SF3875

Purpose

The bill changes how merchants in Minnesota can charge extra fees for using credit or charge cards. It adds specific rules about when surcharges can be charged, how customers must be notified, and caps the surcharge. It also imposes new prohibitions related to not accepting cash or using the merchant’s own card.

Main Provisions

• Surcharge allowance and notice requirements (Section 1)
  • A seller or lessor may impose a surcharge on card payments (in-person, online, or by phone) but only under certain conditions.
  • In-person: inform the customer about the surcharge orally and with a clearly posted sign at the premises.
  • Online or via a mobile device: inform the customer by conspicuously posting a surcharge notice during the sale, on the order summary, or on the checkout page.
  • By phone: inform the customer of the surcharge orally.
  • The surcharge may not exceed 5% of the purchase price.
  • If the seller uses its own customer credit or charge card, they may not impose a surcharge on customers paying with that card.
  • The surcharge definition: a fee that increases the price because the customer uses a credit or charge card. A cash discount (offered to all customers and clearly disclosed) is not considered a surcharge.
  • This section also applies to agents acting on behalf of the seller.
• Prohibitions and stronger limits (Section 2)
  • Subdivision 1a establishes prohibitions:
  • A seller who has its own customer credit or charge card may not impose a surcharge on customers using that card.
  • A seller who does not accept cash as payment is prohibited from imposing a surcharge on transactions in Minnesota.

Significant Changes to Existing Law

• Adds a cap and explicit notice requirements for surcharges when customers pay with credit or charge cards.
• Establishes an explicit prohibition on surcharges for customers using the merchant’s own card.
• Adds a broader prohibition that merchants who do not accept cash cannot impose card surcharges at all.
• Clarifies that cash discounts (offered to all customers and clearly disclosed) are not considered surcharges.
• Extends these rules to agents of sellers and to various payment methods (in-person, online, phone).

How the Provisions Work in Practice

• If you pay with a credit card in person, you should see or be told about a surcharge (up to 5%), plus a clear sign.
• If you pay online, you should see a surcharge notice during checkout or in the order summary.
• If a merchant doesn’t accept cash, they would not be allowed to charge a card surcharge under the new prohibitions.
• If a merchant has its own card program, it cannot surcharge customers who use that card.

Potential Impacts

• Consumers may see more transparency around any card-related fees and could benefit from cash discounts being clearly disclosed.
• Merchants must update signage, online checkout pages, and communications to comply with notice and cap requirements.
• Some merchants may need to stop surcharges entirely if they do not accept cash or if they issue their own card, depending on how they structure payments.

Relevant Terms - surcharge - credit or charge card - cash - cash discount - in person - website - checkout page - order summary - conspicuously posted - oral notice - 5 percent - Minnesota Statutes 2024 section 325G.051 - Subdivision / Subd. 1a - seller or lessor - agent of a seller or lessor - does not accept cash - own customer credit or charge card