A federal appeals court in Manhattan on Tuesday upheld a New York law that prohibits stores from imposing surcharges on customers who use credit cards, reversing a lower court that found the ban unconstitutional.

The law was challenged by merchants, who won a trial court ruling that because it bans "surcharges" on credit cards but not "discounts" for cash, it violates freedom of speech by punishing based on the word used to describe economically identical transactions.

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"Sticker prices, like any other prices, can be regulated without bringing the First Amendment into play," the court said.

The Second Circuit said its ruling means that a merchant selling something for a regular price of $100 cannot charge $103 to credit card customers, but if the regular price is $103, the merchant can sell it to cash customers for $100.

Merchants use surcharges to try to recover a swipe fee charged by credit card companies. New York is one of 11 states that ban the surcharges, the court said. Violation of the statute is a misdemeanor.