Do Merchants Have to notify consumers of credit card surcharges? 2022

Using a surcharging fee or convenience fee has 3 rules in place they must follow.

Any convenience fee must be disclosed before transaction

Convenience tax must be displayed on customers receipt

All credit card surcharges must be below 4 %

If you are conducting business in New York or California, you legally have to inform customers of any credit card convenience fees that may appear on their bills prior to purchase. If you live elsewhere, the legalities may differ, but you do have a moral obligation to warn people, especially nowadays when many are out of work and on a tight budget. If you charge people without warning, it could be considered sneaky and dishonest because it kind of is. If you have any interest in building a repeat customer base, it’s a good practice to lay everything out ahead of time so people can decide to pay cash or debit to avoid convenience fees.
The state and federal governments have different rights and responsibilities in terms of creating and upholding laws. Because the individual states are tasked with deciding who should pay the debit and credit card convenience charges to businesses, the practice varies depending on the state in which you are living and dining. As of the publication of this article, only two states have limited businesses in terms of rendering the consumer responsible for credit and debit fees; California and New York. In these two states, the practice is allowed, but they’re required to warn the customer, giving them the option of avoiding fees by paying cash or debit. This may change over time, one way or another, but if you live in any of the other states, it is perfectly legal for businesses to add debit and credit card convenience charges to bills being paid by credit card. Your state might reconsider, so it’s best to familiarize yourself with the laws regularly anyway. Please bear in mind that a Visa debit for example would not be charged fees because it is considered a debit card. It’s kind of a gray area, which is why some restaurants are choosing to tack on debit convenience charges to what they charge credit card users.

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Can you apply surcharges to debit cards?

Can you apply surcharges to debit cards?

Restaurants cannot apply convenience charges to debit card transactions.

The Visa surcharge that they can put on your bill only applies if someone uses a proper credit card. It doesn’t apply at all if they use a Visa debit, as it’s not actually considered a credit card surcharge, but a debit fee. So they are stuck paying the fees for all of the debit cards, forcing many restaurants to consider marrying the cost of both visa and credit card surcharges and add them onto the bills of customers who use credit cards. If the establishment is lucky enough to sell $10,000, they’d have to pay out $400 in debit and credit card convenience fees. This is on top of all of the other overhead. Utilities, payroll, food and beverage costs, inevitable food waste, taxes, and rent really add up. And if they are forced to use an outside food delivery company, they earn even less on each order. The money isn’t really such a big deal when you put it in perspective. And if you disagree with this practice, it’s easy to avoid the fees. Just pay cash. Or Debit, because the convenience charge from that will either be paid by the restaurant, or tacked on to those who pay by credit card.

 

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Are Credit Card Surcharges Legal in my State?

Is it legal for restaurants and businesses to charge the customer debit or credit card convenience fees?

The simple answer is yes. In most states it is perfectly legal to take these fees on to credit card customer charges. They can’t tack anything on to customers paying in debit, so they still have to pay the bank or credit card company for the convenience of using debit.

The state and federal governments have different rights and responsibilities in terms of creating and upholding laws. Because the individual states are tasked with deciding who should pay the debit and credit card convenience charges to businesses, the practice varies depending on the state in which you are living and dining. As of the publication of this article, only two states have limited businesses in terms of rendering the consumer responsible for credit and debit fees; California and New York. In these two states, the practice is allowed, but they’re required to warn the customer, giving them the option of avoiding fees by paying cash or debit. This may change over time, one way or another, but if you live in any of the other states, it is perfectly legal for businesses to add debit and credit card convenience charges to bills being paid by credit card. Your state might reconsider, so it’s best to familiarize yourself with the laws regularly anyway. Please bear in mind that a Visa debit for example would not be charged fees because it is considered a debit card. It’s kind of a gray area, which is why some restaurants are choosing to tack on debit convenience charges to what they charge credit card users.

These states below NO

Colorado
Connecticut
Massachusetts

These states below YES

Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York (disclose the Credit Card Price), North Carolina, North Dakota, Ohio, Oklahoma, Oregon,, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming

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