Tuesday, February 21, 2023
"I think Visa takes this issue very seriously, and it has made its opinion clear," said James Shepherd, president of CCSales Pro.
Not only does the new cap seriously impact residuals on surcharging accounts, but it could also have consequences for other pricing models that shift processing costs to cardholders. Any pricing model that adds a line-item charge—as is the case with many cash discount programs, for example—could be construed as surcharging, Shepherd warned.
Visa reportedly has dispatched an army of secret shoppers to identify merchants that are adding surcharges to tickets in violation of its rules and fining those merchants' acquirers.
Shepherd's advice: go with dual pricing, where merchants can charge a cash or card price.
Visa and Mastercard have never liked the idea of surcharging credit card payments, or for that matter, offering discounts for cash in lieu of card payments. But they relented as part of a 2013 legal settlement with retailers, allowing surcharges on credit cards only, provided surcharges are allowed by state law. Only Colorado, Connecticut and Massachusetts currently have laws on the book forbidding surcharging.
Cash discounting is expressly permitted under the Durbin Amendment to the Dodd-Frank Act, but also is limited to credit card payments.
Both surcharging and cash discounting are offered to merchants as a way to avoid rising card processing costs
Neither method of charging for card payments had much traction until a few years ago. Surcharging got a lift following a 2017 U.S. Supreme Court decision reversing a lower court ruling that upheld a New York law banning surcharging. Since then, a few companies have come to market with solutions that support compliant surcharging, including CardX, which last year was acquired by Stax Payments.
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.