Credit Card Surcharges

Summary: Discusses surcharges in regards to CentimePay credit card transactions.

Article Contains:

• What is a Surcharge?
• Surcharge management 
• Card Network Surcharge Rules
• Surcharging and card types
• Surcharge rules in US States
• Maximum Surcharge Amount
• Disclosures to charge surcharge
• Requirements to charge a surcharge

What is a Surcharge?

A surcharge is an optional fee that some card-accepting merchants charge customers when paying by credit card. 

Surcharge management 

Surcharge management can be complicated: following rules set forth by card networks, managing the process, and properly accounting for surcharges are all tedious tasks. Centime has built surcharge management into your accounts receivable process. To learn more about how, view this article. 

Card Network Surcharge Rules

Card networks (Visa, Mastercard, American Express) have some rules for rules surcharges which can be arcane. Here’s what you should know.

1. The states of Connecticut, Maine, Massachusetts, and Oklahoma have prohibited or limited the passing of surcharge fees to your customers. As of July 2023, Colorado allows a maximum of 2%. 

2. You must notify card networks (30 days in advance before implementing a surcharge. Centime’s customer success team will guide you through this process. 

3. You cannot pass surcharges fees when accepting payments by debit card 

4. You cannot select a surcharge that is more than your cost of acceptance. While card networks have different maximum surcharge amounts, Centime limits surcharge fees to 3%, to make it simpler to administer. 

5. You must itemize the final surcharge amount on the receipt and during the payment process. (Centime takes care of this within the platform and with an email confirmation/receipt)

Surcharging and card types

The following types of cards can be surcharged:

• Credit cards
• Charge cards

The following types of cards cannot be surcharged:

• Debit cards (even when using as a credit card)
• Prepaid cards
• Cards with non-US billing addresses 

Surcharge rules in US States

Surcharge is permitted in the following states:

• Alabama

• Alaska

• Arizona

• Arkansas

• Colorado*

• Delaware

• Florida

• Georgia

• Hawaii

• Idaho

• Illinois

• Indiana

• Iowa

• Kentucky

• Louisiana

• Maryland

• Michigan

• Minnesota

• Mississippi

• Missouri

• Montana

• Nebraska

• Nevada

• New Hampshire

• New Jersey**

• New Mexico

• New York***

• North Carolina

• North Dakota

• Ohio

• Oregon

• Pennsylvania

• Rhode Island

• South Carolina

• South Dakota

• Tennessee

• Utah

• Vermont

• Virginia

• Washington

• West Virginia

• Wisconsin

• Wyoming

*Colorado – Surcharge cap of 2%

** New Jersey – Surcharge cap equal to the seller’s cost of processing the credit card payment

***New York – Disclosure of full surcharge amount (in dollars and cents) required

Surcharge prohibited states and territories

Surcharging is prohibited in the following areas:

• Connecticut 

• Massachusetts

• Puerto Rico

By default, the surcharge will be disabled for customers belonging to any of the above restricted areas. This can be overridden by the user at the customer level.

Surcharge is disputed in the following states

Due to recent litigation, there are some states where it is not clear whether surcharging is generally permitted for all merchants. These states are:

• California

• Kansas

• Maine

• Oklahoma

• Texas

Merchants are responsible for reviewing all rules and regulations applicable to surcharging in each state. Merchants are solely responsible for deciding in which states to surcharge their customers.

Maximum Surcharge Amount

In general, a surcharge cannot exceed the lower of 3%* or the merchant’s card processing costs. 

*2% maximum in Colorado    

Disclosures to charge surcharge

Merchants must comply with applicable state or federal laws governing surcharges, including but not limited to Colorado law, and must comply with laws governing deceptive or misleading disclosures. Merchants must prominently display clear disclosure of their surcharge policies at the point of store entry or, for an e-commerce transaction, on the first page that lists credit card brands. The disclosure must state that the surcharge is not greater than the merchant’s processing costs for credit card transactions. Merchants must also clearly disclose the actual amount of the surcharge on the customer’s receipt. There are additional merchant disclosure requirements with respect to the merchant’s surcharging practices at both the point of entry of the store and point of sale that are detailed in the network rules and in applicable laws.

Requirements to charge a surcharge

Merchants that choose to surcharge their customers must provide advanced written notice of their intention to surcharge to their merchant processing company (and in certain cases, directly to the card networks) a minimum of thirty (30) days prior to implementing a surcharge.