Surcharge Programs: A Quick Business Owner’s Guide

With the ability to eliminate all transaction fees for credit card acceptance, surcharge programs are rising in popularity. But there remain many misconceptions about these types of programs. Can any business roll out a surcharge program? Are there regulations and guidelines that must be met? Let’s break down some of the most important details. If you decide to implement a surcharge program for your business, avoid misinformation and trust a proven partner who can ensure you remain compliant with the card brands.

Card Brand Registration
To be fully compliant in running a surcharge program, merchants must register with Visa and Mastercard at least 30-days prior to implementing the program, or work with a qualified merchant services partner who will register your business for you. If you do not register, you can be subject to fines and even have your ability to accept credit cards revoked.

Debit Cards Must be Treated as Cash
The ability to surcharge only applies to credit card purchases, not debit cards or prepaid cards. With qualified surcharge programs, smart terminal technology will identify a credit card purchase from a debit card purchase and automatically assess the fee accordingly. This eliminates the need for the merchant to guess or make assumptions. On debit card purchases, the transaction fee is paid by the merchant.

Full Consumer Disclosure
Businesses who run a surcharge program must disclose to their customers this practice both in store and online with clear signage. The amount surcharged cannot exceed the cost of acceptance and the fee amount must also be clearly identified on the customer’s receipt.

Cash Discount Disguised as Surcharge
These two programs are not the same. Cash discount programs do not pass along transaction fees to the customer, but rather offer customers a discount for using cash. With true cash discount programs, think of cash / credit price signs at the gas station. For businesses with many products, this can be a daunting assignment. Many businesses attempt to implement their own DIY version of what they consider a cash discount program but in reality, these are non-compliant surcharge programs. If you are passing on a ‘non-cash adjustment’ or ‘service fee’ at checkout for non-cash-paying customers, this is a surcharge program and must comply with all the guidelines.

Here at OTM Payments, our team is filled with industry veterans, and compliance is at the heart of all our program offerings. Our team is diligently working with merchants to implement innovative and meaningful credit card acceptance solutions, like surcharging. We are ready to get you set up with the right program so you can start saving! For more information on how to get started, reach out to us at [email protected] or reach out to us at 732.230.7700.


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