Credit card surcharging is still illegal in the following states: Texas, Oklahoma, New York, Massachusetts, Maine, Kansas, Florida, Connecticut, Colorado and California. So if you conduct business in any of these states it is illegal to add a surcharge to credit card transactions per state law, which always supersedes regulation of a particular company (Visa).
The rest of the nation has limited authority to surcharge customers starting on Jan. 27th, 2013 based on the rules established by Visa Merchant Surcharging regulations. It is strongly recommended that you review these rules before instituting a surcharge for credit card use to ensure you are in compliance.
Here is a condensed description of what is going to happen:
- Your business must notify your credit card processing acquirer and Visa at least 30 days prior to establishing a surcharge.
- You may only apply a surcharge to credit card purchases. You are not allowed to surcharge debit cards or prepaid cards.
- You may only surcharge an amount equal to or less than the discount rate established by your processor.
- You must disclose the fact that you are surcharging credit card transactions as a fee. You must clearly disclose the surcharge amount at the point of sale, online and on the credit card receipt.
- You cannot surcharge American Express
- You cannot surcharge a debit or prepaid card in any circumstance
- You cannot surcharge more than you are being charged to accept the card
These rules have been made part of the Visa processing guidelines that govern your merchant account. So, breaking these rule constitutes a violation of your card processing agreement and will result in your account being closed and your business being placed on the TMF list.
While this new regulation may seem like a benefit to your business it is strongly recommended that you proceed with caution if you intend on implementing a surcharge. The preferred method of payment for most customers is a credit card. So charging the customer more for using their preferred method of payment may alienate your business and drive customers to the competition. A good approach may be to test it for a month and pull it back to gauge the response of your customers.