Comments on: Surcharging customers using credit cards is illegal!

By: mark Franson

mark Franson — Wed, 19 May 2010 19:35:03 +0000

Is there also a prohibition against surcharging for business to business transactions?

By: jestep

jestep — Thu, 28 Jan 2010 23:59:30 +0000

Government entities are extremely hypocritical. They basically told Visa and MasterCard that they can surcharge, and then most state governments just passed a law to make it official. Right now the organizations that can charge are some government offices, utilities, and some other related services.

By: Greg

Greg — Thu, 28 Jan 2010 23:43:49 +0000

I have heard this in the past, but if what your saying is correct, how does the state of California get away with a convenience surcharge for paying property tax with a credit card?

By: What the bleep

What the bleep — Thu, 28 Jan 2010 13:10:56 +0000

My opinion is that the true cost to the merchant is likely the lost revenue from customers who shop their competitors where the nickel-deeming isn’t taking place.

By: John

John — Mon, 25 Jan 2010 18:02:22 +0000

Are there any states/markets outside of California in which surcharging pin debit trans has had success?

Do you know of any regional debit networks that do not allow pin debit surcharging?

By: Don

Don — Sat, 09 Jan 2010 16:20:12 +0000

Wrong… There’s a difference between being illegal and being against terms of service. One is law punnishable by fines or imprisonment. The other is a rule punnishable by the closing of your merchant account and the potential adding your business to MATCH. On the other hand, the card associations have little or no labor force dedicated to policing this practice or the practice of requiring a minimum purchase to use a card.

The truth is, processing a debit or credit card as a SIGNATURE transaction falls into the terms of service disallowing surchaging or minimum purchase requirements for most businesses (there are a few where this is allowed as a “convenience fee” but those are not retail businesses). PIN based debit networks DO allow surcharging with the excetion of Maestro (owned by Mastercard) but the practice is exclusive to PIN based debit transactions.

Generally, I’ve learned he fee to cover the “cost to the merchant” passed to the customer is higher than the merchant’s actual cost for the transaction which amounts to a hidden tax on the customer. Unethical, but not illegal. And my opionion is that the true cost to the merchant is likely the lost revenue from customers who shop their competitors where the nickel-diming isn’t taking place. Example: There are 2 Dairy Queen franchises near my home. One charges 50 cents, the other doesn’t. I spend about $10/mo on one trip/mo to Dairy Queen with the kids at the store that doesn’t surcharge. The cost of the other franchisee losing my business? $120/year. Avg customer lives in the market 5 years = $600 lost. Multiply by perhaps 5 customers per month lost to the competitor? Priceless.

By: earl

earl — Wed, 30 Dec 2009 11:23:52 +0000

is it legal to add a surcharge on debit card purchases