New credit card laws help merchants, but what about customers?

It's not unusual to walk into a mom-and-pop store and see a hand-lettered sign telling customers they have to spend $5, $10 or $15 if they want to use their credit card. This practice, along with having credit card customers pay more than those paying by cash or check, was long forbidden by the agreements merchants had with the credit card processors. ("Processors" refers to Visa, MasterCard and the like, as opposed to the banks that issue the cards.)

As this 2008 article in Consumerist pointed out, merchants weren't permitted to do either of these things, though many did. Interestingly, though, these rules only came from the card processors. They weren't legislated by Congress or the Federal Reserve or any other governing body.

"Generally, this is industry imposed, and it's for the purpose of making sure retailers don't discriminate against credit cards," says Lauren Bowne, staff attorney for Consumers Union.

Now that status quo has changed. The financial reform legislation that just passed in Congress (and that you've been reading so much about on WalletPop) included provisions, effective immediately, that give merchants more autonomy. "What they were trying to do [with the new legislation] was give the merchants more wiggle room in adhering to network payment laws," says Linda Sherry, director of national priorities for Consumer Action.