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Eliminating Credit Card Fees: Card Brand Rules for a Compliant Business

February 25, 2019

Multiple court rulings have paved the way for merchants across the United States to legally use surcharging to eliminate the burden of credit card fees. Experts believe that soon surcharging will be legal nationwide. But unless merchants adhere to the rules of card brands like Visa and MasterCard, they can still get into trouble. Legally enforceable agreements spell out strict policy guidelines. Failure to follow those can lead to serious repercussions due to a breach of contract. Fortunately, there are innovative software solutions that automatically manage this complication while letting merchants avoid hefty fees.

Visa’s Surcharge Policy

Visa recently issued a bulletin to clarify its policies. Merchants cannot tack on an additional product cost, for example, and then deduct that amount if payment is not made by credit card. That’s prohibited. Surcharging is also limited to credit card transactions and does not extend to other Visa  products such as debit or prepaid cards. In addition, Visa must be given at least 30 days prior notification before a merchant starts surcharging.  Regardless of whether the surcharge pertains to a face-to-face transaction or one processed online, the customer has to be alerted. The customer’s receipt must also disclose the surcharge.

Other Card Brand Rules

MasterCard and other credit card companies have similar brand rules regarding surcharges. Those include the stipulation that the merchant has to notify them 30 days beforehand. Notification typically includes the merchant’s name and address, the number of retail locations affected, and whether the merchant intends to surcharge when transacting for offline, online, mail order, or phone orders. Merchants cannot charge over and above the cost of its card brand processing fees, and there are mandatory caps on interchange fees outlined in the federal government’s Durbin Amendment.

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New Turnkey Solutions

Because surcharging compliance can be complicated, plug-in software solutions that ensure automatic point-of-sale compliance are being embraced by merchants. NTC Texas offers a secure, affordable, fully-compliant system that guarantees that the merchant still retains 100 percent of every sale, because any fees are legally passed along to the consumer. NTC Texas also provides merchants with legally-compliant signage for display. The signage transparently informs customers of all their payment alternatives, in user-friendly language. Those include options to pay in cash or by debit card, in order to avoid a surcharge.

Legal, Fair, and Easy

When merchants use this kind of compliant solution technology, a flexible surcharge percentage is passed along to the customer. Both the credit card fee and the cost of the goods or services are processed simultaneously, in a single transaction, and the surcharge is clearly itemized on the receipt. If someone chooses to pay by debit card, the software automatically detects that it is not a credit card, to prevent accidental noncompliant surcharging.

In this way, the system satisfies card brand rules, ensures that the customer is fully informed, and lets the merchant keep 100 percent of the sale proceeds. That serves the best interests of everyone involved, with fewer hassles and worries and enhanced customer service.