Merchants can now add a surcharge fee in Kansas! A federal judge ruled on February 25, 2021, that surcharging cannot be banned in Kansas. Now there are forty-seven states where a surcharge fee can be applied. Which leaves just three states – Colorado, Massachusetts, and Connecticut with prohibitions against surcharging.
The Kansas law, which had been in place since 1986, was challenged in a May 29, 2020 lawsuit. The lawsuit alleged that the Kansas law prohibiting surcharging violated Merchant’s commercial freedom of speech.
According to Digital Transactions, a payment industry publication – With surcharges, merchants typically tack on at the point of sale interchange and other fees associated with credit card transactions. “If allowed to pass on the cost of credit card acceptance, such businesses can offer their goods and services to the significant portion of the consumer base that prefers or needs to pay with credit. In these industries and across the economy, credit card surcharges expand consumer choice,” Judge John W. Broomes wrote in the order filed in the U.S. District Court for the District of Kansas.
Online Payments and Rising Interchange Rates
Driven by the pandemic, payments for goods and services continued to move online at an accelerated pace. However, merchant fees for online (card-not-present) sales are higher than if in-person sales.
Adding a surcharge to a customers’ credit card transaction provides relief for merchants already struggling from COVID-19 restrictions, reduced sales, and lower profitability. Further, The April 2021 increases in interchange fees for online credit card transactions only increase pressure on already strained margins.
Not a DIY Project
VISA, Mastercard, and states have rules and regulations about how a surcharge fee can be added to a customer bill. Surcharging rules and regulations are continually changing. So, if you have multiple locations or do business across state lines, compliance may be cumbersome.
That is why we recommend using a payment processor who has experience in surcharging.
IntelliPay- Surcharge Fee Experts
IntelliPay has offered fee-based payment options to private and public sector merchants for over 16 years. We understand the requirements, and our technology handles all the details behind the scenes automatically so that merchants are always in compliance.
In addition to fee-based solutions, our turnkey payment suite makes it easy to accept credit and debit cards, ACH/eChecks from any device anywhere. We also support Paysafe ecash payments for those who are either un or underbanked.