Many merchants surcharge customers paying with card- or require a minimum purchase amount- to make up for processing fees. If you’re wondering whether this is legal, the answer is yes, in some states.
Merchants won the right to surcharge- or add “checkout” fees- after a class action lawsuit against card issuers and banks in 2013. But most merchants were (and continue to be) slow to adopt credit card surcharges. Three potential explanations are:
While it’s legal under federal law to add a surcharge to credit card transactions, some states prohibit the practice. Ten states already had laws on the books before 2013. Now that merchants can officially use surcharges, other states are considering outlawing the practice as well. These states include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.
Surcharges and minimum purchase requirements are only for credit card purchases, not debit card transactions. That’s still the case if you sign for a debit card transaction instead of using your PIN (and it’s processed as a “credit” transaction).
It is also possible to only surcharge certain cards and not others. For example, if you chose to only surcharge on Visa, you must surcharge Visa on the same terms and conditions as any equal or higher cost competitor that imposes limits on surcharging.
While surcharging- if legal in your state- is an option, it is a last resort; customers are dissuaded from purchasing your product if they’re charged extra for using a card. It would be beneficial for you to exhaust all options in terms of analyzing your credit card processing statements to see where you can lower fees. Luckily, SwipeSum is a team of expert payment consultants that created an AI-powered software called Staitment, which instantly analyzes processing statements and recognizes where you could save money.