Credit Card Surcharging Checklist: Are You Compliant?

No-fee credit card processing is one of the most profitable business tools a merchant, contractor, legal firm, school, or government agency can deploy. It’s also one of the simplest and easiest, as long as certain steps are taken to ensure full legal and credit card industry compliance. As with most business processes, it helps to have a handy checklist. That enables merchants to understand the rules, why they matter, and how to follow them.

To Do Checklist

Before surcharging, merchants need to make sure they follow the rules stipulated by state regulators and by credit card brands like Visa and Mastercard.

  • One of the first steps is to inform those credit card companies of the intention to start surcharging. This is done by registering in writing, 30 days in advance.
  • Merchants that use no fee credit card processing must also inform their customers of the surcharge, by displaying appropriate and compliant signage within the business and at the point of sale.
  • Credit card companies typically cap the amount of the credit card surcharge at no greater than four percent of the transaction amount.
  • Merchants can only charge an amount equal to the swipe fee, and cannot tack on a profit. In other words, merchants who surcharge retain 100 percent of the sale – nothing more and nothing less.
  • The credit card fee and the price of the product or service sold must be processed together as one transaction. However, the surcharge amount must be clearly displayed on the customer’s receipt as a separate line item.
  • Surcharging only applies to credit cards. It is illegal to surcharge on debit card transactions. That rule holds true even if the customer using a debit card presses the “credit button” on the card terminal.

Different rules may also apply to government agencies and educational institutions. Even in the very few remaining states where surcharging is not permitted for ordinary businesses, government and educational organizations may still be eligible for no fee credit card processing.

The Don’t Checklist

  • Merchants are, generally speaking, not allowed to offer a “cash discount” program.
  • That means that they cannot display one price on the shelf for those who pay in cash, but then add an additional markup at the point of sale for credit card purchases.
  • Similarly, merchants cannot pass along the cost of the credit card swipe fee by merely calling it a “convenience fee” and adding that to the sales price.

Full Compliance Done Automatically

Following all the rules can be complicated, confusing, and labor intensive. Noncompliance can invite stiff fines or result in loss of a merchant’s credit card acceptance privileges. Fortunately, the entire process can be fully and transparently automated as a totally compliant turnkey solution.

  • Merchants can legally surcharge without noncompliance, by using a plug-in software solution like the one exclusively designed by CardX and offered by NTC Texas.
  • All rules and regulatory conditions are strictly adhered to, making surcharging a fast, user-friendly, 100 percent compliant process with no extra technical training needed.
  • Merchants are also provided with all the required signage, and registering with card companies like Visa and MasterCard to start surcharging is done for them, on their behalf.

That removes all the hassles and obstacles, so that no-fee credit card processing can be implemented right away, without worrying about the surcharging checklist of compliance rules and tasks.