By Katie Castellani
Consumers could pay more when they use their credit cards after state senators last week advanced a bill to allow businesses to pass along those processing costs.
Sen. Pavel M. Payano, co-chair of the Committee on Consumer Protection, said the bill offers “a practical path forward.”
“One that supports our small businesses while making sure consumers are clearly and proactively informed about surcharges,” he said in a statement to State House News Service.
Senators drafted the bill that would allow sellers to charge customers paying with a credit card a fee that is no greater than the seller’s cost to process the payment. If the bill passes, Massachusetts would join most states with laws allowing businesses to charge credit card surcharge fees. Five senators voted to advance the bill and Sen. Kelly Dooner didn’t vote “yes” or “no.”
The bill, which draws from three proposals, also requires sellers to notify customers of the credit card surcharge for in-person, online purchases and transactions made over the phone. The measure has support from restaurant owners who say credit card fees are a growing portion of their expenses since 2020.
For example, before the COVID-19 pandemic, credit card sales made up about 50% of the purchases at Turner Seafoods, which has three locations, owner Kathi Turner said. After the pandemic, credit cards are used in more than 90% of sales.
“Cash is almost being eliminated in the field, so it’s in some sense, a life or death to many, many small businesses,” Turner said during a June hearing on the proposals.
Chris Carlozzi, Massachusetts director of the National Federation of Independent Business, said credit card fees have more than doubled for small businesses since 2012, a change largely driven by inflation and post-pandemic spending trends.
Carlozzi also noted the state’s law of allowing sellers to offer a discount for customers using cash has its challenges for certain industries. It could be burdensome for stores with a wide range of products or restaurants with long menus to create a range of prices. The bill would add notification requirements for sellers who offer discounts for customers to motivate them to pay with cash.