New Changes to Credit Card Processing

*Updated April 5, 2023

Many companies and not-for-profit organizations may add a surcharge fee associated with taking a credit card payment or donation. These transactions can be in any environment – in person, online, or through an invoice. Visa has made a notable change in their recent semi-annual card brand updates that would cap the amount at 3.00% any entity can add to transactions.  

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What is a Credit Card Surcharge? 

Before we delve into the change, we must first define credit card surcharging. Each time a merchant accepts and processes a credit card transaction, they are required to pay a processing fee to the appropriate financial institution. The credit card surcharge is the fee enforced by the merchant to compensate for some of the cost of the payment processing.

The Current Credit Card Processing Rule

Currently, any entity (merchant) accepting payments via credit or debit card must follow a set of rules developed by card brands such as American Express, Discover, MasterCard, and Visa. To be compliant and surcharge customers correctly, merchants that decide to charge a processing fee must adhere to another, and fairly strict, set of rules. As of the date of this article, the rules are as follows, but we expect some of these to change as well:

  • Register your account with the card brands that you will be surcharging.
  • The merchant must inform the customers of the credit card fee with appropriate signage in the store or online at the time of checkout or point of sale.
  • The amount of the credit card fee must not exceed 4% and the merchant must not profit from the credit card fee. 
  • The credit card fee and the price of the product or service must be processed together as one transaction. 
    • There are exceptions for those in the following MCC (merchant category code) categories – tax, fines, court costs, miscellaneous government services, college tuition, business and secretarial schools, trade schools, and elementary and secondary schools. 
  • The receipt must show the amount of the credit card fee as a separate line item.
  • The merchant must not apply any fees to a debit card transaction.
  • There are special rules for businesses in New York, Maine, Massachusetts, and Connecticut. 

A surcharge is different from cash discounting. Some areas require duplicate signage showing the credit versus cash price. For example, if an item was priced at $100, you would say the cash (debit card) price is $100 and the credit card cost would be $103.50, if you are charging a 3.50% surcharge fee.

The Credit Card Processing Change

Visa enacted this change in their recent card brand updates that the new maximum surcharge is now capped at 3%. That means the fee passed along to customers may not exceed 3% for all surcharge transactions if the merchant accepts Visa. You cannot discriminate and charge different surcharge fees based on the card brand. This means surcharge transactions on MasterCard, Discover, and American Express are also capped at 3%. Credit Card Payment Services is tracking this change closely and will keep our clients and partners up to date on the impacts regarding potential pricing to their processing accounts. We have yet to see any new pricing or guidelines come from our partners, but we feel there could end up being processing costs to your business or non-profit where there previously weren’t any.

As we learn more and see how this affects the surcharge market, we’ll update you on the various resolutions we’re seeing throughout the processing marketplace.

In addition to helping you navigate the surcharge changes, offers a number of other credit card payment services to help you ensure your business is taking advantage of cost-saving opportunities. Contact us by filling out our form or emailing [email protected] to speak with a strategist to learn more about our credit card processing and payment services.

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