Understanding Merchant Surcharging Rules
Merchant surcharging allows businesses to offset the cost of credit card processing fees by passing these fees to
customers. Implementing surcharges requires adherence to strict rules to ensure compliance with legal and credit card
brand requirements. Below is a comprehensive guide to surcharging rules and frequently asked questions.
Surcharging Rules
1. Registration with Card Brands:
- Merchants must register with major credit card brands before implementing a surcharge program.
2. Customer Notification:
- Merchants are required to inform customers about surcharges on all credit card transactions. Signage at the
point of sale and clear messaging on receipts is necessary.
3. Surcharge Limits:
- The credit card surcharge must not exceed 3%, and merchants cannot profit from the fee.
4. Itemized Receipts:
- The surcharge must appear as a separate line item on receipts. Both the product/service price and the surcharge
amount must be clearly displayed.
5. Debit Card Exclusions:
- Surcharges cannot be applied to debit card transactions, even if the card is processed as a credit card.
Frequently Asked Questions
Are surcharge programs new?
No. Many businesses have offered similar options for years. Surcharging simply allows merchants to pass on the cost of
accepting credit cards while customers retain the option to pay with cash or debit cards to avoid the fee.
Is surcharging legal?
Surcharging is legal in 46 states. However, businesses must comply with rules, including displaying signage at the point
of sale informing customers of the surcharge and ensuring the fee is only applied to credit card transactions.
How does surcharging work?
Credit card companies charge a fee for processing transactions, traditionally borne by the business. With surcharging,
this fee is passed on to customers using credit cards. Debit card transactions are not subject to surcharges, and the
system automatically detects the card type to ensure compliance.
Will surcharging reduce my monthly credit card processing fees?
Yes. By passing the credit card fees to customers, businesses can significantly reduce their processing expenses,
leaving only debit card fees to cover.
Will I lose business by implementing surcharges?
When implemented correctly, surcharging does not typically affect sales. Customers are informed about their payment
options and can choose a debit card or cash to avoid fees. Proper communication and transparency are key to customer
acceptance.
Key Takeaways
- Surcharging offers businesses a way to manage rising credit card processing fees while maintaining compliance with
strict rules.
- Merchants must ensure they follow registration, notification, and receipt requirements.
- Surcharging applies only to credit cards, not debit cards, and is capped at 3% of the transaction.
For assistance with setting up and managing surcharges, please reach out to our support team.
