Credit card swipe fee have been a point of contention for traders for many years. These are the fees that credit card payment networks, such as Visa and Mastercard, charge retailers for the service they provide in enabling credit card payments.
Credit card sales allow merchants to take advantage of higher sales volumes, and they must pay networks to activate this service. It is quite common for retailers to pass these charges on to consumers via a surcharge. Swipe fees typically range from 1.5% to 3%, but should not exceed 4% or the merchant’s actual credit card processing costs.
Reader Tom wonders, “What can happen if a restaurant doesn’t tell you they’re adding an extra?”
Rules for credit card surcharges
There are specific rules retailers must follow when it comes to credit card surcharges. In the past, Visa and Mastercard have prohibited merchants from passing swipe fees on to consumers through surcharges. However, after losing a legal battle initiated by merchants, card payment networks had to allow surcharges.
However, a few states still prohibit or limit credit card surcharges, including Connecticut, Maine, Massachusetts, and Oklahoma. Colorado is also currently part of this minority group, but legislation passed in 2021 would allow credit card surcharges after July 2022.
Before a merchant can start charging additional fees on credit card transactions, they will need to notify the card network, as well as the bank that authorizes and settles card payments for the merchant, 30 days later. advance.
The credit card surcharge also should not exceed the merchant’s cost of accepting a customer’s credit card. In other words, the merchant cannot take advantage of the surcharge.
Credit card surcharges require proper disclosure
In order to overcharge customers for credit card swipe fees, companies must do adequate disclosures. Merchants must post notices at the entrance to their business and at the point of sale, informing customers of their credit card surcharge policy. The surcharge amount should also be shown separately on the customer’s receipt. And online sellers must disclose on their website that a surcharge will apply, when they first mention credit card acceptance.
These types of disclosures ensure that retailers do not engage in false advertising by quoting a lower price and then imposing a surcharge when the customer pays. Typically, companies tend to quote the highest price, adding surcharges across the board. They can then advertise a discount for customers who pay cash.
Restaurants must adhere to these disclosures and cannot quietly add an extra when you pay your bill. Nor can they simply state on their menu that there will be an extra charge for customers paying with a credit card, without making the other required disclosures.
Remedies for Inadequate Disclosure of Credit Card Surcharges
If, like Tom, you’ve had the experience of eating at a restaurant that didn’t sufficiently inform customers of its credit card surcharge policy, you have recourse.
You could lodge a complaint with the map network involved. You can also follow up with your state attorney general or consumer protection department. And you can file a complaint with the Consumer Financial Protection Bureau.
To support your case, you must also provide evidence of the restaurant’s non-compliance with the law, which may include photos of the advertised price and your receipt, as well as details of the merchant’s location.
The bottom line
Most states allow retailers to pass credit card swipe fees on to customers in the form of surcharges. There are specific disclosures they must make, however, and they can’t just add extra to your bill without notification.
Tom, if a restaurant has just added a surcharge to your bill without following the required protocol, you can file a complaint with the proper authorities, with evidence to support your claim. I hope the issue is resolved to your satisfaction.
Contact me at [email protected] with your credit card questions.