The Dodd-Frank Wall Street Reform and Consumer Protection Act made surcharging legal on a federal level in the United States in 2010, and since the beginning of 2013, Visa and MasterCard have put out rules for merchants who want to pass along the cost of accepting credit cards to customers with a “surcharge” or “checkout fee”. Our surcharge support program is available to merchants who decide to offset the costs of credit card acceptance via surcharges.
Surcharging improves your bottom line by mitigating credit card acceptance costs. Accepting credit cards offers customers a convenience, but it isn’t free for merchants. Surcharging helps merchants provide the service of accepting credit cards more affordably. If you decide these pass along fees are the right fit, Integrity can help you get started and assist you in following the necessary requirements.
Boost Your Bottom Line through Surcharging
Merchants feel the cost of credit card acceptance every time a customer uses a card. Adopting a surcharging program immediately boosts merchant revenue. Some businesses position surcharges as a ‘cash discount’, which communicates to customers that there is an expectation of a small payment in exchange for the ease of using a credit card.
There are a few rules for merchants who choose to surcharge.
First, they must post clearly visible signs on all doors and at the point of sale indicating that they surcharge. Integrity can help with this signage.
Second, the surcharge amount must be clearly visible on each and every receipt.
Third, in the US, surcharging can only be applied to credit cards as a percentage. You may not add a surcharge fee to signature debit or prepaid cards. PIN debit surcharging is allowed, but must be a fixed cash amount. Merchants must choose between PIN debit and credit surcharging, but not both.
And finally, merchants must notify Visa, MasterCard, Discover, and Integrity 30 days before applying surcharges.
Once a surcharging program is in place, merchants will see an instantaneous bump in their revenue. Business can save thousands of dollars a year as they retain the total of each sale.
How Much Can a Merchant Surcharge?
Surcharge rates can include the Interchange rate and many fees associated with processing the transaction via the network and acquirer. This does not include fees not associated directly with the transaction, for example the costs of a point of sale system or PCI Compliance fees are excluded from the calculation. Surcharge fees may not exceed the cost of accepting the credit card and may not exceed 4%.
Also note that the following states have passed laws restricting surcharging: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.
Convenience Fees vs. Surcharging
A convenience fee is a flat fee for using a credit card to pay over the phone or internet when a merchant typically accepts payments in person. A convenience fee is sometimes appropriate to cover the costs and risks associated with taking payment through these methods rather than in person. For example, concertgoers might pay an additional fee when they buy tickets online rather than at the box office. While these convenience fees should not be confused with a percentage based surcharging program, they can also help businesses cover the cost of processing payments.
Surcharging applies to a fee applied to cover the costs associated with accepting credit cards, regardless of the context of the payment. In the case of credit card transactions, surcharges will be percentage based and will adjust according to the size of the transaction. PIN debit cards may include a flat fee as a surcharge for using the card, but again this surcharge covers acceptance costs not the context of payment.
Integrity’s Surcharge Support Program
Surcharging could reduce or possibly eliminate credit card processing fees for your business. Integrity is here to help you through the process.
Since surcharges and checkout fees must be noted on receipts and added to the price of purchase, merchants who decide to surcharge may need to upgrade their terminal or point of sale hardware. Merchants who decide to surcharge will need to notify Visa, MasterCard, Discover and Integrity 30 days before they can initiate these charges.
Integrity can help you update your hardware and receipts, set you up with the correct signage, and make necessary notifications to the card brands.
Click here to get started with Integrity’s Surcharge Support Program today!