Credit card surcharging has evolved, and it's worth considering.
A surcharge is an additional charge a merchant places on top of a credit card purchase to help cover the merchant's credit card processing fees.
The benefits of surcharging are obvious: credit card processing fees can be a top expense for businesses, and surcharging allows them to offset these fees.
However, to do so properly requires compliance with rules that are sometimes contradictory.
The risks for non-compliance should not be ignored … but they can be overcome with the right expertise and technology.
State
Laws
Compliance
Requirements
Technology
Solutions
Verisave can help. We are merchant account experts and consultants.
We work with the processor you already have, as well as surcharging technology partners, to ensure your surcharging is done properly.
Is Surcharging Right for You?
The Risks:
A merchant who violates the credit card surcharging rules can potentially have its merchant account locked, and be prohibited from taking credit card payments going forward.
In addition to potential legal roadblocks, many consumers have a negative view of surcharging. But for some merchants in states that allow it, the benefit of recuperating merchant service fees through surcharging can outweigh the bad publicity.
Knowing the rules
Complex Requirements
In the U.S., businesses must follow specific rules when implementing credit card surcharges to avoid legal or regulatory issues.
State Laws Vary
Some states prohibit surcharges altogether, while others allow them under certain conditions with regulated amounts.
Disclosure Requirements
Customers must be clearly informed about the surcharge rate before transaction completion.
Card Network Rules
Major networks have specific guidelines that can include registering the surcharge with the card network.
Catch-22 Situation
Visa and Mastercard require surcharging be applied to all cards equally, but American Express requires surcharging all card transactions including debit…which is not permitted. Compliance with conflicting rules requires a much more sophisticated solution.
Properly implementing a surcharging program
In its current state, proper surcharging requires a technology solution. In order for your payments stack to navigate the various rules on-the-fly and apply surcharging properly, you will need to integrate with a system capable of doing so.
Some processors claim to have this technology built-in, but beware: many of them are inadequate, and apply blanket surcharges that can be non-compliant.
In most cases, a dedicated third-party solution is the best and safest option.
Customization
Choose the best surcharge amount for your business
Customer Exemptions
Exempt certain clients from being assessed a surcharge
Card Type Exemptions
Prevent certain card types from being assessed a surcharge
Automated Management
Ensure 100% compliance with surcharging rules
Risk Management
Many solutions place the risk on the technology provider for your protection
Verisave can help you identify the best solution.
Optimize your fees before you surcharge
Whether or not you decide that surcharging is a good fit for your business, it's always a good idea to optimize your merchant account to ensure the processing fees are being calculated correctly.
And if you DO chose to surcharge, your customers will benefit from these lower fees.
Strategy
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Strategy
We dissect and analyze every fee on your merchant account to find all viable savings tactics, re-classifications, and hidden discounts.
Monitoring
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Monitoring
We monitor the account every month to ensure your fees do not increase over time, and that any annual rate updates are minimized or avoided.
Is surcharging right for your business?
Let us help you identify the best solution. Verisave is a third-party firm specializing in merchant account setup, payments stack optimization, and credit card processing fees.
There are many ways to reduce processing fees, and surcharging is one option.
Surcharging is not a great fit for everyone.
Verisave can help you identify whether surcharging would be a good fit for your business, identify surcharging trends within your industry, and ensure you are surcharging properly on each and every transaction.
Get in Touch
Have questions about our services? We'd love to hear from you. Send us a message and we'll respond as soon as possible.
Surcharging
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