What is a surcharge?
Previously, merchants were not allowed to "pass on" the cost of processing a transaction. In other words, they could not impose a surcharge. Now, if they choose to, merchants can charge their customers an extra fee, called a surcharge, for processing Visa or MasterCard transactions.
eCommerce
Currently PayJunction does not support adding surcharges in either the Hosted Payments hosted checkout solution or the PayJunction API solution.
Step by Step Instructions
There are specific rules for adding a surcharge to your transactions. Please be sure to read the section named Rules for Merchants below to make sure that they are being followed for all transactions which include a surcharge.
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Click on the Process button.
- Click on the Customize link.
- Set the Surcharge field to Display or Required.
- Enter in the percentage and/or dollar amount you wish to implement as a surcharge.
- Click the Save button.
- A surcharge line will now be present on the Process page and will automatically be added to your transactions when an amount is entered into the field.
- Fill out the remainder of the form and click Process to submit your transaction.
Rules for Merchants
Summary
If a merchant would like to impose a surcharge, they must:
- Notify Visa, MasterCard and your merchant bank at least 30 days in advance of beginning to surcharge.
- Limit surcharges to credit transactions. Please see the Transaction/Payment Type section in the Summary Details further in this article for specifics.
- Disclose the surcharge as a merchant fee and clearly alert consumers to the practice at the point of sale, both in store and online, and on every receipt.
For more information on these rules and links you might find useful, please see the Summary Details further in the article.
Prohibited States
The following states have laws prohibiting the use of surcharges:
- California
- Colorado
- Connecticut
- Kansas
- Maine
- Massachusetts
- New York
- Oklahoma
- Texas
Summary Details
Notify
Merchants who choose to surcharge must notify Visa, MasterCard, and their merchant bank 30 days prior to beginning to surcharge.
Visa
MasterCard
Discover
- Discover does not require a form or notification at this time. They reserve the right to require more information at which time they will request it from our partner bank.
Limit
The surcharge must be equal to, or less than, the average percentage rate that the merchant pays per transaction, not to exceed a maximum of 4%.
Examples
- If the merchant pays an average of 2% per transaction, then the surcharge cannot exceed 2%.
- If the merchant pays an average of 4.5% per transaction, then the surcharge must be 4% (cannot exceed 4%).
Transaction/Payment Types
| Type | Allowed/Prohibited | Notes |
|---|---|---|
| Credit Cards | Allowed | N/A |
| Debit Cards | Allowed | Because of the way PayJunction processes transactions for debit cards, this is technically allowed. |
| PrePaid Cards | Prohibited | Prohibited by card association rules for surcharges (Visa, MasterCard). |
Disclose
Merchants must disclose the surcharge to their customers in multiple locations:
- Merchants that surcharge must disclose the surcharge dollar amount on every receipt.
- Disclosures must be posted at the point-of-entry (at the entrance of the business).
- Disclosures must be posted at the point-of-sale (at the register and/or website).
Considerations for Merchants
Before choosing to surcharge, merchants may want to consider a number of factors, including:
- The potential impact on your customers' experience.
- What your competitors might be doing.
- What information must be disclosed to your customers, and how.
- Cost of credit cards and other forms of payment.