How Your Business Can Implement Surcharging

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How Your Business Can Implement Surcharging

How Your Business Can Implement Surcharging

Surcharge fees are becoming increasingly popular in the retail and restaurant world. But what exactly are they, and what do you need to know before implementing them? This blog post will answer all of your questions about surcharging and provide you with all the information you need to make an informed decision. Stay tuned for more details!

What is a Surcharge Fee?

Surcharging has become increasingly popular as businesses attempt to offset the rising credit card processing costs. Surcharge fees are simply an additional fee charged to customers using a credit card. This checkout fee is passed along to the customer to cover the costs of processing the credit card transactions. The fee is usually set between 3% – 4% depending on the average transaction size. Despite some initial merchant concerns about losing customers due to surcharging, businesses have found this is not the case. Sales are not negatively impacted by implementing a surcharging program. This is one of the simplest ways to save thousands on processing fees and increase profits.

Some Things to Consider about Surcharging

There are a few things to keep in mind before you start surcharging. First and foremost, it is essential to check the laws in your state or jurisdiction, as surcharging may not be legal in some areas. As of mid-2021, surcharging is not allowed in Connecticut, Massachusetts, and Puerto Rico. You can find out if surcharging is allowed with a simple google search or by checking the card brand sites. You must notify each of the card brands 30 days in advance, before implementing a surcharge program. Additionally, to be compliant,  businesses must follow certain notification guidelines which vary by jurisdiction. Seamless Chex helps merchants set up a fully compliant surcharge program.

So is Surcharging Legal?

Surcharging is currently legal in most states and jurisdictions. However, it is essential to check the laws in your area before implementing any surcharge fees. Some common restrictions include:

  • Cannot charge clients more than what it costs the business to process the card
  • Must notify customers of the surcharge fee before they make a purchase
  • Must only apply the surcharge fee to credit card transactions (e.g., debit cards and prepaid cards  can not be surcharged.)
  • Merchants must surcharge all card brands the same percentage
  • Must notify card brands of surcharge program 30 days prior to implementation

Some states that do not allow surcharge fees: Connecticut, Massachusetts, and Puerto Rico. Violating these restrictions can result in significant fines, so it’s essential to be aware of the laws before implementing surcharging into your business.

How to Implement a Surcharging Program

There are three simple steps to imposing a surcharge fee:

  • Notify the Card Networks
  • Set up the appropriate signs and technology
  • Correctly document the surcharge fees on CC transactions

If you’re interested in taking these steps and want to learn more, reach out to a Seamless Chex representative today. We would be happy to help you get started with implementing a surcharge fee for your business! Seamless Chex is the industry leader in credit card processing and merchant services. We are here to help your business grow and succeed. Contact us today to learn more about how we can help you!

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