When Surcharging is Done Wrong
There is a mindset among some merchants that they can “Self” surcharge. When surcharging is done wrong, it is where a business will use its current merchant account and simply choose to add a fee for the processing of all card types. The typical scenario is a SMB adding a fee to a product or service at the point of sale. The merchant invariably does a few things wrong.
- They charge a convenience fee on both debit and credit
- They do not post signage specifically detailing a fee for paying by credit card
- The fee is not applied consistently across all products
Although well-intentioned, this is not a compliant process and is subject to a tremendous amount of risk. The lowest, yet all too common risk, is the risk of chargeback. Customers are wising up to the rules as well. A customer is well within his/her right to chargeback a transaction in which any of these common missteps occur. As the business owner, you will have no recourse against the chargeback.
The card brands ie. Visa and MasterCard, are aggressively ramping up compliance of the processing regulations for surcharging. Moving forward, Visa and MasterCard will be assessing fines to merchants that do not comply with the surcharging rules. In more egregious violations, a business can expect to be permanently barred, across all processors, from processing card transactions.
Calculating the overall cost of processing for your business, when surcharging is done wrong is not worth the risk.