Here’s why prices are changing on many restaurant menus

That will no longer be an acceptable way for restaurants to tell customers about their two-tier pricing system – if they use one – under a state consumer protection law taking effect Sunday.

The new law applies to all businesses, including restaurants and retailers. Businesses can still charge different prices depending on whether customers pay with cash or credit cards. But they will have to be clear about it, and list the highest price a consumer might pay for an item.

The change will be especially pertinent at restaurants, which have embraced the credit card surcharges as a way of raising prices – or recovering the cost of credit card transaction fees – after being squeezed by rising prices.

As consumers continue to forsake cash in favor of credit card purchases, those transaction fees can add up. Industry analysts say those fees typically range from 1.5% to 3.5% per transaction.

As a result, some businesses pass along that fee to consumers in the form of a surcharge, to avoid cutting into their own profits. The new law requires merchants to be up front with consumers about their pricing system. Notice of a surcharge can’t be tucked away in the fine print on a menu or a receipt. Businesses can face fines of up to $500 per violation.

The new law also says businesses can’t charge customers a surcharge exceeding the processing fee charged to the business by the credit card company.

Amanda Powers, director of communications and marketing for the Retail Council of New York State, called the new law a “win-win” by making the pricing rules clearer for consumers and merchants alike.

“Retailers do not profit from a surcharge,” Powers said. “If a store is charging a 3% surcharge, they are merely recouping the fees they are being charged for that credit card.”

The thrust of the new state…