Thursday, September 6, 2018

Convenience Fees and Surcharges

How do Surcharge Rules Differ from Convenience Fees

Visa allows most Merchants two ways to add charges to Visa card payment transactions to let the Merchant pass the cost of the card transaction on to the person making the payment.
  1. Convenience Fees
  2. Surcharges

I wrote about "convenience fees" in my last post...

Rules for Surcharges

Surcharges differ from convenience fees on several major points.

  • Only applied to credit card payments
  • Cannot be applied to debit card payments
  • Can be a flat fee or percentage
  • Cannot be an additional revenue generator for the merchant
  • Merchant must register with Visa stating they are charging surcharge in advance

Limits on Surcharge Amount

The amount of the surcharge is limited by the actual cost of the transaction...

"the US Credit Card Surcharge amount is not greater than the applicable Merchant Discount Rate for Visa Credit Card Transactions at the Merchant"

The surcharge can cannot be charged on any debit card transactions...

"surcharges are not permitted on debit Transactions regardless whether a Cardholder selects the "credit" or "debit" button"

It is up to the merchant to determine if the actual card being used is a debit or credit card. This is typically done by referencing BIN tables with the processing software.

The Visa Rules on surcharging can be found beginning on page 378, Rule 5.6. at this link...

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