Many business owners are confused about whether or not adding a surcharge to cover credit card processing costs is legal.

The answer is, yes, but there are certain requirements that must be met.

Let’s look at list of common questions we hear surrounding credit card surcharges.

WHAT DO THEY MEAN BY SURCHARGE?

A surcharge is an additional fee added to a customer’s bill, meant to help offset costs that the merchant pays when a customer uses a credit card to pay their bill.

IS MY BUSINESS ALLOWED TO SURCHARGE?

Maybe.

Under the settlement, U. S. merchants have the option of adding a surcharge to credit card transactions. However, merchants must decide if they want to surcharge at the ‘brand level’ or the ‘product level’, but not both.

• Brand Level surcharging applies the same surcharge to all credit card transactions for a particular brand (Visa, MasterCard, American Express, Discover, etc.).
• Product Level surcharging applies to a particular type of credit card (e.g. Visa Signature, World Elite MasterCard). 

IS SURCHARGING LIMITED TO CREDIT CARD TRANSACTIONS?

Yes, surcharging is allowed only on credit card transactions, it is prohibited on debit and prepaid card transactions.

ARE THERE ANY OTHER LAWS THAT LIMIT SURCHARGING?

Yes, at this time 10 states have laws that limit or prohibit surcharging. These states include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Please consult your legal adviser to make sure you comply with applicable state and local laws.

WHAT ARE THE RULES FOR ‘BRAND LEVEL’ SURCHARGES?

• The surcharge must be the same for all credit card transactions of that brand (VISA/MasterCard/AMEX/Discover, etc.), regardless of which bank or company issued the card to the cardholder.
• The surcharge must be no greater than the merchant’s average discount rate for that brand’s credit card transactions.
• The surcharge cannot exceed 4% in any event.
• Additional requirements may apply for merchants that accept multiple card brands.

WHAT ARE THE RULES FOR ‘PRODUCT LEVEL’ SURCHARGES?

• The surcharge must be the same for all transactions of that particular product (Visa Signature, World Elite MasterCard, etc.), regardless of card issuer (bank, airline, retailer, etc.).
• The surcharge must be no greater than your average discount rate for credit card transactions of that particular product, minus the regulated debit interchange rate.
• The surcharge amount cannot exceed 4% in any event.
• Additional requirements may apply for merchants that accept multiple card brands.

DO I HAVE TO REGISTER OR DISCLOSE A SURCHARGING POLICY?

Yes, Visa and MasterCard require that merchants who decide to surcharge credit card transactions must satisfy the following notification and disclosure requirements:

• You must provide 30 days advance written notice to your credit card processor, Visa and MasterCard.
• Click here to register with MasterCard 30 days prior to surcharging: here
• Click here to register with Visa 30 days prior to surcharging: here
• Click here if you have a merchant account with Motus Financial; to register with Motus Financial just provide your name, merchant number and contact information 30 days prior to surcharging:  here
• You must provide clear disclosure to your customers that you are imposing a surcharge; including the amount and that the surcharge is not greater than your discount rate.
• You must provide the dollar amount of the surcharge on the transaction receipt.

• You must provide 30 days advance written notice to Motus Financial, Visa and MasterCard.
• Click here to register with MasterCard 30 days prior to surcharging: here
• Click here to register with Visa 30 days prior to surcharging: here
• Click here if you have a merchant account with Motus Financial; to register with Motus Financial just provide your name, merchant number and contact information 30 days prior to surcharging:  here
• You must provide clear disclosure to your customers that you are imposing a surcharge; including the amount and that the surcharge is not greater than your discount rate.
• You must provide the dollar amount of the surcharge on the transaction receipt.

Visa has also created a website that provides more information related to surcharging.

Our motto is “Moving Forward” and it is our desire to help your business positively grow in many ways. Get started today by calling us at 608-819-8666 or visit us online anytime at www.MotusCC.com.