Q: Our agency manages its own circuits, for which we are the credit card merchant. We would prefer most customers to pay us by check, but some customers prefer to pay by credit card which costs us around 4%. Can we add a credit card surcharge?
A: The answer is complex, as it depends on the state the customer is in, the type of card, the method of disclosing a surcharge, and the amount of your proposed surcharge. However, in general, the answer is yes.
First, in every state and with every card, you can avoid the problem by setting a price and then offering a discount for non-credit card payments. Since the price set would then be higher than it would be with a supplement, and you might not want to talk about “discounts” for your visits, I would understand that you would not favor this approach.
Second, credit card surcharges are legal in 40 states. In eight other states — California, Florida, Kansas, Maine, New York, Oklahoma, Texas and Utah — the surcharges violate state law, but the violations are unenforceable due to court rulings. That leaves only Connecticut and Massachusetts as states where you cannot surcharge a credit card sale.
Third, for debit cards, federal law prohibits surcharges, even for debit card transactions treated as credit card transactions (i.e., without a PIN).
Fourth, New York and Maine require you to disclose exact cash and credit card prices in dollars and cents when you quote a price, and other states require you to quote the surcharge percentage at the point of sale and again on the receipt.
Fifth, American Express, Visa, MasterCard and Discover each have their own rules, which are set out in their trade agreements. While none of the providers categorically prohibit supplements, they do impose a bunch of conditions:
- Visa, MasterCard and Discover require you to notify the network (by completing an online form) and your processor or bank at least 30 days in advance of your intention to impose a surcharge.
- All card provider rules provide that additional fee amounts are limited to your effective rate for credit card transactions or 4% (2% in Colorado), whichever is lower.
- Visa, MasterCard and Discover also require you to include the surcharge amount on a separate line on a receipt and in the authorization request. However, American Express allows you to combine the supplement and the price of the trip into a single amount.
Most of the rules seem designed to deter you, and card companies say that imposing these surcharges forces most consumers to turn to sellers who don’t have surcharges. While that might be true with buying interchangeable consumer goods, I doubt it’s true for circuits, especially if yours are unique.
Either way, if a potential customer doesn’t want to pay extra, you can waive it, or you can offer several other payment methods, including check, wire transfer, PayPal, or various buy now, pay later at the point of sale. lenders that customers could use.