Surcharge FAQs

What's Surcharging?

Q. What is a surcharge fee?

A. A surcharge fee is an additional fee added by a merchant to a transaction when a customer uses a credit card for payment.

If you have other questions about surcharge fees or surcharging in general, talk to one of our experts.

Q. What is the difference between a surcharge and convenience fee?

A. Convenience fees and surcharge fees are often used interchangeably, but they’re not the same thing.

A surcharge is a fee charged to customers simply because they’re using a credit card. The surcharge fee can be a fixed amount or a percentage of the transaction.  Surcharge fees cannot exceed 4%. Adding a surcharge fee to a sale is prohbitied in four states currently and applies only to transaction made using credit cards.  A merchant cannot add a surcharge fee to pre-paid, gift card, debit or other stored value cards.

Convenience fees are a fixed amount regardless of the size of the sale or transaction. Convenience Fees are only allowed on Card Not Present Transactions i.e. phone payments and online payments.

To discover whether a surcharge or convenience fee is right for your situation, talk to one of our experts today.

Q. How can a merchant learn more about whether surcharging is right for their organization?

A.  Surcharging can be complex. Keeping up with the latest changes can be tme consuming and remaining compliant difficult even for tech-savvy organizations. Organizaitons need a credit card processing company that has experience in fee-based payment options.  IntelliPay’s intelligent platform eliminates complexity and ensures ongoing compliance.  To learn more or get your questions answered, talk to one of our knowledgeable experts.

Surcharge Transactions

Q. What types of cards can I add a surcharge fee?

A. You can add a surcharge fee to all credit cards regardless of whether it is a consumer card, rewards card, business card, corporate card, or purchase card.  It is prohibited to add a surcharge fee to pre-paid and debit cards.

Q. Can I surcharge debit cards?

A. No. Surcharging debit, pre-paid or stored value card transactions are prohibited.

Q. Can a merchant assess a surcharge fee on debit card transactions when the cardholder using a debit card chooses “credit” on the point of sale terminal?

A. Under no circumstances is a merchant to surcharge a debit card. Many merchants believe that debit card transactions authorized by a signature are credit card transactions. This is not true. Debit cards can be authorized by a PIN or by a signature and are still debit card transactions and you cannot add a surcharge fee any debit transaction.

To learn more about surcharging, talk to one of our expert consultants.

Q. Can a merchant pick and choose the card types that are cahrged a surcharge fee?

A.  No. Merchants must add the same surcharge fee to all credit card transactions. The surcharge fee applies to any card type, whether the card is a consumer card, rewards card, business card, corporate card, or purchase card.  Merchants cannot add surcharge fees to pre-paid cards and debit cards.

If you have other questions about surcharge fees or surcharging in general, talk to one of our knowledgeable consultants.

Surcharge Law and Requirements

Q. Is it legal to add a surcharge fee to card payments?

A. The answer is yes to credit card payments, no to payments made with pre-paid cards or debit cards.  In March 2017, the U.S.  Supreme Court ruled in Expressions Hair Design v. Schneiderman, that state “no-surcharge” laws restrict constitutionally protected speech.  Today, surcharging is legal in all but four states: Colorado, Connecticut, Kanasas, Massachusetts.

Q. What states ban surcharging?

A. Currently, these four states; Colorado, Connecticut, Kansas, and Massachusetts prohibit surcharging.  However, rules and regulations regarding surcharging change frequently.  An expereinced card processing company like IntelliPay can provide merchants seeking to add a merchant surcahrge theguide they need.  Merchants considering adding a merchant surcharge should consult with legal counsel about the laws regarding adding surcharge fees for their state.

Q. What are the rules for “brand level” surcharges?

A: Here are the general requirements

  • The surcharge fee must be the same for all credit card transactions of that brand, regardless of issuer.
  • The surcharge fee can be no greater than the merchant’s average discount rate for that brand’s credit card transactions.
  • The surcharge fee cannot exceed 4%.

Q. What are the rules for “product level” surcharges?

A:  Here are general requirements:

  • The surcharge fee must be the same for all transactions of that particular credit card, regardless of who issued the card.
  • The surcharge fee can not be greater than the merchant’s average discount rate for credit card transactions minus the debit interchange rate.
  • The surcharge fee charged can not exceed 4%.

Surcharging Requirments

Q. What are the requirements for adding a surcharge fee?

A. Surcharging can be complex and staying compliant can be challenging for even the most technology savvy organizations.  Intellipay handles the complexity and ensures that your organization is always in compliance.  To learn more, please reach out to one of our consultants.

Q.What do I need to do before I can start surcharging ccredit card transactions?

A.  Calculate your effective rate, notify your bank and card brands at least 30 days befroe you start surcharing, update equipment,  etc.. IntelliPay’s experts and  intelligent platform take the hassle out surcharging  by handling the myriad of requirements behind the scenes.  We also ensure you are always in compliance with the latest rule changes and regulations.  Talk to us to learn how to get started with surcharging today.

Q. Will a merchant’s current equipment and terminals need to change?

A. Yes. Our support team is ready to help you successfully transition to new equipment.

Q. Will a merchant need to make changes to the accounting process or software for surcharging?

A. Maybe. Merchants will need to talk to their accounting team, software provider and credit card processing company about how to account for surcharge fees.

Q. Does a merchant have to provide their customers notice before they start surcharging?

A. Yes. Merchants will be required to place signs at the point of entry and point of service. IntelliPay will provide 1 point of entry and 1 point of service sign at no cost.  We will also provide the verbiage for your e-commerce site.

Q.  What are the rules for surcharging when the customer is present?

A.  For all retail face-to-face transacitons, the merchant must disclose the surcharge fee at the point of sale meaning before the customer is charged, as well as on the receipt.

Q.  What are the rules for charging a surcharge fee in online or ecommerce transactions?

A.   Merchants must disclose that there will be surcharge fee and the amount of the fee  on their website before checkout.  The surcharge fee must appear as a separate item on the receipt.

Q.  What are the rules for charging a surcharge fee on MOTO transactions?

A.   Merchants have to disclose their surcharge fee over the phone before the customer is charged. The surcharge fee must show up as a separate item on the receipt that is either emailed or mailed to the customer.