Merchants, credit card fees & having surcharges
Posted by: Curtis Stevens on November 18th, 2009

In generally, businesses cannot add a surcharge to a credit card transaction for the convenience of the customer using the card.  When a merchant signs up for a credit card processing account, they are agreeing to a merchant agreement that states this is completely prohibited.  The rule is coming from Visa/MasterCard directly.  Their theory is they do not want their customers to be penalized for using their service.  In generally, I think it is a bad idea anyways.  Consumers expect merchants to absorb the cost like any other business expense.  I see a lot of places in my area that do this and if their processor ever finds out, they would immediately terminate their account.  They would then have an almost impossible time getting another one.

There is one exception to the rule. That is government agencies.  V/MC have allowed these types of organizations to add a convenience fee to the transaction.  Most government agencies are now accepting credits and many of them charge a 3 to 4% surcharge.  In my opinion, that shouldn’t be acceptable as they are now charging more than what it actually costs.  If their costs is that high with their provider, then they should get their fees reduce as Interchange tops out at just a little over 3%.  This shouldn’t be an area that generates revenue for them.

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