S129 - CREDIT CARD FEES
-MFA's proposal to require full disclosure of all charges by financial institutions when entering a contractual agreement with merchants to offer their credit or debit card.
S129 - AN ACT RELATIVE TO CREDIT AND DEBIT CARDS
PURPOSE OF THE PROPOSAL:
To clarify the rules, schedule of any fees, transaction rates and any changes made to them for retailers who enter a contractual agreement with a financial institution to accept credit card or debit card payments from customers.
WHAT THE PROPOSAL DOES:
1. Creates the definition of a “debit card” which would be subject to any of the provisions proposed in this legislation.
2. Requires any financial institution that enters a contract with a merchant authorizing them to accept a debit or credit card that they issue to adhere to certain conditions and disclosures, including:
· Giving the merchant access in this state to a complete paper copy of the rules referenced in the contract;
· Notify the merchant when a referenced rule has been changed or a new rule added, prior to the effective date of the new or revised rule;
· Provide a copy of the new or modified rule.
3. Contracts offered by financial institutions to merchants authorizing them to accept a credit card they issue must contain:
· Complete schedule of interchange fees, credit card and debit card transaction rates and any other fees that may be charged to the merchant;
· An explanation of which rates apply to the merchant and the situations in which they apply.
4. Said contracts authorizing a merchant to accept a credit card or debit card shall not prohibit a merchant from disclosing the contracting financial institution’s rules or rates as a condition of receiving access to the rules or rates.
If an issuing bank or credit card company fails to provide a merchant access to its rules or rates:
· The merchant shall not be liable for any chargeback or fees associated with its credit card or debit card transactions from the time the contract is executed until the rules and rates are provided, and;
· They shall be held liable for a civil penalty of $10,000 per charge levied prior to providing the rules.
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