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Small Business Owners (SBOs) must remain vigilant when dealing with credit card rules and regulations.
This can get overwhelming when having to deal with the multitude of other details when operating a business.
Payment Processing Agents should be a channel and a resource of available information to help keep the Small Business Owner compliant and to assist them with staying ahead of the credit card processing rules, but sadly, this is not always the case.
A Surcharge is when a Merchant, at check out, ADDS A FEE to a credit card transaction, and then, immediately removes the fee, if the Customer then decides to pay with a debt card or cash.
There have been instances where Merchants, and even a few Payment Processing Agents, have referred to the above described ‘practice’ as Cash Discounting’ or ‘Dual Pricing’, which is incorrect.
VISA Issued a Bulletin Stating:
“Models that encourage merchants to add a fee on top of the normal price of the items being purchased then give an immediate discount of that fee at the register if the customer pays with cash or debit card are NOT compliant with the Visa Rules…”
VISA went on to say that Merchants who choose to post SHELF PRICING and MENU PRICING that reflect ‘one price’ if the Customer chooses to pay with a ‘credit card’ and ‘another price’ if the Customer chooses to pay with ‘cash’, side-by-side, would be acceptable, and would be compliant with Cash Discounting and Dual Pricing.
However, posting a CASH PRICE and then ADDING A FEE or a ‘SERVICE FEE’ when a Customer pays with a credit card, but then removes the ‘SERVICE FEE’ for a Customer paying with cash, is not compliant to the Cash Discount or Dual Price Rule.
Gas station signage is well known for using Cash Discounting and Dual Pricing Models as they clearly display the ‘cash price’ per gallon of gas versus the ‘credit card price’ per gallon of gas, giving the Customer the choice to pay with cash or credit card BEFORE pumping the gas.
Take Note:
- As of this writing, Surcharging is prohibited in Colorado, Connecticut, Kansas, Maine, Massachusetts, and Oklahoma. NON Compliance in these states may land the SBO in BIG TROUBLE
- Debit Cards are prohibited from Surcharging. Merchants caught doing this run the risk of being fined
- Running a Surcharge Program disguised as a Discount or Dual Price Program could cost the Merchant to lose the ability to accept credit cards as a form of payment
It may ‘feel good’ to be a rebel and go against the grain, but if you lose the ability to accept credit cards as a form of payment for your business because of it, you will ‘feel the pain’ of lost revenue… for sure.
Stay Compliant.
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