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Surcharging Credit Cards

We do offer a surcharging program that will allow certain terminal types to automatically add a fee for accepting a credit card. This program is easy to sign up for but there is important information you need to know and be up to speed with before doing so. If you are a current customer and interested in this program, reach out to us at info@schmoozeinc.com, to get started. Thank you!

What is surcharging?

A payment card surcharge, also known as a checkout fee, is an additional fee that a merchant adds to a consumer’s bill when he or she uses a card for payment.

Can I add a surcharge to card transactions?

As a result of a legal settlement to resolve claims brought by a group of U.S. merchants, merchants in the U.S. and U.S. territories may add a surcharge to certain credit card transactions, starting January 27, 2013. Merchants who choose to surcharge must follow consumer disclosure and other requirements agreed to as part of the settlement.

When can I begin to surcharge?

U.S. merchants must first notify Visa and their acquirer of their intent to surcharge at least 30 days prior to implementing surcharging.

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 your acquirer at least 30 days in advance of beginning to surcharge.
  • Limit surcharging to credit cards only (no surcharging debit and prepaid cards) and limit the amount to your merchant discount rate for the applicable credit card surcharged*.
  • 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, 10 U.S. states have surcharging restrictions including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

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.

Are there limits to the amount I can surcharge?

Yes. U.S. merchants may assess a surcharge on credit card purchases that does not exceed the merchant discount rate for the applicable credit card surcharged (4%).

Am I required to disclose the surcharge to my customers?

Yes. U.S. merchants that surcharge must disclose the surcharge dollar amount on every receipt. In addition, disclosures that a merchant outlet assesses a surcharge on credit card purchases must be posted at the point-of-entry and point-of-sale.

What laws exist that may relate to surcharging?

Currently, 10 U.S. states have surcharging restrictions including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Please consult with legal counsel to determine whether your practices comply with relevant state law.

Additional key points to the surcharging program

  • A merchant may not apply a convenience fee or service fee in conjunction with a surcharge.
  • A separate line item is required on receipts identifying the surcharge after the subtotal allowing for any discounts and prior to the total amount.
  • Surcharging may not be done on debit or pre-paid cards.

Non-Compliance Assessments

Merchants may be assessed the following assessments for failure to comply with the above stated payment card brand rules. Failure to resolve any compliance issues may result in merchant termination and listing on MATCH.

Mastercard

  • Up to $20,000 for the first violation
  • Up to $30,000 for the second violation within 12 months
  • Up to $60,000 for the third violation within 12 months
  • Up to $100,000 per violation for the fourth and subsequent violations within 12 months

Visa

  • Warning letter with specific date for correction and $1,000 fine for first rule violation
  • $5,000 for second violation of same rule in a 12-month period
  • $10,000 for third violation of same rule in a 12-month period
  • $25,000 for fourth violation of same rule in a 12-month period
  • 5 or more violations of same rule in a 12-month period will be assessed at Visa’s discretion

AMEX

  • Warning letter with specific date and action for correction
  • Up to $10,000 for second violation within a 12-month period
  • Up to $20,000 for third violation within a 12-month period

Discover

  • Warning letter with specific date for correction and $2,500 if not corrected 

Key Reference Guide on Signage

Transaction Type

Point-of-Entry

Point-of-Transaction

Face-to-Face Transaction

Main entrance(s) of the Merchant Outlet, in a minimum 32-point Arial font, but in any case no smaller or less prominent than surrounding text

Every customer checkout or payment location, in a minimum 16-point Arial font, but in any case no smaller or less prominent than surrounding text

Electronic Commerce Transaction

The first page that references credit card brands accepted, in a minimum 10-point Arial font, but in any case no smaller or less prominent than surrounding text

Checkout page, in a minimum 10-point Arial font, but in any case no smaller or less prominent than surrounding text

Mail order Transaction

The first page of the catalog that references credit card brands accepted, in a minimum 8-point Arial font, but in any case no smaller or less prominent than surrounding text

Mail order form, in a minimum 10-point Arial font, but in any case no smaller or less prominent than surrounding text

Telephone order Transaction

The first page of the catalog that references credit card brands accepted, in a minimum 8-point Arial font, but in any case no smaller or less prominent than surrounding text

Verbal notice from the telephone order clerk, including US Credit Card Surcharge amount

Unattended Cardholder Activated Terminal

Main entrance(s) of the Merchant Outlet (if applicable), e.g. gas (petrol) station store, in a minimum 32-point Arial font, but in any case no smaller or less prominent than surrounding text

Main entrance(s) of the Merchant Outlet (if applicable), e.g. gas (petrol) station store, in a minimum 32-point Arial font, but in any case no smaller or less prominent than surrounding text