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illegal to add surcharge?

xxx97
are sellers allowed (by credit card terms) to add surcharge (3-5%) to the buyer for using credit cards?
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12 comments

Date Votes
  • dongizmo
    Most I see give a cash discount, not a surcharge[:D][8D]
    I recently found out you cannot have minimum order if a customer uses a visa.[V]
    Don
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  • bpost
    quote:Originally posted by xxx97
    are sellers allowed (by credit card terms) to add surcharge (3-5%) to the buyer for using credit cards?


    Under the terms of the VISA/ Mastercard agreement you can't add service charges to a credit card transaction; and if you accept them you are not supposed to give "cash" discounts. It is never enforced as far as I can tell.
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  • SFC Hall
    well it cost the store 3 to 5% for each CCard transaction... If they are priced higer to counter that, then fine... but some small mom and pop shops can't afford to just absorb that... in small shops (my local Gun Shop) I don't mind paying the extra because I know he prices as low as he can to begin with...
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  • joker5656
    i know credit cards are charged 3-5%, but is a debit card charged also? any shop owners or other store owners know? after all this does come out of a account with cash in it.
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  • dongizmo
    http://www.usa.visa.com/download/business/accepting_visa/ops_risk_management/rules_for_visa_merchants.pdf
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  • joker5656
    i just called, the debit card dept is closed, but I'll post what i find out tomorrow.
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  • p3skyking
    No, according to the clearing houses, you can be terminated if you charge a customer for using his credit card.
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  • Clarentavious
    quote:Originally posted by xxx97
    are sellers allowed (by credit card terms) to add surcharge (3-5%) to the buyer for using credit cards?


    If they inform you about it BEFORE the transaction is completed (meaning they don't tell you after you've already been charged), they can do it as long as you knew ahead of time. Also, they should just tell you "We charge an extra fee for credit cards"

    Visa and Mastercard don't like businesses telling customers there is either a minimum purchase amount, or there will be credit card processing fee... something along those lines. That means less business for them. In many cases, it is against the terms of service in the contract of their merchant account. Their go between from them to the banks could drop them... in which cause they'd just find another.

    Using the term "surcharge" is usually against merchant services policy, but not against the law. But honestly, most people don't care about it that much... unless it's a really large purchase and you have like 5%

    If the idiots who use a credit card for a total 10 cent pepper mint from a gas station, realize the store owner is being charged both a swipe fee, and a percentile - he's not only dumb, he's being inconsiderate of the person he is doing business with... cuz not only ain't he makin' profit, he's losing money.
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  • muss
    I am a very small company using visa/MC and I only pay 1.7% on my transactions. So those guys charging 3-5% are making money on you.
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  • admin
    muss - there are different rates for different types of merchants. Higher volume merchants typically pay less than small volume merchants. Grocery stores pay a very low rate. Card not present (internet, mail order) pay the highest rate. Even if you have a card terminal if you manually enter the card number it is considered card not present and it bumps that transaction to a higher rate. Card not present starts at about 2% from MC/VISA and that is before the merchant bank marks it up.

    To the best of my knowledge MC/VISA do not prohibit cash discounts. 'Convenience fees' are allowed in some circumstances. The rules are rather complex and vary by card.

    It is not "illegal" to charge extra for credit cards. There are no state or federal laws governing this. Presented incorrectly it may (and I stress "may") be a violation of the agreement between the retailer and the card association. The card associations seldom if ever try to enforce the provision because their own rules are full of exceptions and, in a lawsuit, the provisions would probably be struck down on anti-trust grounds.
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  • muss
    Admin,

    The mark up is established by your bank, If you have a good relationship with them you can negotiate a lower rate. We started out at 3.5%, until I raised heck with them. If you are paying 3-5%, you might want to talk to the bank. Also the credit card machines vary in price greatly. I bought mine for $280, I have a buddy that RENTED one for almost $1500 for three years.

    Everything in life is negotiable...[:D]

    I mostly run non card present and only about 1-3 transactions per day. Sometime I go for a week without a transaction.

    So I am a very small potatoe.
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  • Clarentavious
    If you're paying more than 3%, you're paying too much... Even Paypal is only 2.9% for meager premier accounts.

    I know a guy who ran a small business, and he didn't even pay a swipe fee - just a percentile. Paypal charges a 30 cent transaction fee.

    There are a ton of merchant services out there... I've gotten offers from AAA and CoCard.

    Also, the type of card used may affect the price. Amex is always the highest... one reason it isn't so widely accepted (but also because of their chargeback policies). Then followed by Discover. Actually, now that I think about it, Diner's Club is accepted almost nowhere in america...

    Really, this "surcharge" practice is not all that uncommon. If you reported it to the merchant account, they may take action if they don't make much money off the retailer, and have had past trouble with them.
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