The subject of surcharging is one that has caused a great deal of confusion in our industry for quite some time. However, because the United States District Court for the Eastern District of New York preliminarily approved a proposed settlement agreement in the In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation in November 2012, we are starting to see some clarification from the card associations.
As a result of the settlement agreement, Visa and MasterCard recently changed their Operating Regulations, giving merchants in the U.S. the ability to surcharge credit card transactions beginning January 27, 2013. To help understand the new rules, see the following summary of the rule changes.
A surcharge, sometimes called a checkout fee, is an additional fee that a merchant adds to a consumer’s bill when he or she uses a card for payment.
Under the settlement, U.S. merchants have the option of adding a surcharge to credit card transactions. However, merchants must decide if they want to surcharge at the “brand level” or the “product level,” but not both. A brand level surcharge applies the same surcharge to all credit card transactions for a particular brand (Visa or MasterCard). A product level surcharge applies to a particular type of Visa or MasterCard credit card (e.g., Visa Signature, Visa Signature Preferred, World Elite MasterCard).
Yes, surcharging continues to be prohibited on debit and prepaid card transactions.
For U.S. merchants that accept credit or charge cards from other payment network brands, including American Express, Discover, and PayPal, surcharging practices are subject to a competitive “level playing field” limitation.
Yes, Visa and MasterCard require that merchants who decide to surcharge credit card transactions must satisfy the following notification and disclosure requirements.
Yes, MasterCard requires that acquirers register merchants with MasterCard so they can help monitor compliance.
A merchant can satisfy its disclosure obligation to MasterCard by clicking here and providing the information requested.
Merchants who choose to surcharge must notify Visa 30 days prior to beginning to surcharge; click here to notify Visa.
Merchants who choose to surcharge must notify Clearent 30 days prior to beginning to surcharge. Please email Clearent Customer Support and include your business name and merchant number.
The settlement agreement required Visa and MasterCard to provide a written notification to their merchants. The official notifications can be found at the links below:
Yes, 10 states have laws that limit or prohibit surcharging. These states include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Please consult your legal advisor to make sure you comply with applicable state and local laws.
Visa has created numerous resources on this topic, including Frequently Asked Questions and other documents that can help merchants decide if they should surcharge their customers. These resources can be found at www.visa.com/merchantsurcharging.
MasterCard also provides additional information on its website at www.mastercard.us/merchants/support/surcharge-rules.html.