Committee holds bill to ban credit/debit-card surcharges after broad defenses from business groups

The Committee on Economic Development and Agriculture heard competing testimony April 16 on Bill 36‑0019, a measure to prohibit merchants from imposing a surcharge for the use of a credit or debit card and to permit merchants to offer a discount for payment by cash or other non‑card methods.

Sponsor Senator Marvin A. Bridal said the bill would protect consumers from surprise surcharges and help the territory remain competitive as a tourist destination. “The customer sees an item on the shelf or is told the cost of the service, and then when they go to pay, they are charged an extra percentage for using a credit card,” the sponsor said during the introduction.

The committee heard a range of perspectives. The Division of Banking, Insurance and Financial Regulation and the Department of Licensing and Consumer Affairs recommended caution and proposed clarifying language. The lieutenant governor’s banking division warned that, as drafted, the bill could have a “significant adverse impact” on licensed insurance agencies that earn revenue based on commissions; the division supplied an example showing how processing fees on card payments can substantially reduce net commissions in renewal business unless agencies change billing technology or pricing.

The Department of Licensing and Consumer Affairs said the bill’s core consumer‑protection goal is sound but urged specific drafting changes and statutory placement to avoid creating a de facto dual‑pricing system that hides surcharges as “discounts.” DLC suggested placing any new surcharge/discount rules in the existing payment‑method provision (12A V.I.C. §4‑52) and adding explicit signage and receipt‑disclosure requirements to reduce confusion.

The St. Thomas‑St. John Chamber of Commerce opposed a flat ban on surcharges, saying the cost of credit‑card processing is already part of the business cost structure and that, if a surcharge were forbidden, merchants would recover the cost through higher posted prices. Merchant testimony argued that forcing businesses to absorb or disguise processing fees could disadvantage small firms and that price increases could be passed to cash customers if firms rebalance prices to cover fixed costs.

Legal counsel from the Department of Justice advised the committee on constitutional issues that have arisen in other U.S. jurisdictions. DOJ’s analysis noted a split of federal appellate decisions on anti‑surcharge measures (some courts have found those statutes regulate speech and are vulnerable under the First Amendment while others have upheld them) and recommended carefully drafted text. The committee recorded extensive questions from senators and asked witnesses for draft amendments and examples of consumer‑protection signage.

Formal committee action: after the hearing senators voted to hold Bill 36‑0019 in committee at the call of the chair for further amendment and consideration. The committee asked DLC, banking regulators, DOJ and business stakeholders to work with the bill sponsor on language that addresses the insurance‑industry concerns and clarifies permissible discounting and disclosure practices.

Why it matters: the measure weighs consumer transparency and tourist competitiveness against business costs, payment‑processing realities and constitutional questions that have split courts in other states. The committee’s decision to hold the bill reflects the need for narrower drafting and stakeholder agreement before a territorial ban would be advanced.