VISA recently notified its merchants that it has lowered the maximum surcharge they will allow on their transactions from 4 to 3 percent. This change is an amendment to their merchant agreement so it’s binding on all who accept VISA cards for payment. Failure to comply could result in fines up to $25,000 per month. Continued non-compliance could lead to a $100,000 per month fine and could lead to account termination.
Of course surcharges on credit cards are generally illegal in New York. According to the NYS Division of Consumer Protection, credit card surcharges are prohibited in New York State. Businesses are not allowed to advertise a price and add a surcharge at the point of sale when a consumer elects to pay with a credit card. Instead, businesses are required to inform consumers of the higher credit card price for a product or service by posting the higher price. Businesses are also able to offer a discount to consumers who pay in cash. Here are the key points to remember:
- You can’t merely surcharge your customers as a percentage of the bill
- The higher credit card price must be listed in dollars and cents on the menu – the customers must know the total price without having to do the math themselves
- Businesses may offer customers a discount for paying cash – your menu prices would reflect the higher credit card prices – you can offer a percentage discount for cash customers
The rules are different for debit cards. A surcharge or higher fee for the use of a debit card is permitted but must be accompanied by clear disclosure at the advertised street signage or prominent placement in the retail location.