As merchant costs continue to increase, the popularity of using surcharging to recover credit card fees has grown enormously. This has not gone unnoticed by the card networks, who have rules in place to ensure that customers being surcharged have a positive experience with their credit cards.
As a result, the card networks have increased enforcement of these rules. Merchants who are not compliant can see fines starting at $25,000 per infraction, and the number of fines issued is going up daily. This makes compliance with the rules a critical part of any surcharging program.
But what rules are most aggressively enforced? Visa and Mastercard have stated that they’re most concerned with the following:
- Your rate is too high: Each card brand has a maximum percentage that can be surcharged on a transaction. Going above this maximum percentage is an immediate red flag.
- You’re surcharging the wrong card types: Surcharging isn’t allowed on every kind of card type or transaction. Knowing which cards are not allowed is critical.
- Inadequate disclosures to cardholders before the payment: There are specific rules regarding how customers must be notified about surcharges so they aren’t surprised during the transaction.
- No surcharge amount listed on the payment confirmation: The surcharge amount must appear on every transaction receipt, and there are specific rules regarding how it should be formatted.
- Allowing someone other than the merchant to assess the surcharge: Only the merchant conducting the transaction can assess the surcharge, not a third party. The specifics of how a surcharge program is implemented is critical for compliance here.
- Improper refund of a surcharge: If a customer needs to be refunded, the surcharge also needs to be refunded.
- Imposing another processing-related fee in addition to a surcharge: Adding convenience fees, service fees, currency conversion fees, commissions, or other fees on top of a credit card surcharge is strictly forbidden.
- Failure to include a surcharge in a currency conversion: This doesn’t happen often, but surcharges must occur before currencies are converted in a transaction, not after.
These are just a few of the stated regulations from just two of the major card networks. Each network has their own rules, which can conflict with each other but are nevertheless enforced with high, frequent fines.
The best solution to ensure compliance is to partner with a Managed Surcharge Provider like InterPayments to handle every aspect of your surcharge program. This includes not just compliance, but business integration, customer customization, and more.