SURCHARGING CREDIT CARDS
Surcharging Credit Cards – Q&A for Merchants
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Q. What is a payment card surcharge?
A payment card surcharge is an additional fee that a merchant adds to a consumer's bill when he or she uses a card for payment.
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Q. Can I assess a surcharge on both credit and debit card purchases?
No. The ability to surcharge only applies to credit card purchases, and only under certain conditions. U.S. merchants cannot surcharge debit card or prepaid card purchases.
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Q. What are the surcharge methods?
There are two surcharge methods:
• Brand-Level Surcharge – The application of the same surcharge to all credit card transaction regardless of the Issuer, i.e. all VISA credit cards, all MasterCard credit cards etc.
• Product-level Surcharge – The application of the same surcharge to all credit card transactions of the same product type regardless of the issuer, i.e. only corporate cards issued by all card brands, only rewards cards issued by all card brands etc.
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Q. When can I begin to surcharge?
U.S. merchants must first notify Visa, MasterCard, and their Merchant Service Provider of their intent to surcharge at least 30 days prior to implementing surcharging. Merchants can get additional information and submit the notification forms to:
• Visa at: www.visa.com/merchantsurcharging
• MasterCard at: https://www.mastercard.us/en-us/surcharge-disclosure- webform.html#contentpar_text
• Discover: Does not require registration at this time.
• American Express: Does not require registration at this time.
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Q. What should I consider when determining whether or not to assess a surcharge on card transactions?
Before choosing to surcharge, U.S. merchants may want to consider a number of factors, including:
• The potential impact on your customers experience.
• What your competitors might be doing.
• What information must be disclosed to your customers and how.
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Q. I am a merchant who intends to surcharge. What is the process I need to follow?
U.S. merchants that intend to surcharge are required to:
• Notify Visa and MasterCard and your Merchant Service Provider at least 30 days in advance of beginning to surcharge. Please see links above for each card brand.
• Limit surcharging to credit cards only (no surcharging debit and prepaid cards) and limit the amount to your average discount rate/interchange fees plus the average various card brand pass-through fees imposed (maximum surcharge amount is 4%)..
• Disclose the surcharge as a merchant fee and clearly alert consumers to the practice at the point of sale, both in store and online – and on every receipt.
Merchants should also consider whether they comply with all applicable state or federal laws. Currently, the below listed stated have surcharging restrictions:
Colorado, Connecticut, Florida, Kansas, Massachusetts, and Oklahoma.
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Q. Can I assess a surcharge on debit card transactions for which the cardholder using a debit card chooses “credit” on the point of sale terminal?
Under no circumstances is a merchant to surcharge a debit card. Many merchants believe that debit card transactions authorized by a signature are credit card transactions. This is not true. Debit cards can be authorized by a PIN or by a signature and are still debit card transactions and CANNOT surcharge that transaction.
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Q. Are there limits to the amount I can surcharge?
Yes. The surcharge amount can’t exceed the merchant’s average discount rate/interchange fees plus the average various card brand pass-through fees imposed, and it can NEVER exceed 4% even if the merchant’s average merchant fee is greater than that.
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Q. Am I required to disclose the surcharge to my customers?
Yes. The merchant MUST disclose their surcharging practices to customers in three locations:
At the point of store entry, or for e-commerce merchants, on the first web page that references payments. Customers should be told that the merchant imposes a surcharge on credit cards, and the surcharge is not greater than the merchant’s cost of acceptance.
Examples:
• We impose a surcharge on credit cards that is no greater than our cost of acceptance.
• We impose a surcharge of % on the total transaction amount on credit card transactions, which is not greater than our cost of acceptance. We do not surcharge debit cards.
• At the point of sale, or for e-commerce merchants, on the checkout webpage. Customers should be told that the merchant imposes a surcharge on credit cards, the surcharge is not greater than the
merchant’s cost of acceptance of the credit card, and the amount of the surcharge.
• Sales receipts must have separate line items with the surcharge amount.
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Q. What laws exist that may relate to surcharging?
Currently, the below listed U.S. states have surcharging restrictions. Please consult with legal counsel to determine whether your practices comply with relevant state law.
Connecticut, Florida, Kansas, Massachusetts, Oklahoma
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Q. What states permit surcharging but have additional laws?
Maine (requires additional consumer disclosures including posting both cash and credit prices) New York (requires both prices to be listed for disclosure purposes)
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Q. Can I pick and choose what types of cards I add a surcharge to?
Merchants have to surcharge all Visa, MasterCard, Discover and American Express credit card transactions the same – you can’t decide to surcharge some credit card transactions and not others. The surcharge can be expressed as a flat rate and/or fixed dollar amount (e.g., $2.50 per transaction) or as a percentage (e.g., 2.50% per transaction). But the surcharge must be the same for all Visa, MasterCard, Discover and American Express transactions, regardless of whether the card is a rewards card or a non-rewards card.
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Q. I also accept American Express & Discover. My fees are higher than MasterCard & Visa, can I charge the higher rate?
No. You cannot assess a higher surcharge for one card network than another. You can’t charge more for American Express and Discover than Visa or MasterCard. Accessing surcharges must be done so on a level playing field, which means the fee, is the same regardless of the card brand.
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Q. Does the ability to surcharge apply to merchants globally?
No. The settlement agreement impacts Visa’s rules related to the surcharging of credit card purchases made in the U.S. and U.S. territories only. Surcharging remains prohibited outside the U.S. unless there is a local law or variance that requires merchants be permitted to engage in the practice.
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Q. Where can a merchant find out more detailed information about surcharging?
Merchants can review additional information about surcharging credit card at the following sites:
