As a business owner, it can be frustrating to see the amount of money that you are spending on credit card surcharges. Most customers pay with credit cards, and these fees can add up over time… and cut into your bottom line. One option that you might consider is passing the credit card fees onto your customers.

Is it Legal to Charge Customers for Credit Card Surcharges?

The state of California passed a law in 1985 that prohibited merchants from charging fees for customers paying with a credit card. But, this law was overturned by the federal court in March 2015, making it legal for businesses to pass the fees onto customers.

Just because it is legal, doesn’t mean that you will gain good rapport with your customers. Many customers don’t like paying the extra fees. But, they have the option to pay with cash if they don’t want to absorb the credit card processing fees.

Follow These Steps if You Are Going to Charge Customers for Credit Card Transactions

If you decide that you are going to pass the transaction fees onto your customers, then there are a few steps that you need to follow:

  • Talk to the credit card brands to find out about registration for customer-paid fees
  • Post clear signs informing your customers about the policies
  • Set the customer’s fee to be no more than your cost of acceptance, up to a maximum of 4%
  • Process one transaction that includes the service or product as well as the credit card fee
  • Show a separate line item on the receipt to detail the breakdown of the processing fee

Keep in mind that the credit card processing fee can only be charged to the customer for credit cards. If the person is paying with a debit card, then you cannot add a fee for the transaction.

Credit card companies have various rules regarding the transaction fees. So, it is important that you understand the rules and abide by the policies for each type of card that you accept.

If you have questions about accepting credit card transactions, then we encourage you to call today. Our team is here to help with anything that you need.