Card surcharges: Is this finally the end? (2024)

FAQs

What is the new law for credit card fees? ›

Under the new regulations, credit card issuers, including Bank of America, Capital One, Citibank and JPMorgan Chase, cannot charge more than $8 for a late payment unless they can explicitly point to data showing they must impose higher fees to make up for losses.

Do Not Surcharge More Than the Cost of Your Processing Fee. This rule stipulates that you cannot use surcharging as a means to make a profit. In general, a surcharge cannot exceed 3% in the U.S.

A new law took effect in New York this past weekend, requiring businesses to inform customers about credit card surcharges that will cost them more money at the register. Starting Sunday, businesses must post the total cost of goods or services with a credit card, including surcharges, before customers checkout.

They are a result of non-qualified transactions of different communications methods.: Connecticut, Massachusetts, and Puerto Rico. Everywhere else, you can choose to add a surcharge fee, but you'll need to closely follow state laws and the rules set forth by card brands.

Businesses cannot impose any surcharge for using the following methods of payment: consumer credit cards, debit cards or charge cards.

The answer is: yes, if your business operates in states where it is legal to do so. As of the time of publishing this, the practice of imposing additional fees on credit card transactions (i.e., credit card surcharges) is prohibited in only three U.S. locations: Connecticut, Massachusetts, and Puerto Rico.

Credit card surcharging

This practice is legal in all but four states — Connecticut, Maine, Massachusetts and Oklahoma — additionally, Colorado caps the surcharge fee at 2%. It is also important to note that surcharging is not allowed for debit cards, even when they are run as a credit transaction.

But passing on credit card fees to customers is legal in the majority of the U.S. Whether or not a merchant can charge them boils down to local laws and the parameters provided by payment processing networks. Being familiar with the restrictions in your area is important to ensure you aren't overcharged.

The easiest way to avoid any card surcharges is to pay for everything using cash. If you're not a fan of carrying around cash, you can choose to only buy from businesses that don't charge you to pay by card.

Consumer Financial Protection Bureau Releases Final Rule on Credit Card Late Fees, with Overdraft Fees on Deck. On March 5, 2024, the Consumer Financial Protection Bureau (Bureau) announced the final rule governing late fees for consumer credit card payments, likely cutting the average fee from $32 to just $8.

Why do credit card surcharges exist? ›

Every customer credit or debit card transaction costs your business money, as each purchase made by your customers via an EFTPOS terminal incur different fees from your bank/payment processors. To help cover these costs, many businesses opt to pass these expenses onto their customers with a credit card surcharge.

What laws exist that may relate to surcharging? Currently, 10 U.S. states have surcharging restrictions including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Please consult with legal counsel to determine whether your practices comply with relevant state law.

Because debit card surcharging is illegal for the most part, you may be wondering, “How can I offset costs in another way?” There are a couple of tried and tested ways for merchants to offset the cost of transaction processing fees outside of implementing surcharging.

A surcharge is not a convenience fee. A convenience fee is levied by a merchant for offering customers the privilege of paying with an alternative non-standard payment method. Merchants can process convenience fees in all 50 states. A surcharge is levied by a merchant for customer purchases made with a credit card.

Businesses should clearly and conspicuously notify customers of any credit card surcharges both at the point of entry and at the point of sale. This means having signs or notices in visible locations that inform customers about the surcharge.

Among several changes, the new RBI rules stipulate that at least once, the cardholder will be provided option to choose any date as the starting or closing date of the billing cycle. Instructions relating to credit cards will apply to all credit card issuing banks and non-banking financial companies (NFBCs).

The CCCA is a pro-competition bill that finally addresses the failings of the U.S. credit card industry. The Visa and Mastercard duopoly have created a system that allows them to set swipe fee rates and lock out competitors through exclusivity contracts with large banks.

It's illegal for a merchant to impose a minimum purchase amount for debit card purchases. It also states that if the merchant chooses to impose a $10 minimum purchase requirement for credit card purchases, then it must do it for all credit card companies.