Potential Merchant Surcharges on Credit Card Purchases

Friday, February 01 at 10:35 AM
Category: Arvest News

As of January 27, merchants who accept credit cards issued by Visa and MasterCard can begin registration for the option to add a service charge to the item purchase price when paid with a credit card.

Merchants are required to register with Visa and MasterCard and then register with their acquirer. Merchants are not allowed to begin surcharging until 30 days after registration. This new surcharge option is being called many different things including a credit card fee, merchant fee, check-out fee and merchant surcharge. Each individual merchant, or retailer, is responsible for deciding if they want to apply this charge.

Early indications show most merchants are not planning on adding this surcharge fee.  Those who are applying the fee are required to post signage at the entrance of their business.

Consumers should be aware of these potential charges and always ask up-front if there is a fee for paying with a credit card.

What you need to know:

  • What types of cards does this new surcharge apply to?
    Merchants can only add this charge to Visa and MasterCard credit card transactions, not debit card transactions.
  • What is the charge amount?
    Consumers should be aware there are limits to the amount merchants can charge. The surcharge can be no more than 4 percent. The intent is for the surcharge to equal the cost of processing the credit card transaction, which is usually 1.5 to 3 percent.
  • What are retailers saying?
    According to research conducted by NBC News, some large retailers like Walmart, Target, Sears and Home Depot say they have no plans to add a credit card surcharge.
  • Does this apply throughout the U.S.?
    At this time we are aware of ten states that have banned credit card surcharges. They are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.  Merchants in these states cannot apply the added fee. There may be other states that have enacted such laws, and a merchant is encouraged to review the laws of any state in which it does business to determine whether surcharging is prohibited.
  • What about Discover, American Express and other credit cards?
    Discover has allowed merchants to surcharge for awhile which is why they aren’t being called out in recent news coverage. American Express prohibits surcharge fees. A merchant who accepts American Express, or other credit cards not subject to surcharging, will not be able to add a merchant fee on any of those cards.
  • How do I know if there is a credit card surcharge?
    Retailers who apply a credit card surcharge are required to post a notice at the store's entrance. The exact percentage of the surcharge does not need to be disclosed until the point of sale. The customer receipt must list the amount of the surcharge.
  • Does this include online purchases?
    Online stores with a surcharge will not be required to have a notice on the home page. They only need to alert shoppers about this when they reach the page where credit cards are first mentioned.

Read more about these changes on Visa’s Understanding Payment Card Changes website.

Tags: Credit Cards
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