Seven Common Credit Card Surcharge Mistakes

April 30, 2019

Often referred to by merchants as a checkout fee, a surcharge is a minimal fee meant to offset the merchant costs associated with credit card transactions.  Processing rates usually cost business owners between 1.75% and 3.5% on each transaction. Surcharging allows the business to accept credit cards at 0% cost, making it 100% revenue neutral.

Common Mistake #1: Adding a surcharge to a debit card

Card brand rules and regulations allow for a surcharge on credit cards only. You cannot add a surcharge to any debit transaction.   Our solution automatically detects when a debit card is entered and applies no fee.

Common Mistake #2: Not registering with the credit card company

If you plan to exercise your right to add a surcharge, you must register with the credit card company first by sending a written notice to them. CLARUS completes each registration on your behalf.

Common Mistake #3: Not including the surcharge on the customer receipt

Card brand rules and regulations state that the receipt must show the amount of the credit card fee as a separate line item.  The credit card fee and the price of the product or service must also be processed together as one transaction.  The CLARUS Merchant Service solution produces a receipt that itemizes the credit card fee and processes the fee and purchase amount as one transaction.

Common Mistake #4: Charging too high of a fee

The amount of the credit card fee must not exceed 4%, and the business must not profit from the credit card fee. Our solution passes on a 3.5% credit card fee.  You receive 100% of your sale – no more or less.

Common Mistake #5: No signage

You must inform your customers about the fee by placing appropriate signage at both the store entry and point of sale. For online businesses, you should display the policy on the website as well as the order form.  CLARUS Merchant Services provides you with all necessary signage, keeping customers informed—and keeping you compliant.

Common Mistake #6: Cash Discount.  Are they Compliant?

In general, no, because they list the cash price and add a fee at the point of sale.  Most “cash discount” programs are non-compliant, because they list the cash price on the shelf and then mark it up at the point of sale.  When you add a fee to the listed price, you must comply with the card brand rules, and must not apply the fee to a debit card.  A compliant cash discount would show the “credit card price” alongside the “cash price” with equal prominence whenever the prices are posted or quoted.  Almost all “cash discount” programs fail to meet these requirements, risking fines from the card brands and state attorney general.

Common Mistake #7: Raising prices instead of surcharging

Some retailers might think it easier to simply raise prices to cover the cost of credit card transactions. Nevertheless, this can be unfair to your customers who do not use credit cards.  On the contrary with the surcharge, the cost is passed on only to customers who use the convenience of credit cards.

CLARUS Merchant Services provides business owners credit card processing rates at Zero Cost, stay Fully Compliant, with technology that handles all the calculations and thinking, creating a customer friendly transaction.  Simply, we allow business customers to pay the fee if they choose a credit card for convenience or rewards, or to use a low-cost debit card with no additional fee.

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