Merchant Surcharge Program – Rules and FAQs

13 Apr Merchant Surcharge Program – Rules and FAQs

Are you a merchant that currently surcharges on your customer’s transactions?

If so, on April 15, 2023, there are new changes for credit card surcharges that will go into effect. In January of this year, the “card brands” which are Visa, Mastercard, Discover, and American Express announced the below changes to the credit card surcharge rules.

• Merchants must go through a registration process with the card brands and notify their merchant acquirer 30 days in advance of commencing surcharging.
• The allowed surcharge in the U.S. will be reduced to 3% from the current 4% maximum.
• Surcharges cannot be added to any type of debit card. If a customer pays with a debit card (this includes pin debit and pin-less debit) then you could be exposing your business to large fines and even have your merchant account suspended.
• Merchant’s must ensure adequate signage at checkout to inform their customers of surcharge fees on credit cards and must reflect a surcharge line item on the customer’s receipt.

It’s important to understand the rules and regulations around credit card surcharges to ensure your business complies and avoids costly penalties.

What are the penalties for non-compliance, you ask? That’s a great question, depending on the violation card brands can impose fines up to $50,000 or higher and/or suspension of merchant account. These fines can and will be issued without prior notification. It is also important to remember fees are not applicable on debit cards. This means that businesses are not allowed to add a minimum sale amount on debit cards. This only applies to credit cards.

If you are a merchant that wants to know more about surcharging here is information below to get you started.

Credit card surcharges are extra charges merchants add to a bill when a credit card is used for any payment. It is added to compensate for credit card processing fees that businesses are required to pay. With more and more people choosing to use credit cards the fees can be substantial, and the business owner is ultimately responsible for the fees. Therefore, some business owners choose to pass on the fees to the customers thus saving them money.

Targeted Merchant Solutions President, Jennifer King says,
“There are currently, 10 states in the U.S. that have surcharging restrictions: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. However, South Carolina is not one of these states.”

Don’t let confusion hold you and your business back. Make sure you are informed and take control of your payment processes. If you need assistance with your surcharging strategy, contact us today.