By Nick Cucci
Fluid Pay LLC
Surcharges can be a point of frustration for shoppers, but for businesses, they are often considered a standard business practice. These optional checkout fees can be beneficial for businesses and help them to stay ahead of certain fees. However, essential rules must be followed. In this article, I will explore compliant surcharging and how to stay in alignment with shifting Visa guidelines.
According to Investopedia, a surcharge is a fee that is assigned to the customer upon checkout. These fees are commonly used when someone uses a card to pay for a specific product or service. The value of the surcharge may vary. However, Visa requires that certain rules be adhered to when assessing a surcharge. Visa credit cards, debit cards and surcharges Visa released a new set of rules and guidelines regarding surcharges imposed on purchases made with Visa credit cards (see tinyurl.com/5dp35r8r). These new rules apply to any credit card interaction where a merchant intends to assess a surcharge. In order to remain in compliance with Visa standards, companies and small businesses must be aware of these changes and adapt their business practices as needed. Failing to adhere to these standards may result in penalties.
Since surcharges are commonly associated with cards, many merchants take this as a universal rule. However, it's important to remind them that surcharges cannot be applied to business transactions involving debit cards. They are exclusively reserved for credit card purchases. Also, it is important to know that not all credit card purchases qualify for surcharges—and debit cards never qualify for these fees. When to implement surcharges Deciding whether to apply surcharges to customer purchases can vary on a case-by-case basis. Some businesses use them; others do not. Knowing whether or not to assess a surcharge is a matter of preference for each business, but there are quite a few considerations that might influence whether or not it is a good idea for a particular business in your portfolio.
Businesses can apply a surcharge as long as they adhere to certain standards, but there are also other factors at play. Before taking steps to implement surcharging, it is important to first consider what making this decision means for the business in question. Is this fee likely to alter the perceived value of the product? Does it feel appropriate in combination with the price of the original product? For every business it's important to ask whether surcharging is truly worth it.
In addition to the customer experience, companies will want to consider the full spectrum of the financial commitment. Credit cards can often come with other fees, particularly when purchasing certain items from certain places. Determine if this is standard practice for businesses in your industry or if it is something that will set you back compared with companies similar to yours. Navigating surcharges while adhering to Visa standards Compliance is a key concern for all businesses. In today's growing digital world, these rules are what govern each interaction. Given that Visa is a major player in how a great number of customers pay for products and services, it is important to consider Visa's standards when implementing the use of surcharges as a standard business practice. Let's take a closer look into what Visa expects from merchants who intend to use surcharges.
Merchants who do business with Visa customers are expected to be completely open about their intent to assess surcharge fees. With Visa's most recent change, merchants are expected to inform Visa in advance when they intend to include these fees in transactions with customers.
Ensuring that Visa is aware of your intent will help when a customer attempts to dispute specific fees during a purchase. In addition, to maintain compliance, companies must communicate their intent to assess these charges 30 days prior to adding surcharges to the purchase process (see tinyurl.com/538mjsyp). Know the limitations Although Visa does support merchants assessing surcharges, the card brand does require reasonable limitations to be set in place. First, Visa expects companies will not impose surcharges that exceed the merchant discount rate—a rate that is charged to the merchant for payment processing. Above all else, surcharges should be used to support your business, not to make more money.
Selecting the right value is important, but remaining in compliance with how these fees are assessed is equally important. Since surcharges must never be applied to debit card transactions, this means they cannot be applied to prepaid card transactions either. Companies must be able to distinguish this. Communicate the fee to consumers While the steps I've mentioned are essential, the most critical rule when applying surcharges is the need to actively communicate these fees. Customers must know in advance that a surcharge is being assessed. And the fees cannot be hidden from the consumer during the purchase either. Without proper notice, the customer expects to pay the purchase amount displayed with the item and will be blindsided by the additional cost. To remain in compliance, companies must communicate these charges and label them as what they are. Also, indicate clearly what they will do to the total price of the transaction. Decide when surcharges are the right step Businesses are not required to assess surcharges, but they can do so in specific circumstances. Some regions do not support surcharges, which means that companies must make sure they are not adding them to transactions where these charges are not allowed.
Visa also has certain competition considerations when it comes to these fees. Companies are expected to maintain similar fees across different card companies to avoid giving any one provider an unfair advantage.
There are times when it is appropriate for businesses to assess a surcharge during certain transactions. These fees can help support the health of a business and ensure that they are being fairly paid for each individual sale.
Staying up to date on the expectations of card companies can help your merchant customers maintain compliance and continue to offer popular payment options to their customers. Ultimately, being informed and adapting as needed can have a positive impact on business interactions. 
Nicholas Cucci is the co-founder and COO of Fluid Pay LLC. Cucci is also a graduate of Benedictine University and a member of the Advisory Board and Anti-Fraud Technology Committee for the Association of Certified Fraud Examiners, as a CFE himself. Fluid Pay is the ONLY 100 percent cloud-based Level 1 PCI Payment Gateway processing transactions anywhere in the world. Contact Nick atNick@FluidPay.com. Benefits of crypto for the underbanked
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