By Nicholas Cucci
With merchant credit card fees reaching as high as 3.5 percent per transaction, according to Bankrate, https://bit.ly/3L5PwLH, it's no wonder business owners are hunting for ways to recoup some of these costs. Business owners you serve may be wondering if there's a way to pass these fees on to their customers to help cover this costly business expense.
The answer is yes, they can. One popular solution is to add a surcharge to credit card transactions, but there are rules and regulations that you and your clients need to follow to stay compliant.
A surcharge, also known as a convenience or checkout fee, is an additional fee merchants may charge customers to cover the cost of credit card processing fees. For example, if a customer pays for a purchase with a credit card, the merchant may add a surcharge of up to 4 percent of the sale to help cover the cost of the transaction fee charged by the credit card company.
There are three main merchant advantages to adding a surcharge to credit card transactions:
Merchants need to be aware of potential drawbacks before implementing a surcharge program, including:
In most cases, it's legal for merchants to add a surcharge to credit card transactions. However, surcharging is illegal in Connecticut, Massachusetts and Puerto Rico, for example. So, again, merchants must perform due diligence by researching the rules and regulations set forth by the credit card companies and their state laws to ensure compliance.
Each credit card network has established a unique set of surcharge rules, so make sure your merchants have access to the full guidelines they are required to follow. In general, most credit card companies allow merchants to add a surcharge as long as they adhere to the following guidelines:
These are general guidelines set forth by select credit card companies and do not include the rules of every credit card network, nor do they include specific state laws in place. In addition, credit card brands may alter their requirements at any time, so it's always best to research the most recent regulations before surcharging.
Nicholas Cucci is the co-founder and COO of Fluid Pay LLC. Cucci is also a graduate of Benedictine University and a member of the Advisory Board and Anti-Fraud Technology Committee for the Association of Certified Fraud Examiners, as a Certified Fraud Examiner himself.. Fluid Pay is the ONLY 100 percent cloud-based Level 1 PCI Payment Gateway processing transactions anywhere in the world. Contact Nick at Nick@FluidPay.com.
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.Prev Next