If your question is, “Can I charge my customers a fee to pay with credit card?” The answer depends on when and which credit card.
Before July of 2012, the answer was much more complicated as various credit card processors, bank, and originators such as Visa, MasterCard, and American Express imposed various policies on if and how to “pass” credit card fees to customers. Visa and MasterCard essentially allowed the merchant to pass on the fees to its customers by providing the customer “discount for cash” rather than a surcharge for using Visa or MasterCard charge cards. Discover cards allowed a surcharge if the merchant charged a fee on all credit cards accepted and the fee did not exceed the cost incurred by the merchant from accepting credit cards. Other than these three credit cards, American Express which specifically stated that the merchant may not accept the card for fees or costs exceeding the cost of the goods and services being provided.
Now: In July of 2012, Visa and MasterCard settled an anti-monopoly 2005 lawsuit which was filed by millions of retailers. The premise of the suit was that companies controlling the networks (in this case Visa and MasterCard) along with major banks (Chase, Bank of America, Citi Group, and Wells Fargo) engaged in price fixing of interchange fees merchants pay to accept charge cards. The settlement included payments of about $6 billion to defendants, will now allow merchants to collectively negotiate for lower interchange rates, and starting in 2013 allow merchants to charge customers for using credit cards.
So, starting in 2013, a merchant can start charging customers a fee for using credit cards.
How can you charge your customers a fee for using credit cards? There are three basic methods of charging customers a surcharge for using credit cards.
- The first is to add a fixed convenience fee to every transactions. You may have seen this as merchants add a fixed amount for credit card purchases.
- You can also charge a percentage of total receipt to for additional charges on cusotmers using credit cards.
- The last is to increase your prices across all your services and products to reflect the average cost of accepting credit cards.
If you are using a point of sale systems and/or credit card processing from Sintel Systems, there is a built in function on this. We had a call from one of our Pizza POS customers to address this surcharge, but it applies to all POS systems from GlobalPointofSale.com (Sintel Systems.) We answered this question in a previous blog.
However, before you start counting your new revenue from being able to charge credit card customers extra, you should ask:
- “Should I charge customers a fee for using credit cards?”
- “What is the real cost of accepting credit cards?”
You may have to change your entire business strategy and outlook if you need to charge credit card fees to run a successful operation.
Do you have any questions or comments? Please contact Sintel Systems, your Global POS Porvider:
www.SintelSystems.com www.BestPizzaPOS.com www.ChocolateStorePOS.com www.FrozenYogurtPOS.com