Compliant Surcharge

By Onkore

A compliant surcharge program, also known as a surcharging program, refers to the practice of charging customers an additional fee for using credit cards as a method of payment. The term "compliant" indicates that the surcharge program adheres to legal and regulatory guidelines, as surcharging is subject to various laws and card network rules. Here's a detailed explanation of compliant surcharge programs with examples:

Overview of Compliant Surcharging:

1. Legal Considerations:

   • Surcharging is subject to regulations that vary by jurisdiction. In the United States, for example, merchants must adhere to rules outlined in the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation settlement and comply with card network rules.

2. Disclosure Requirements:

   • Merchants are generally required to clearly disclose the surcharge to customers both at the point of sale and on the receipt. The disclosure should include the percentage or fixed amount of the surcharge.

3. Card Network Rules:

   • Card networks (such as Visa and MasterCard) have specific rules regarding surcharging. Merchants need to follow these rules to ensure compliance.

Example of a Compliant Surcharging Program:

Let's say a merchant decides to implement a compliant surcharging program with a fixed percentage fee of 3% on credit card transactions.

1. Transaction Amount: $100.00

2. Surcharge Rate: 3%

Calculation:

• Surcharge Amount: 3% of $100.00 = $3

In this example, the customer would pay a total of $103.00 for a $100.00 transaction, with the additional $3 representing the surcharge.

Compliance Steps:

To ensure a compliant surcharging program, merchants typically take the following steps:

1. Check Local Regulations:

   • Understand the legal framework and regulations regarding surcharging in your jurisdiction.

2. Disclosure:

   • Clearly disclose the surcharge amount to customers at the point of sale and on receipts.

3. Uniform Application:

   • Apply the surcharge uniformly to all credit card transactions rather than singling out specific card brands.

4. Stay Informed:

   • Keep abreast of changes in regulations and card network rules to ensure ongoing compliance.

5. Cap the Surcharge:

   • Some jurisdictions and card networks may impose a cap on the surcharge percentage, so ensure compliance with any applicable limits.

It's crucial for merchants to carefully navigate the legal and regulatory landscape and to communicate the surcharge transparently to customers. Non-compliance can lead to penalties and legal issues. Additionally, some businesses choose not to implement surcharges to maintain positive customer relations, as surcharging may be perceived negatively by some consumers.