WICHITA, Kan. (Legal Newsline) – A software company that wants Kansans to have to pay fees when using their credit or debit cards has filed a motion with a federal judge asking him to make it so.
Judge John W. Broomes is now tasked with deciding if a 34-year-old state law should be struck down. Plaintiff CardX sued Kansas Attorney General Derek Schmidt earlier this year, arguing a prohibition on Kansas businesses from passing on credit card transaction fees to consumers forces them to absorb those costs.
“Kansas is one of only four states in which a no-surcharge statute remains, as a relic of misguided paternalistic consumer protection regulations adopted in the 1970s and 1980s,” the Sept. 11 motion says.
“Not surprisingly, this prohibition actually harms Kansas consumers: prohibiting merchants from passing on these costs to credit-paying customers as ‘credit card surcharges’ forces merchants to pass on these costs to all customers through increased prices for goods and services, thus requiring cash-paying customers to subsidize customers using credit cards.”
CardX filed its lawsuit on May 29, claiming the 1986 law is unconstitutional and that other no-surcharge statutes in California, Florida, New York and Texas have been struck down.
In Oklahoma, state Attorney General Mike Hunter concluded that state’s law violated the First Amendment as it restricts commercial speech.
CardX has patent-pending payment processing software that allows merchants to display and process price differentials, allowing consumers to comparison shop among payment types.
Small businesses lack the bargaining power to negotiate lower fees with credit card companies, the company is also arguing.