Common Questions About Surcharging
1. Is it legal to surcharge credit cards?
In most cases, yes, it’s legal to surcharge credit cards. However, there are federal restrictions and state-specific laws to consider.
2. Are there any states where credit card surcharging is illegal?
Yes. As of July 1, 2024, credit card surcharging is illegal in Connecticut, Maine, Massachusetts, and California.
3. Are there any states with restrictions on credit card surcharges?
Yes, many states have specific regulations regarding credit card surcharges. Some common restrictions include:
- Disclosure requirements: Merchants must disclose the surcharge amount before the sale.
- Surcharge limits: Some states limit the surcharge amount to the merchant’s cost of processing the credit card transaction.
- Cash discounts: Some states allow “cash discounts” instead of surcharges.
4. How can I determine the specific laws in my state?
It’s recommended to consult with an attorney or directly with your state’s consumer protection agency to get accurate and up-to-date information.
5. Can I Charge Different Surcharges for Different Credit Cards?
No, surcharging must be applied evenly across all credit card brands. This ensures compliance with most card network rules and keeps the process transparent for customers.
6. Can I Apply Surcharges to Other Fees, Like Delivery or Taxes?
No, surcharges should only cover credit card processing fees. Extra fees like delivery charges or taxes cannot be surcharged. Additionally, debit card surcharging is illegal in all 50 states.
7. Do I Need to Refund the Surcharge If I Process a Refund?
Yes, if you issue a refund, the surcharge must also be returned to the customer along with the original transaction amount.
8. Is There a Limit to the Surcharge Amount?
Yes, most states cap surcharges at 3% of the transaction amount, which means your surcharge cannot exceed this percentage. Keeping within this limit helps ensure compliance.
9. Can Surcharges Be Applied to Recurring Charges?
Yes, surcharges can be added to recurring payments, as long as you disclose the surcharge amount to the customer during the initial transaction.
10. Can I Label Surcharges as “Convenience Fees”?
No, surcharges and convenience fees are different. Surcharges must be explicitly marked as fees to cover credit card processing costs.
