These fees are typically a percentage of the sale plus a fixed dollar amount. Fees vary with the credit card provider. For instance, American Express has different rates than Discover. Important to note: surcharges cannot be charged to make a profit and may not exceed 4 percent of the transaction total.
As of September 2024, most states allow merchants to add a surcharge when customers pay with a credit card. This means businesses can pass along the cost of processing credit card transactions directly to the customer.
Credit card surcharges can't exceed the cost of accepting the card or 4 percent, whichever is the lower amount, even if it costs the business more than that amount to process your credit card payment.
Nationwide, the surcharge rate for credit card transactions cannot exceed 4% of the total transaction (3% for Visa cards). Businesses must inform customers about the surcharge both online and in-store before payment. The surcharge must only cover processing costs and cannot be a profit-making tool.
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.
Use cash where you can
The easiest way to avoid card surcharges is to pay by cash. While businesses can charge a surcharge for paying by debit or credit cards, they can't charge a surcharge for paying by cash.
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.
Credit card surcharges are optional fees that merchants charge customers who use a credit card to pay at checkout. Surcharges are legal unless restricted by state law and are limited to 4% of the total transaction.
As per the law w.e.f. 1st April 2023, the highest surcharge rate of 37% will be reduced to 25% as per the new tax regime.
There are a few ways of legally passing on credit card fees to customers. Some are direct, and some are indirect. Adding a surcharge to cover the credit card fee is the more direct method while incentivizing cash payments is indirect.
What are TLVs? TLVs are the maximum average airborne concentration of a hazardous material to which healthy adult workers can be exposed during an 8-hour workday and 40-hour workweek—over a working lifetime—without experiencing significant adverse health effects.
Whether accepting payments online or in person, banners, posters, and other appropriate types of signage should inform customers that an extra fee, such as a surcharge, will be added (as a separate line item) to the final dollar amount of their credit card purchases.
In simplest terms, a credit card limit — also known as a credit line — is the maximum amount that a person can spend on their card, set by the credit card issuer.
Use a different payment method.
Merchants often charge convenience fees or surcharges when credit cards aren't a standard payment method. If you have a rent, utility or tax bill, consider paying by check or electronic transfer instead.
As of the time of writing, surcharging is legal in all but four states (Connecticut, Maine, Massachusetts, and New York*) and Puerto Rico. Note: Surcharges are governed by state law and card brand rules (like those published by Visa and Mastercard), each of which are subject to change.
If most of your customers pay with a credit card, a surcharge effectively increases your prices, putting your business at a competitive disadvantage. For businesses that compete in a price-sensitive market, surcharging can hurt your bottom line because customers may decide to buy from your competition.
Convenience fees can be a fixed dollar amount or a percentage of the transaction amount, usually 2% to 3%, and must be disclosed to the consumer in advance. Types of payments where the payee typically charges a convenience fee include mortgage payments, property tax payments, college tuition, and taxes.
Cardholders are required to be notified in advance if a merchant will impose a surcharge. Merchants must also include the surcharge fee on all receipts. Surcharges are allowable up to 4%. The limits vary by brand and by merchant discount rate.
Tap-to-pay is less vulnerable to credit card skimming and other types of fraud since the card itself never touches the payment terminal for a transaction. “Skimming” involves using a hidden device to read and translate credit card data when a credit card is swiped to make a purchase.
To avoid a credit card surcharge, you can pay with alternative methods such as cash, debit cards, or mobile payment apps. Some businesses also offer discounts for non-credit card payments, providing an incentive to choose other payment options that help avoid credit card surcharge.
The golden rule of Credit Cards is simple: pay your full balance on time, every time. This Credit Card payment rule helps you avoid interest charges, late fees, and potential damage to your credit score.
7-year credit rule and your credit score
Under the Fair Credit Reporting Act, in most cases, debts can only appear on your credit report for seven years. After that period is up, the debt can no longer be reported. Also, if you've had a delinquent account on your credit report, creditors can hold the debt against you.
Credit card surcharging enables a business to charge an additional fee (up to a maximum of 3% of the total transaction for Visa and up to 4% for Mastercard) when a customer pays with a credit card. This is meant to cover the cost of the processing fees for the business.