But your merchant may charge more or less, depending on the specific terms of its credit card merchant contract. Most consumers don’t consider the surcharge because it’s a fraction of the total cost, but surcharges add up. From EFTPOS payments to American Express transactions, credit card surcharges range from under 0.5% – 2%. Different payment methods such as cash, credit cards and debit cards have different costs and benefits to both the merchant and the consumer. Many architectural firms that accept credit cards implement surcharges on top of every transaction to help offset the cost of processing fees. To avoid credit card processing fees altogether, you might want to consider offering customers discounts for paying cash.
- These findings provide a positive outlook for restaurateurs who want to implement credit card surcharges.
- The practice of surcharging was outlawed for several decades until 2013 when a class action lawsuit permitted merchants in several U.S. states to implement surcharges in their businesses.
- Credit card surcharges cannot exceed the actual cost to process a transaction and are capped at a maximum of 4% (2% in Colorado).
- You may write a letter to your financial account representative or file paperwork provided on the credit card’s website.
(Italian Colors v. Becerra (9th Cir. 2018) 878 F.3d 1165.) The Attorney General will generally apply the Italian Colors decision to merchants that are similarly situated to the Italian Colors plaintiffs. Each time a merchant accepts and processes a credit card transaction, they pay a processing fee to the appropriate financial institution. A credit card surcharge (or cc surcharge) is a fee enforced by the merchant to compensate for some of the cost of payment processing. This fee can only apply to credit cards—and never debit, even when a debit card is run like a credit. Modern clients prefer to pay by credit card, so accepting them is an excellent way to futureproof your firm. But there’s one thing that’s holding you back—credit card processing fees. It’s a fact—any business that accepts credit card payments for their goods and services must pay a processing fee for each transaction that uses one.
The Definition Of Surcharging
Because of this lawsuit, several U.S. states began permitting merchants and businesses to implement surcharges on credit card payments they accepted. Over time, perspectives have shifted towards a more pro-surcharging point of view. Merchants can charge convenience fees on purchases made with credit cards and other types of payment. Unlike credit card surcharges, the fee amount isn’t based on the merchant’s credit card processing costs—convenience fees may be a few dollars or over $15 per purchase. The Westchester Consumer Protection Department is working to clear up questions for consumers and businesses regarding credit card surcharges. A credit card surcharge, also known as a checkout fee, happens when merchants or restaurants charge their customers an extra fee to recover these credit card processing costs. How much you can charge customers for this fee will depend on your payment processor’s pricing model, so be sure you fully understand all the credit card processing fees that appear on your restaurant’s monthly statement.
Merchants cannot lure in consumers by only posting the lower cash discount price. Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
- These fees are typically a percentage of the total bill added as a separate line item.
- Merchant Cost Consulting is a cost reduction firm that helps businesses lower credit card processing fees on merchant services without disrupting their day-to-day operations.
- A merchant that decides to impose surcharges must post a notice of the surcharge at the point of entry into the place of business, at the point of sale, and on the receipt given to the consumer.
- Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy.
- When the patient chooses to pay with credit, their bill will reflect a 2% cc surcharge for services rendered.
To make it easy, we’ll say the total value of a hypothetical sale is $20. It’s also important to note that the limitations on surcharging generally only apply to consumer businesses. Separate laws and regulations affect the ability of government agencies and educational institutions to implement surcharges, and these are allowed even in states that prohibit surcharging by consumer businesses. In this article, we’ll look at current state laws and card association guidelines for surcharging and what you need to do to start adding surcharges. We’ll also discuss the limits that apply to the practice and whether it will be a good choice for your business. No. The surcharge may only be imposed upon credit cards, and not debit or prepaid cards. The amount of the surcharge may not exceed the amount of the swipe fee paid by the merchant on the particular credit card.
Is Cryptocurrency A Viable B2b Payment Method? 6 Pros And Cons
If a merchant adds an illegal credit card surcharge to your purchase, you can report the merchant to your state’s attorney general’s office. The AG’s office may reach out to the merchant to inform them that the fee isn’t legal, or explain what they need to do to legally add a surcharge to credit card transactions.
Just swipe, tap, or scan a card, and watch client satisfaction soar as they enjoy meeting at a convenient location and appreciate the flexibility of your firm. Below, we’ll break down the most common rules for legal professionals to follow when executing surcharges at their firm. Colorado is the newest state to legalize surcharging and caps surcharge rates at 2%. It’s important to distinguish between the total cost of your work and the amount you are surcharging for. Your clients must be able to clearly see how much the surcharge is costing them.
Whether you prefer to charge in-person or online (by computer, tablet, or mobile phone), we’ll help you give clients more options to pay—with each method adhering to credit card surcharge laws. The practice of surcharging was outlawed for several decades until 2013 when a class action lawsuit permitted merchants in several U.S. states to implement surcharges in their businesses. While credit card surcharging might seem like an appealing way to recoup credit card processing fees, that’s rarely the case. Merchants turn to credit card surcharging as a way to save money on credit card processing. This is especially true for small business owners with slim profit margins.
Surcharging Raises Your Effective Prices
This can be a win-win for both parties since customers are looking for ways to save money as well. Before we discuss the various credit card association guidelines for surcharges, let’s address whether it’s legal to charge a fee for using a credit card — or not. You will need to check the laws for the state(s) where your business operates. Over the past several years, the number of jurisdictions that prohibit credit card surcharging has diminished as legal challenges have resulted in many laws banning the practice being overturned by the courts.
These fees began to be passed on to consumers in 2013, following a class-action lawsuit that businesses and merchants brought against Visa and Mastercard in response to such costs. As part of the lawsuit settlement, the surcharge fees merchants had historically been charged by credit card companies and payment processors could be passed to consumers. Most credit card companies require merchants to disclose credit card surcharges in online transactions, on a sign at the store’s point of entry and point of sale, and on the receipt. Additionally, any undisclosed fees may constitute an unfair or deceptive trade practice prohibited by Florida law. You must adhere to the following rules if you want to start collecting credit card surcharges. They are applicable to all card networks, although American Express is a bit of an outlier and does not impose the same requirements on advance notice or receipt itemization.