5 Credit Card Surcharging Rules Every Business Should Know

Credit card surcharging is a practice that allows businesses to pass on a portion of the payment processing fee to customers who choose to pay with a credit card. While it can help businesses save money, there are strict rules and regulations around surcharging that must be followed to avoid legal issues and customer dissatisfaction. In this article, we will explore the five essential credit card surcharging rules every business should know and how Stellar Payment Systems can help you manage these rules with ease.

1. Know When You Can Apply a Surcharge

Not all transactions are eligible for credit card surcharging. The first rule is knowing when you can charge a surcharge and when you cannot. According to the major credit card networks like Visa, MasterCard, and American Express, businesses can only apply a surcharge to credit card transactions—not debit card transactions.

Rule: You can apply a surcharge only on credit card transactions, not debit card payments, prepaid cards, or any other form of payment.

2. Surcharge Limits Must Be Clearly Defined

There are limits on how much you can charge for a credit card surcharge. The credit card networks set these limits, and they vary depending on the card type. Typically, the surcharge can’t exceed 2% of the transaction amount, and businesses must comply with these limits.

Rule: The surcharge must be a percentage of the transaction amount and cannot exceed a set percentage. This is usually between 1.5% and 2% depending on the network and card type.

3. Disclosure Requirements Are Essential

Transparency is a key aspect of credit card surcharging. You are required to clearly inform your customers about the surcharge before the transaction is processed. This means that businesses must disclose the surcharge amount on the checkout page or at the point of sale before the customer finalizes their purchase. Failure to provide proper notice can result in chargeback claims and penalties.

Rule: You must clearly disclose the surcharge to customers before they proceed with the payment, and the amount should be clearly visible at the point of sale.

4. You Must Apply the Surcharge to All Credit Cards Equally

Another important rule for businesses is that the surcharge should be applied uniformly to all credit cards. For instance, if you apply a surcharge on Visa and MasterCard credit cards, you must apply it to all similar transactions regardless of the card issuer. Selectively applying surcharges to specific card types or issuers could violate the terms set by credit card networks.

Rule: Apply the same surcharge rate to all credit card transactions, regardless of the issuer (Visa, MasterCard, American Express, etc.).

5. Follow Local and State Laws Regarding Surcharging

While credit card networks have their rules, businesses also need to comply with local and state regulations that may impose additional requirements or even ban the practice of credit card surcharging. Some states, including California and New York, have specific laws that restrict or regulate surcharging. Therefore, it’s crucial to stay updated with the laws in your area to avoid non-compliance.

Rule: Be sure to check local and state regulations regarding surcharging to ensure compliance with all laws in your region.

How Stellar Payment Systems Can Help You Comply

Navigating the complexities of credit card surcharging rules can be challenging, but with the right payment processor, the process becomes much easier. Stellar Payment Systems offers tools and resources to ensure your business stays compliant with all surcharging rules.

• Clear Disclosures: We help you set up your point-of-sale systems to provide clear and automatic surcharge disclosures to customers at checkout.
• Surcharge Cap Management: Our systems help you set caps on surcharges to ensure you never exceed the allowable limit for different credit card types.
• Flexible Payment Options: Whether you accept online payments or in-store payments, Stellar Payment Systems makes surcharging simple and compliant.
• Custom Solutions: We tailor our payment processing solutions to suit your specific business needs, ensuring compliance with both credit card network regulations and local laws.

Conclusion: Ensure Compliance and Protect Your Business

Credit card surcharging can be an effective way to manage payment processing costs, but it’s important to understand and follow the rules to avoid costly mistakes. By complying with these five essential surcharging rules, businesses can minimize the risk of chargebacks, fines, and customer dissatisfaction.

With Stellar Payment Systems, you can ensure that your credit card surcharging process is transparent, fair, and compliant with all regulations, helping you optimize your payment processing and grow your business.

Visit our website to learn more about how we can help you streamline your payment processing while staying compliant: www.stellarpayments.com

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