However, my personal advice will not change. And it is: Don`t do it. Don`t charge your customer for a swamp. Post-purchase fee: Three friends are having dinner at a nice restaurant and asking for separate checks. Before presenting the cheques, the waiter asks how they will pay. One plans to use a debit card, another plans to use a credit card, and the third friend pays in cash. When they look at their cheques, they find that a service fee has been added to the bills of the first two friends. Regulations for individual card tokens vary, so it`s important for merchants to carefully consider any rules that may affect them. Visa and MasterCard settled a dispute with merchants by allowing surcharges in 2013, but with the following rules: Percentage fee: Tabitha goes to tavern T to eat. She sees a sign on the menu that says, “If you use a credit or debit card, there`s a 5 percent fee.” What for? Because it`s wise not to. After 41 years as a lawyer (the last 27 years in a general firm with four lawyers), nothing has had a more positive impact on my fee income than a combination of disciplined and smart billing practices and credit card acceptance. Offering hyperlinks to my credit card page in my billing email and on my invoices at no extra charge results in the immediate payment of a significant number of monthly invoices. Different prices: A store shows two prices for each item, and signage indicates that the first is the price customers pay when using a debit or credit card, while the second price is the price they pay when using cash.
Dear Claude: QUESTION: Can you charge fees or additional fees for customers you pay with a credit card? Fixed fee: A grocery store places signs at its checkouts that say, “All debit or credit card sales will incur a $5 fee.” It is important to note that New York merchants are still required to comply with regulations on card token reloading, otherwise they could be removed from the card brand. While the provisions for surcharges vary slightly from one card brand to another, here`s a general list of card token regulations that merchants should be aware of: Simply put, the January 2019 ruling reinterpreted New York`s existing merchant markup law. This law states that “no seller in a sales transaction may charge extra to a cardholder who chooses to use a credit card instead of paying by cash, check or similar means.” When customers use a credit card to purchase goods or services, businesses must pay a processing fee to receive payments. Fees can range from 1% to 5% depending on the credit card company, so many businesses want to impose additional fees on their customers who choose to pay with credit or debit cards to cover the cost. These additional charges may be referred to as “additional charges” or “comfort charges”. However, the practice of “surtax” is prohibited by the State of New York under Section 518 of the New York General Business Law, unless a company avails itself of its exemptions. A business has the legal right to “charge” its customers who use a credit or debit card in accordance with the laws of the State of New York, provided certain conditions are met. Typically, a “surcharge” refers to the amount charged and adds a fee on a pro rata basis.
A “comfort fee” is usually a lower flat rate added to a fee just to pay with a card. Typical convenience fees could be the $2.50 charged by a local government for car registration renewals, regardless of the amount charged. This has been the case in New York for some time, but a January 2019 ruling by the New York State Court of Appeals will give merchants a little more leeway on top-ups and, therefore, rebate programs (many restrictions still apply, though). In this blog post, we`ll review the facts about discount programs and surcharges, as well as what New York merchants need to know to comply with state and card token regulations. Fresh after purchase: Frank goes to Restaurant R for a pleasant meal. When he receives the cheque, he notices a “service fee” that was added when he said he was paying with his credit or debit card. You have undoubtedly encountered the situation as consumers. You go to pay for your item and see a small sign at the checkout, “3% extra on all credit cards”. Either you switch to cash or you pay the additional fees attached to it. Sellers must clearly state the price of the credit card, including surcharges, at the location where a sale takes place. However, the laws of California, New York, Texas and Florida have all been challenged in court. The California law was declared unconstitutional in Italian Colors Restaurant et al.
Harris in 2015. California is appealing the District Court`s decision. In September 2016, the U.S. Supreme Court upheld Expressions Hair Design v. Schneiderman, the case that challenges New York law that prohibits merchants from charging extra for the use of a credit or debit card, but does not prohibit cash discounts. For example, a merchant who wants to charge a 3% fee to customers who pay with a credit card can do so, but only under certain conditions. From the Supreme Court decision in Expressions Hair Design v. Schneiderman (2017), “A merchant who wants to charge $10 for cash and $10.30 for loans cannot arbitrate this price. It`s not free to say “$10, with a 3% credit card surcharge” or “$10, plus $0.30 for credit” because both screens identify a single sticker price – $10 – that is less than the amount charged to credit card users.
If the merchant wishes to publish a single sticker price instead, they must specify $10.30 as the sticker price. New York is currently proposing an amendment to the law that, if passed, would prohibit the addition of surcharges to debit transactions. The change would also prevent card processors from preventing merchants and acquirers from offering discounts to customers who pay with cash. This allows lawyers in Florida to pass on the processing fee to their clients. However, please also be aware of the limits that may be imposed by your credit card company. The above-mentioned law has been in force for many years to protect consumers from unfair practices. In 2013, however, five New York merchants sued the state for violating their free speech rights. The case dragged on for six years until the New York Court of Appeals finally issued its official reinterpretation last January. If you charge extra fees, comfort fees, or other additional costs (assuming it`s legal in your state), you`re also at a disadvantage. A strong incentive to use a credit card is to buy the miles or points as a side effect and not pay extra dollars. Adding extra is like throwing an extra tracking door from the church tower before making a payment. Also, after hard work on a case and excellent service, an additional fee in the form of a supplement can end an otherwise positive interaction with a sour note.
Why should this be the last impression a client has of your work? This is a dynamic range that changes frequently. I expect that some states will stand firm in blocking these fees (unless the ban becomes an interstate trade issue) and that some states will throw in the towel. So always check with your own state`s government consumer protection unit, whether it`s independent or managed by the attorney general, auditor, or treasurer. As you can see, the subject has its share of complexity. If you want to recover the fees you receive from credit card companies, the easiest and most compliant way is to increase your prices by the percentage applicable for all products and display those prices.