Utah has become the 11th state to bar retail stores from tacking surcharges onto credit card purchases, though it's not clear the ban will last beyond the middle of next year.
That's because the measure — signed into law Monday by Utah Gov. Gary Herbert — expires after one year.
"This issue will come back before the Legislature," says state Sen. Curtis Bramble, a Republican who sponsored the measure, "and the discussion will continue."
Under the new law, Utah retailers may not impose a surcharge on credit card transactions of $10,000 or less. The provision expires on June 30, 2014.
The Utah law comes in response to the proposed settlement of a long-running lawsuit that a group of merchants brought against Visa and MasterCard.
The two credit card giants long used contractual provisions to bar merchants from imposing surcharges at the cash register. But under the proposed settlement, which was reached last year, they agreed to allow such fees for the first time.
Merchants want the ability to charge so-called check-out fees in part because they believe it will allow them to negotiate lower prices during their negotiations with Visa (NYSE: V) and MasterCard (MA).
But there's a difference between having the right to charge a fee and actually doing so. Many retailers fear that if they impose the fees, they will lose business to competitors who do not. So far there is little evidence that significant numbers of retailers are using surcharges.
Still, legislation to ban the fees is currently under consideration in 17 other states. That's on top of the 11 states, including Utah, that now have bans in place.
The Utah legislation was intended to maintain the status quo while lawmakers take a closer look at the issue, according to Bramble, who chairs the state Senate's business and labor committee.
"Once those fees are established, it's very difficult to reclaim the ground of no fees," he says.