Surcharge: Yes or No

Monday, January 28, 2013


In July of last year, we reported the changes that were coming with regards to the ability of merchants to ' surcharge' or add a fee when their customers paid with a credit card. (See the article here) For years, the practice was prohibited by Visa/MasterCard but just like the rest of the credit card processing industry, the landscape for surcharging has changed.

In November 2012, the United States District Court for the Eastern District of New York preliminarily approved a proposed settlement agreement in the In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation. As part of this settlement, Visa is required to implement certain Visa International Operating Regulation rule changes, including the ability for merchants in the U.S. and U.S. territories to surcharge certain credit card transactions beginning January 27, 2013.

Merchants will now be tasked with the decision of whether they choose to surcharge or not. There are plenty of pros and cons no matter which side of this issue you agree with, so we'll give you some things to think about. The first thing to consider is whether surcharging is permitted in your state. The following states have laws prohibiting the practice of surcharging:


Please contact your state representative or legal representation to determine if you will be able to add a surcharge, now that the card associations have changed the regulations.

Once you have determined that surcharging is permitted in your state, you have to determine how adding a surcharge will impact your business.

  • Will your customers willingly accept a surcharge?
  • Will your customers resent the addition of a surcharge?
  • How much would you charge? (You cannot charge more than what you are being charged by your processor)
  • Will your customers continue shopping with you if you elect to charge them a fee for using their credit card?

Merchants who choose to surcharge, now that the rules have changed, will be required to follow certain requirements, including disclosure of surcharge practices to customers at the store entry point and at the point of sale. Merchants are also required to give notification 30 days prior to adding a surcharge, to Visa & MasterCard.

If you elect to add a surcharge (after reading our article of course), CLICK HERE to submit your 30 day notice of intent to surcharge.

At Total Merchant Concepts we advise our merchants NOT TO SURCHARGE
for the following reasons:

#1- When a customer has the ability to pay you with a credit card, they tend to spend more money and it has been proven that credit card users spend more than those using cash.

#2- Adding a surcharge might be considered as a penalty to your customers.

#3- Accepting credit cards is a cost of doing business; like electricity and all of the other expenses involved with running a business. Adding those costs into the prices charged for your goods and services, makes good business sense.

#4- If a competitor of yours chooses not to add a surcharge- you will be at a disadvantage.

Credit card processing fees have always been a heated topic. Businesses don't think it's fair that they have to pay to accept plastic as a form of payment. Consumers don't like it when they get charged fees related to their credit card. So who pays?

  • Accepting credit cards helps businesses.
  • Accepting credit cards makes shopping easier for consumers.
  • Accepting credit cards costs money.

Everyone understands the need to cover the costs associated with doing business, however some consumers may react negatively if surcharges are assessed. So consider the ramifications and do what you think is best for your bottom line.

Cheri Perry 1/28/2013

Add your comments:

Items in bold indicate required information.