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Table of Contents

Lead Story

Progress on the long road to faster payments

Patti Murphy

Direct mail dinosaur or diamond?


NEAA blends tradition, innovation

PCI SSC revises ecommerce guidance

CFPB regulates prepaid, Congress eyes CFPB

Arby's under the microscope after breach


Jeff Shavitz


The adjacent POS-sible

Dale S. Laszig
DSL Direct LLC


Street SmartsSM:
Rebranding as an equipment leasing professional

John Tucker
1st Capital Loans LLC

Secrets: A contemporary legal take

Adam Atlas
Attorney at Law

Looking ahead: Fintech in 2017

Don Bush
Kount Inc.

Company Profile

Prospay Inc

New Products

Gain, retain customers with real-time analytics

Retention Intelligence

Compliant, automated cash discounts at the POS



Letter from the editors

Readers Speak

Email prospecting tips that work

Resource Guide


A Bigger Thing

The Green Sheet Online Edition

February 27, 2017  •  Issue 17:02:02

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Readers Speak

Should surcharging be legal?

One place where readers of The Green Sheet speak their minds about matters of particular importance to ISOs and merchant level salespeople (MLSs) is GS Online's MLS Forum. Among the recent topics explored were white-label iPad solutions, partnering with an accounting firm, the future of Dodd-Frank, PAI's sale to Clearent and surcharging. Following are excerpts from the lively discussion on surcharging:

Mariuz broached the subject by writing, "I am aware that most of the states allow surcharging up to 4 percent. Does your processor have a software for all types of equipment … which would calculate the surcharge amount based on the card type and automatically add it to the transaction? Or is there any software that would enable the merchant to add flat surcharge amount depending of what merchant would choose: 2 percent, 2.5 percent, 3 percent, etc.?

"[D]o you think that surcharging should be legal or should it be banned? NRF is fighting with card brands to make surcharging legal. From my standpoint, I think it would benefit MLSs and ISOs because we could drive the prices up. From the merchant perspective, it also makes sense. But from the consumer not so much. Any input?"

Clearent replied, stating, "The rules behind surcharging are pretty strict, so making sure the POS or terminal follows them is very important. This includes registering as a surcharging merchant. "To play devil's advocate, the worry about surcharging at Visa, et al., is that it discourages card usage. Anything that discourages card usage reduces our revenue. Additionally, surcharging is not allowed on any form of debit per the Durbin amendment, so the question is, how much does it truly benefit a merchant?

"Since this occurs at the merchant level, settlement would show just the total transaction, but the transaction receipt would disclose the surcharge clearly. So, with all this, if we are talking, say, 3 percent, why not just raise prices that amount? Giving cash discounts is allowed in every state, and doesn't require registration. Truth is, until all states allow surcharging, this latter approach is the simplest for merchants to understand and support."

Others emphasized that surcharging is a complex challenge involving registration, printing appropriate language on in-store signage and receipts, and specialized software to separate debit card bank identification numbers (BINs) from credit card BINs to ensure debit card purchases are not surcharged. Also, in 10 U.S. states, surcharging credit card transactions isn't even legal.

Given this, as well as the restrictions on how high surcharges can be, many merchants have been deterred from the practice. It is estimated the surcharge amount typically works out to less than 3 percent. "U.S. merchants may assess a surcharge on credit card purchases that does not exceed the merchant discount rate for the applicable credit card surcharged, "Visa Inc. stated. "In cases where the applicable merchant discount rate exceeds 4 percent of the underlying transaction amount, in no event can the merchant assess a surcharge above 4 percent."

For a Q&A on essential aspects of merchant surcharging, please visit To see the MLS Forum's full discussion on this and other topics, please register via the Forums link on our home page, And remember we will welcome your comments and questions at

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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USAePay | Impact Paysystems | Electronic Merchant Systems | Inovio | Board Studios, Inc.