CardX LLC, a surcharging-services provider, can now add another state to the list of places where it can do business. A federal judge ruled Thursday surcharging cannot be prohibited in Kansas. The decision leaves just Colorado, Massachusetts, and Connecticut with outright no-surcharge rules on the books.
Filed May 29, 2020, the CardX suit alleged the Kansas prohibition violated the commercial free speech of merchants. Kansas’s law, according to the complaint, had been in place since 1986.
With surcharges, merchants typically tack on at the point of sale interchange and other fees associated with credit card transactions. “If allowed to pass on the cost of credit card acceptance, such businesses are able to offer their goods and services to the significant portion of the consumer base that prefers or needs to pay with credit. In these industries and across the economy, credit card surcharges expand consumer choice,” Judge John W. Broomes, wrote in the order filed in the U.S. District Court for the District of Kansas.
The order brings good news for Chicago-based CardX. “This result has been over a year in the making. We prevailed in our constitutional challenge, which means that we’re able to serve merchants in Kansas today,” Jonathan Razi, founder and chief executive, tells Digital Transactions News in an email. “We have a number of merchants based in Kansas who have previously inquired about our services, and they’re being set up with our surcharging solution now. Similarly, we’re launching ISO partnerships in Kansas and notifying current CardX partners that they can begin offering our solution in Kansas effective immediately.”
With this ruling, only Colorado, Massachusetts, and Connecticut block surcharging on credit cards. Razi says CardX is evaluating its options to enter these states, though he adds, “We intend to be a 50-state provider.” Network rules prohibit surcharging on debit card transactions.
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