.

���� This bill regulates credit
card interchange fees by prohibiting an electronic payment system from:

�

imposing any requirement, condition, penalty, or fine in a
contract with a merchant relating to the display of pricing for goods or
services for sale by the merchant;

�

inhibiting the ability of any merchant to offer its customers
discounts or in-kind incentives for using cash or a debit card or credit card
of another electronic payment system;

�

inhibiting the ability of any merchant to decide not to accept
the products of an electronic payment system at one of its locations while
still accepting the products of that electronic payment system at other
locations;

�

preventing any merchant from setting a minimum dollar value,
provided the minimum is not set below $10, or a maximum dollar value for its
acceptance of a credit card;

�

limiting the number of electronic payment systems through which a
credit card transaction may be processed to only one or only affiliated
electronic payment systems; or

�

inhibiting any merchant from choosing the electronic payment
system through which a credit card transaction is processed.

���� Under the bill, an electronic
payment system is defined as, �an entity which is not a national bank that
directly, or through licensed members, processors or agents, provides the
proprietary services, infrastructure, and software that route information and
data to facilitate transaction authorization, clearance, and settlement, and
that merchants access in order to accept a brand of general-purpose credit
cards, charge cards, debit cards or stored-value cards as payments for goods or
services.�

���� A violation of the bill�s
provisions is an unlawful practice under the consumer fraud act, P.L.1960, c.39
(C.56:8-1 et seq.)� An unlawful practice is punishable by a monetary penalty of
not more than $10,000 for a first offense and not more than $20,000 for any
subsequent offense.� In addition, a violation can result in cease and desist
orders issued by the Attorney General, the assessment of punitive damages, and
the awarding of treble damages and costs to the injured.�

���� The bill further specifies
that an electronic payment system found to be in violation must reimburse all
affected merchants for all chargebacks, fees, and fines collected from the
affected merchants during the period of time in which the electronic payment
system was in violation.