The Green Sheet Online Edition
August 8, 2020 • 20:08:02
Readers Speak: Surcharging in 2020
I've heard conflicting things about surcharging card transactions. Apparently, it's legal now, but word doesn't seem to have filtered down to Main Street merchants. Is it really legal, and how feasible is it?
Tom Lydon, Merchant Level Salesperson
Tom,
The major card brands banned imposing surcharges on card payments until 2013, when they revised their rules to allow the practice. However, surcharging of credit card payments was illegal in 11 U.S. states until 2017, when the Supreme Court struck down a New York anti-surcharging law. Surcharging debit card payments, however, remains illegal across the board.
Now, the only remaining states whose anti-surcharge laws impede adoption are Kansas, Colorado, Massachusetts and Connecticut. However, efforts to enable surcharging in those states are ongoing, and it is generally accepted that, given the Supreme Court's 2017 decision, those states will ultimately allow the practice, too. Legalities aside, however, surcharging is not necessarily the right solution for all merchants who want relief from interchange fees. This is so for a couple of reasons. Many retailers, especially small and midsize businesses, fear consumers will object to the practice and take their business to merchants who don't surcharge. Others fear that if surcharging gains wide acceptance, it will signal to the card brands and issuing banks that they can increase fees even more.
Surcharging is, however, taking hold among merchants who have not previously accepted credit cards because they didn't want to pay the related fees. It is also gaining steam in B2B payments where parties hit with surcharging fees are unlikely to bolt because switching to another service or materials provider would disrupt the supply chain. And some philanthropic nonprofits can make a good case for passing on the fee to donors because more money will then be going toward their cause.
Whether surcharging will eventually become palatable to most consumers is an open question, but there are service providers who can make the process seamless for merchants who choose to try it.
Your views
Tell us about your experiences with surcharging, cash discounting or other current industry developments at greensheet@greensheet.com. 
Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.
Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.
