The answer to the question, “Can I charge a surcharge for accepting a credit card?” depends upon your state. In some states, businesses cannot charge a customer extra. That’s because states and territories have their own specific surcharge statutes.
Where Surcharges Are Illegal
The National Conference of State Legislatures lists 10 states and one organized territory. In these entities, one may not add a surcharge:
- California
- Colorado
- Connecticut
- Florida
- Kansas
- Maine
- Massachusetts
- New York
- Oklahoma
- Texas
- Puerto Rico
Minnesota customers may also use a credit card, instead of paying by cash, check, or similar means. And, retailers cannot charge them extra for that privilege.
Where Non-Card Discounts Are Legal
In addition, 10 entities allow merchants to discount non-card payment forms:
- California
- Colorado
- Connecticut
- Maryland
- Massachusetts
- Nevada
- Oklahoma
- Washington
- Wisconsin
- Wyoming
- Puerto Rico
Can I Charge a Surcharge for Accepting a Credit Card from All Processors?
Creditors, like Visa, Discovery, Mastercharge, and American Express also have their own policies about surcharges. For example, each of these card processing companies requires retailers to “display a notice of the surcharge at the point of sale.” So, understanding the policies of the services that they offer can help your sales team to align its protocol.
How Merchants Cover Card Transaction Fees
Merchants deal with the fees in different ways. As you can see, their strategies depend upon state, territory, and corporate policies.
So, in states allowing the surcharge, businesses may simply add the fees at transaction time. They may also require a minimum purchase price on debit and credit card transactions.
Where permitted, other retailers may incentivize customers with discounts on cash, checks, or PIN-based transactions. Of course, these merchants must inform customers about the discriminatory fees.
How Can I Charge a Surcharge for Accepting a Credit Card?
Convenience Fees
While many states do not permit surcharges, all of them do allow convenience fees, even though they actually constitute a subset of credit card surcharges. Of course, restrictions on convenience fees exist too.
Companies charging convenience fees must clearly display a respective notice at the point of sale. And, failure to advise customers can warrant a complaint to your credit card network. Networks take these complaints seriously and will follow up on them.
These fees work by applying the charge toward the mode of payment, rather than the medium. For example, if a box office normally sells its tickets at a physical location, it may provide an alternative purchase option online, using a credit card. Hence, the business may levy a convenience fee.
Legally, the convenience fee charges for the privilege of paying online, rather than by driving to the box office to buy tickets. Likewise, if the online payment were via an ACH bank-to-bank transfer, it would qualify for a convenience fee.
Is it Fair to Charge the Surcharge?
Someone has to pay the surcharge. If businesses raise the prices of products or services to cover it, customers see it as higher prices. Otherwise, it cuts into their margins. Charging a surcharge also represents a cost that customers see.
Regardless, businesses cannot offer their products and services if they cannot cover the cost of transactions. Consequently, they somehow have to pass the cost onto the customer directly or indirectly.
So, in answer to the question, “Can I Charge a Surcharge for Accepting a Credit Card?” Sometimes you can. As a QuickBooks expert team, we ask you, “Is it fair to charge it? What do you think?”
