Compliant Dual-Pricing Solutions
What are Cash Discount or Surcharging Programs all About?
You’ve heard them marketed under many different names: No-Fee Processing, Zero-Fees, Swipe4Free…and the list goes on. But are these programs actually compliant with the Card Association Rules? And is it a good idea to implement such a program in the first place?
Unfortunately, many merchants who have implemented one of these programs, are not in full compliance with the “Rules”. In addition to exposing your company to substantial fines ($5K and up) from the Card Associations, you might be losing some of your loyal patrons to your competition!
Merchants – Please Be Aware!
Visa® has implemented a process of conducting on-site audits of businesses through the use of secret shoppers. This is to determine if a merchant is in violation of the Visa Core Rules and Visa Product Rules (collectively, “Visa Rules”). The audits are intended to determine, if merchants are (1) assessing a surcharge on debit card transactions and/or prepaid card transactions, or (2) imposing a Minimum Transaction Amount as a condition for honoring a Visa debit card or prepaid card, among other types of violations. These actions as described above are not allowed under the Visa Rules and were the subject of previous Visa audits. If a secret shopper has already visited a merchant’s location, audits will continue to ensure ongoing compliance.
Visa® – Credit Card Surcharge Disclosure Requirements –
Effective through October 2022 – In the US Region or a US Territory: A Merchant must, at both the point of entry into the Merchant Outlet and the Point-of-Transaction, clearly and prominently disclose any Credit Card Surcharge that will be assessed. The disclosure at the Point-of-Transaction must include all of the following:
- The exact amount or percentage of the Credit Card Surcharge
- A statement that the Credit Card Surcharge is being assessed by the Merchant and is only applicable to credit Transactions
- A statement that the Credit Card Surcharge amount is not greater than the applicable Merchant Discount Rate for Visa Credit Card Transactions at the Merchant
Merchants with Acceptance Devices that offer Cardholder choice for debit Transactions in the form of “credit” and “debit” buttons must ensure that:
- Debit Card Transactions are not assessed a Credit Card Surcharge
- It is made clear to the Cardholder that surcharges are not permitted on debit Transactions regardless of whether a Cardholder selects the “credit” or “debit” button
For an Electronic Commerce Transaction, a Mail/Phone Order Transaction, and an Unattended Transaction, the Cardholder must be provided the opportunity to cancel the Transaction subsequent to the Credit Card Surcharge disclosure.
Payment Card Surcharging – Q and A
A payment card surcharge, also known as 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.
Merchants in the U.S. and U.S. territories may add a surcharge to credit card transactions, subject to certain limitations. Merchants who choose to surcharge must follow consumer disclosure and other requirements..
Before choosing to surcharge, U.S. merchants may want to consider a number offactors, including:
o The potential impact on your customers’ experience
o What your competitors might be doing
o What information must be disclosed to your customers, and how
o Cost of credit cards and other forms of payment
U.S. merchants that intend to surcharge are required to:
o Notify Visa and your acquirer at least 30 days in advance of beginning to surcharge. A notification form to Visa can be submitted at www.visa.com/merchantsurcharging.
o Limit surcharging to credit cards only (debit cards and prepaid cards cannot be surcharged) and limit the amount to your merchant discount rate for the applicable credit card surcharge*.
o Disclose the surcharge as a merchant fee and, for both in-store and online transactions, clearly alert consumers to the practice at the point of entry, the point of sale or transaction, and on every receipt. Merchants should also consider whether they comply with all applicable state and/or federal laws. Currently, several states have laws that prohibit or limit surcharging, including Colorado (prohibition effective through 30 June 2022), Connecticut, Maine, Massachusetts, and Oklahoma.
o More information can be found at www.visa.com/merchantsurcharging.
No. The ability to surcharge only applies to credit card purchases, and only under certain conditions. U.S. merchants cannot surcharge debit card or prepaid card purchases.
No. The ability to surcharge only applies to purchases made with a credit card, and only under certain conditions.
Yes. U.S. merchants may assess a surcharge on credit card purchases that does not exceed the merchant discount rate for the applicable credit card surcharged*. More information can be found at www.visa.com/merchantsurcharging.
• As of April 15, 2023, Visa has capped the surcharge amount to 3.0% (reduced from 4.0%). The other Card Brands are expected to follow suit, soon.
*In cases when the merchant’s cost of acceptance exceeds 3% of the underlying transaction amount, the merchant cannot assess a surcharge above 3%.
Yes, however merchants typically must surcharge Visa on the same terms and conditions as any equal or higher cost competitor that imposes limits on surcharging.
Yes. U.S. merchants that surcharge must disclose the surcharge dollar amount on every receipt. In addition, disclosures indicating that a merchant outlet assesses a surcharge on credit card purchases must be posted at the point of entry and point of sale/transaction. Disclosure requirements and sample compliant signage can be found at www.visa.com/merchantsurcharging.
Currently, several states have laws that prohibit or limit surcharging, including, Colorado (prohibition effective through 30 June 2022), Connecticut, Maine, Massachusetts, and Oklahoma.
No. If a merchant is legally prohibited from surcharging in one state, Visa’s rules do not prevent the merchant from surcharging in other states that allow the practice.
U.S. merchants have the option to add a surcharge at the “brand level” to all Visa credit card transactions, or to particular types of Visa credit card transactions at the “product level” (e.g. Visa Traditional, Visa Traditional Rewards, Visa Signature) but not both.
No. The rules discussed in this Q&A related to the surcharging of credit cards apply to purchases made in the U.S. and U.S. territories only. Surcharging remains prohibited outside the U.S., with certain limited exceptions. For further information, please visit:
https://usa.visa.com/dam/VCOM/download/about-visa/visa-rules-public.pdf.
• Merchants can access this and other information by visiting www.visa.com/merchantsurcharging.
• For further information, please visit: https://usa.visa.com/dam/VCOM/download/about-visa/ visa-rules-public.pdf.
• In no event can a merchant assess a surcharge above 4%, even in cases where the applicable merchant discount rate exceeds 4% of the underlying transaction amount. Information provided here is subject to Visa’s operating regulations relating to surcharging.