As most merchants know the cost of accepting card payments keeps going up, though in small increments. Merchants now can take advantage of passing some of those costs back to the consumer via “Surcharging”. We will look at the guidelines for merchants to add surcharging to those customers paying with credit cards.

First we should explain what Surcharging means. Surcharging is the practice of adding a small fee to a credit card transaction to cover the merchant fees that businesses incur from processing companies. The biggest thing to know is that you can not Surcharge debit cards or Pre-Paid cards. This means that whatever equipment or software a business uses to process card payments must be able to differentiate between credit and debit cards.

You also need to know your state’s laws on Surcharging. Currently there are only 2 states that completely prohibit Surcharging:  Connecticut and Massachusetts. Other states such as California, Florida, Kansas, Maine, New York, Oklahoma, Texas and Utah have Surcharging rules on the books, but are currently unenforceable due to court decisions, so it is good to keep up to date on those laws if things change.

Current Surcharge rules state that if you add Surcharging, you must surcharge all credit cards from each card brand. Also note that each card brand has its own rules on Surcharging. For example, Visa sets a cap at 3%. Also, you may not charge a higher percentage that your costs for accepting credit cards.

Here are other guidelines:

  1. You must notify the card association and your merchant services provider of your intent in writing at least 30 days in advance. (Note: American Express surcharge rules do not require you to provide notice so long as you comply with all other rules.)
  2. Surcharge amounts are limited to your effective rate for credit card transactions, capped at 4% (2% in Colorado). In other words, you can’t profit from surcharges; you can only recoup your baseline costs.
  3. You must post appropriate notice inside your store at the entrance and the point of sale. Similar rules apply to e-commerce businesses at the checkout page of their websites.
  4. You must include the surcharge amount on the receipt as a separate line item. The surcharge must also be included in the network authorization request and settlement. (Note: American Express is the only brand with an exception to this rule.)
  5. For Visa and MasterCard, you can apply brand-level surcharges (e.g., all Visa cards) or product-level surcharges (only certain lines of cards). However, you cannot do both.

You must also notify your processor that you will be Surcharging and that your equipment is certified to accurately record the surcharges.

So, should a business take advantage of Surcharging? That really depends on knowing your customers and your competitors. In today’s market more and more businesses are using Surcharging to help offset their fees and customers are becoming more used to seeing these fees added to their purchases.

Need more information? Call Accept Credit Cards and a representative can assist you on choosing the right equipment and Surcharging rate for your business. Accept Credit Cards can be reached at: 800.476.5020 and choose opt.1 for assistance.

http://www.acceptcreditcardsus.com