So, unless a business only accepted Discover and American Express, checkout fees were off the table.Īs of January 27, 2013, these rules have changed. Visa and MasterCard have always prohibited these fees as part of their merchant agreements Discover and American Express allowed them, but forbid businesses to surcharge their cards differently than any other brands. Checkout fees have historically been defined as a fee charged to consumers who use credit cards that would not have been charged if the consumer had paid with cash or a check. What has changed are the rules regarding surcharging or checkout fees. CardFellow has an excellent guide to convenience fees, and the rules for these have not changed. Most transactions - including any transaction that is face-to-face, and any transaction done over the phone or online if that is the only method of payment available - fall outside the definition of a convenience fee. These fees are meant to be used when paying with credit card is “bona fide” convenience over other forms of payment - for example, if the only other option for the customer would be a money order. Convenience FeesĮven before the Visa & MasterCard settlement, businesses were allowed to charge their customers convenience fees for using credit cards in a very limited set of situations. States Where Merchant Surcharging is BannedĪs you consider whether or not surcharging is right for your business, start by familiarizing yourself with some essential information - the difference between checkout fees (surcharges) and convenience fees, the states where surcharging is currently banned, and the procedures you must follow in order to start surcharging.
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We regularly update this article and do our best to maintain the accuracy of surcharge laws, but it’s a good idea to check with your state’s Attorney General or a business lawyer for the latest on surcharge legalities before implementing a surcharge.**īy copying and pasting the code below into your site.
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Read more about cash discounts (and how to determine if the program you’re considering is compliant) in our article Are cash discounts legal? **State laws are constantly evolving on the topic of credit card surcharges. **Recently, many non-compliant cash discount programs have cropped up that are in violation of Visa’s surcharging rules.
Surcharges are capped at 4% or the “actual cost of processing,” whichever is lower.Where legal, surcharges are only allowed on credit cards, NOT debit cards.Surcharges are prohibited in Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, and Oklahoma.It is not against merchant agreements the card brands allow surcharging.However, there are many rules businesses must follow in order to charge checkout fees, as well as pros and cons that should be considered before deciding if surcharging your customers when they use credit cards is the right move for your business. The settlement will allow businesses to reduce the impact of credit card processing fees. A 2013 class action lawsuit against Visa and Mastercard resulted in a settlement that allows businesses to charge their customers a fee for using credit cards - commonly referred to as “merchant surcharges” or “checkout fees.”
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