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ReadersSpeak

Should surcharging be legal? discourages card usage reduces our
revenue. Additionally, surcharging
ne place where readers of The Green Sheet speak their minds about is not allowed on any form of debit
matters of particular importance to ISOs and merchant level sales- per the Durbin amendment, so the
people (MLSs) is GS Online's MLS Forum. Among the recent top- question is, how much does it truly
O ics explored were white-label iPad solutions, partnering with an benefit a merchant?
accounting firm, the future of Dodd-Frank, PAI's sale to Clearent and surcharg-
ing. Following are excerpts from the lively discussion on surcharging: "Since this occurs at the merchant
level, settlement would show just the
Mariuz broached the subject by writing, "I am aware that most of the states total transaction, but the transaction
allow surcharging up to 4 percent. Does your processor have a software for receipt would disclose the surcharge
all types of equipment … which would calculate the surcharge amount based clearly. So, with all this, if we are talk-
on the card type and automatically add it to the transaction? Or is there ing, say, 3 percent, why not just raise
any software that would enable the merchant to add flat surcharge amount prices that amount? Giving cash dis-
depending of what merchant would choose: 2 percent, 2.5 percent, 3 percent, counts is allowed in every state, and
etc.? doesn't require registration. Truth
is, until all states allow surcharging,
"[D]o you think that surcharging should be legal or should it be banned? NRF this latter approach is the simplest for
is fighting with card brands to make surcharging legal. From my standpoint, merchants to understand and sup-
I think it would benefit MLSs and ISOs because we could drive the prices up. port."
From the merchant perspective, it also makes sense. But from the consumer not
so much. Any input?" Others emphasized that surcharg-
ing is a complex challenge involv-
Clearent replied, stating, "The rules behind surcharging are pretty strict, so ing registration, printing appropri-
making sure the POS or terminal follows them is very important. This includes ate language on in-store signage and
registering as a surcharging merchant. "To play devil's advocate, the worry receipts, and specialized software to
about surcharging at Visa, et al., is that it discourages card usage. Anything that separate debit card bank identifica-
tion numbers (BINs) from credit card
BINs to ensure debit card purchases
are not surcharged. Also, in 10 U.S.
states, surcharging credit card trans-
actions isn't even legal.

Given this, as well as the restrictions
on how high surcharges can be, many
merchants have been deterred from
the practice. It is estimated the sur-
charge amount typically works out to
less than 3 percent. "U.S. merchants
may assess a surcharge on credit card
purchases that does not exceed the
merchant discount rate for the ap-
plicable credit card surcharged, "Visa
Inc. stated. "In cases where the appli-
cable merchant discount rate exceeds
4 percent of the underlying transac-
tion amount, in no event can the mer-
chant assess a surcharge above 4 per-
cent."

For a Q&A on essential aspects of
merchant surcharging, please visit
www.visa.com/merchantsurcharging. To
see the MLS Forum's full discussion
on this and other topics, please regis-
ter via the Forums link on our home
page, www.greensheet.com. And re-
member we will welcome your com-
ments and questions at greensheet@
greensheet.com.

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