This webpage on surcharging details what surcharges are, the legal requirements surrounding them, and whether (or not) your business should charge them.
As of March 2021, most U.S. states allow merchants to surcharge on credit card transactions, with only
Colorado, Connecticut, and Massachusetts having laws against surcharging.
Credit card surcharging rules
All merchants who decide to implement surcharging into their business are required to follow a set of rules defined by the major credit card brands. Though some of these brands have small variations of these rules between them, the general rules for implementing a surcharge is relatively universal. We’ll break down the most common of these rules below.
Notify the card brands
The major credit card brands must be notified of a merchant’s intent to surcharge. This can be handled either by a letter to your account’s representative, or by filling out paperwork provided on the card brand’s website. However, with certain online payment solutions, their support team will handle this notification process on your behalf, saving you a step in the process.
Link to Visa Merchant Surcharge Application Form – Visa Surcharge Form
Notify your clients
Your clients must also be made aware of your intention to surcharge. This must be written out plainly, not hidden away in a contract or in fine print. You could accomplish this by including the surcharge on your invoice, or displaying a sign on your website or office. If you’re using an online payment solution, this notice should be automatically included on your payment page.
Do not surcharge more than the cost of your processing fee
This rule essentially means that you cannot use surcharging as a means to profit. A surcharge cannot exceed 4 percent.
Do not implement surcharges on debit card transactions
Surcharge fees are strictly limited to credit card transactions only. Even if a client wishes to run a signature debit transaction, where a debit card is essentially used as a credit transaction, you are still not allowed to implement a surcharge.
List surcharges as separate line items
When drafting an invoice and tallying up transactions, you cannot simply add the surcharge into the total cost of the service. Each surcharge that occurs must be listed separately on your invoice and labeled clearly.
The reality is that in today’s legal environment, accepting credit cards has become a normal cost of doing business. Your clients would much rather pay by credit card, and by accepting these payments in your firm, you’ll be getting paid more often and at a faster rate than by traditional means. Surcharging allows you to keep your transaction costs balanced while also offering your clients the payment methods they prefer.
If you should happen to own a business in a state where surcharging is illegal in your area there are other options for you that you can take advantage of but you would need to approach doing so in a different way with a different set of rules and guidelines. Another method of offsetting your credit card acceptance costs is called CASH DISCOUNTING and is legal and available everywhere as long as its setup properly in your place of business. For more information you can reach out to us here at ValComputers or click on the link below to visit our page on CASH DISCOUNTING.