Surcharging
Important Visa Surcharge Changes: What Businesses Need to Know
Starting on April 15th, 2023, merchants in the United States will face new restrictions on surcharging customers who pay with Visa credit cards. This development has sparked considerable discussion in the payment processing industry. In this blog article, we will delve into the following topics:
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What is credit card surcharging?
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Credit Card Surcharge Laws by State
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Changing Visa Surcharge Rule
What is credit card surcharging?
Surcharging refers to the practice of adding an extra fee to a customer's credit card purchase to cover the credit card processing cost. It is a way for businesses to mitigate the impact of merchant services fees. Some providers market this as "Cash-Discount" or "Zero-Fee" processing, but it's important to note that there is still a processing fee involved; it is simply passed on to the merchant.
Credit Card Surcharge Laws by State
Surcharging is not legal in all states or countries, and specific regulations govern its application. As of 2023, only two states and one US territory prohibit credit card surcharging outright: Connecticut, Massachusetts, and Puerto Rico. In several other states, anti-surcharging laws remain on the books but are unenforceable due to recent court decisions: California, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Utah.
Changing Visa Surcharge Rule
Surcharging is not legal in all states or countries, and specific regulations govern its application. As of 2023, only two states and one US territory prohibit credit card surcharging outright: Connecticut, Massachusetts, and Puerto Rico. In several other states, anti-surcharging laws remain on the books but are unenforceable due to recent court decisions: California, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Utah.
​Visa emphasizes that when assessing a surcharge, the amount must be populated in Field 28 - Amount, Transaction Fee, which will serve as notification of the surcharge. Additionally, surcharges are only permitted on credit cards in states, territories, or provinces where surcharging is not prohibited by local law. Visa will closely monitor surcharge assessment and take compliance action if any violations of the Visa Rules are identified.
What Businesses Should Do Because of the Visa Surcharge Changes
Businesses that accept Visa payments, especially those exploring surcharging options, need to be aware of these changes and adjust their practices accordingly. To navigate these changes successfully, businesses require the assistance of a trusted advisor who can provide guidance and support.
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ALLPAY, LLC is here to help with the expertise and experience needed to help businesses understand the new Visa surcharging rules and make necessary adjustments to their payment processing systems. By relying on our guidance, businesses can avoid costly mistakes and ensure compliance with the new regulations.
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These changes are significant as they affect businesses across various sectors. Surcharging plays a crucial role in many payment processing strategies, and these new regulations necessitate adjustments to existing systems. Non-compliance with the upcoming regulations can result in fines, penalties, or even the closure of merchant services accounts.