If you are passing on the fees, to avoid potential fines and penalties, a merchant must to be compliant with the program terms and contracts of your processor, card-brands and the state that you are located in.
1. Create processes to follow the rules outlined below
It may be complex, but it is possible to implement a surcharge program on your own.
Card-Brand Rules & State Laws
SurChoice automatically performs and enforces the below to keep merchants complaint. If you are attempting to implement your own surcharge program, be sure to follow the below rules.
Due to state laws, you cannot surcharge credit card fees in the following states: Colorado, Connecticut, Kansas, Massachusetts or Oklahoma. You can surcharge in Main and New York, but you must disclose the exact credit card price anywhere you show or quote, including price tags and advertisements.
You must send notification to your processor and the card-brands 30 days prior to implementing a surcharge program. SurChoice automatically takes care of this for our customers.
Any merchant with a surcharge program must notify their customers with signage at the store entrance (where available) and at the point of sale. There are specific font size requirements and the signage must state that the surcharge is not from the card brands and that it does not exceed your cost of acceptance.
SurChoice provides compliant, printable signage and disclosures as well as verbal cues at the time of sale.
Per the rules of the card brands, a surcharge is never to exceed the cost of your acceptance or a 4% cap. This means that you are not permitted to profit from the surcharge and that your surcharge cannot exceed 4% of the total sale.
With SurChoice our surcharge is capped at 3.5%.
Per the rules of the card brands, each transaction must have the base and the surcharge as individual itemizations on the receipt and must be processed as a single transaction.
SurChoice processes all of it’s transactions as a single transaction and itemizes each per the rules of the card-brands.
This is by far the most challenging for any merchant or processor to achieve. The reason this is challenging is many customers do not disclose that the card is a credit or debit. Often they will select debit, even though it is a check card or a prepaid card. Although this bypasses the PIN requirement, signature debit is still banned from surcharges.
SurChoice checks every card prior to an authorization to see if it is truly a debit card or a credit card. If there is any variation of debit in the card setup, it will automatically have the surcharge removed and applied as a cash discount.