If you’re a business owner looking to offset some of the costs of processing credit cards, you’re not alone. Many credit card processors like to charge way above what they need to process your payments because those locked in contracts they sign you up for will keep you around no matter what. That’s why many business owners have been looking into credit card surcharging. Surcharging customers’ credit cards is the process of charging a customer a small fee if they’ve used a non-cash payment method.
That fee will help cover the price of processing the payment, and is usually small enough to not bother most customers. And if it does bother them, they’ll use cash, which lowers your monthly processing statement even further. “If it’s so easy, then why aren’t more business owners doing it?” Well, because there are credit card surcharging requirements that you need to make sure your business meets.
What are the Credit Card Surcharging Requirements?
- You can never surcharge in Colorado, Connecticut, Kansas, Maine, Massachusetts, Oklahoma and Texas
- Your surcharge cannot be more than 4% of the original purchase amount.
- Your surcharge cannot be more than your payment processing fees.
- Surcharges are allowed on credit cards only, not on debit cards – this includes debit with and without a pin code (aka offline debit).
- Surcharge rate awareness signage must be clearly posted in front of store and at checkout.
- Surcharge amount must appear as a separate line item on their customer receipts.
- Merchants must notify their processor they will be surcharging and register with the card brands at least 30 days before first surcharge.
- Cardholder must accepts the total price (including the surcharge amount) at the checkout.
Keep This in Mind
Above are the rules of surcharging you’ll have to abide by everywhere you go. However, there are additional considerations in specific circumstances.
Problem: Some terminals or Point of Sale systems won’t recognize the difference between a credit card or debit card. The business owner is still responsible for ensuring a debit card is not surcharged.
Solution: Ask your merchant services representative if your surcharging settings are properly set up. If they aren’t, you or they will have to update them in your payment gateway.
Problem: Customers do not often inform employees of their card type during over-the-phone orders. Surcharging a debit card can result in a hefty fine(s) even in these accidental circumstances.
Solution: Train your employees to always ask the card type during a transaction.
ONLY these 43 states allow businesses to surcharge their customers: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming