» Merchant Resources
» Merchant Memos

Card Usage Surcharges

The states that prohibit surcharging for credit cards include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.

Convenience Fees Rules
MasterCard Convenience Fee Program
Visa Convenience Fee Tax Form
Convenience Fee Best Practice Guidelines

As you know, it is against the rules for merchants to charge cardholders a surcharge for using their credit card. The penalties for being reported by a cardholder escalate from a slap on the hand on the first offense to a $5,000 fine on the third. However, there are two exceptions. Merchants may impose a Convenience Fee if this fee meets the following criteria: 1) It is a flat fee and not a percent of the sale, for example, a flat $5 regardless of the dollar value of the sale, 2) It must be charged equally on all forms of payment including other card products, checks, and even cash payments, 3) It is charged only for non-standard acceptance methods, for example, an Internet business cannot charge for accepting payment over the Internet and a restaurant can't charge for accepting cards at the POS (these are the standard acceptance procedures for these industries, and 4) It must be fully disclosed prior to the sale.

The second exception is the Visa Tax Payment program where a Service Fee is allowed given the following: 1) The merchant must be enrolled in the pilot, and 2) The transaction and the Service Fee must be two separate transactions, for example, the tax payment transaction of $5,000 and the Service Fee transaction of $125. If the merchant only accepts MasterCard and not Visa, then registration is possible for the MasterCard Convenience Fee program which is open to educational institutions and public sector merchant categories.

For more information, please call us at 800-397-2380.