One of the best sessions I attended at Credit Congress this year was on a subject of much confusion - credit card surcharges. I am so glad I was able to get some clarification on this sometimes vague and confusing subject.

First of all, let's talk about the difference between a convenience fee and a surcharge fee. A surcharge fee is an additional amount a merchant adds onto a transaction when a customer uses a credit card for payment. A convenience fee is a flat or fixed amount that is applicable on all forms of card payment.

Because this subject can be very involved and I could take 3 pages to go into everything, here is the cliff notes version of credit card surcharges.

Surcharge Fees:

• A surcharge can be assessed if it does not exceed the effective rate for applicable credit card surcharged, with a cap at 4%. So if you are charged an average of 3% merchant fee, that is the most you can pass on.
• Visa and MasterCard permit surcharges on CREDIT card transactions only, NOT on DEBIT card transactions. 
• Discover allows a charge to be imposed if it doesn't exceed the merchant fee paid to Discover, and as long as the fee is charged on all other cards accepted.
• Visa, MC and Discover require the transaction receipt to show the surcharge amount separately on the front of the receipt in the same font as the other items after subtotal, allowing for discounts and before the final transaction amount.
• Written notice must be provided to Visa, MC, Discover and the merchant card processor 30 days prior to surcharging.
• American Express says a fee must not be imposed if the card is presented, UNLESS, the fee is equally imposed on all other payment processes, except cash, EFT or check. No registration is required and the surcharge does not have to be separated out on receipt.
• Surcharge policy must be posted at the store point of entry and the point of sale prior to the purchase transaction being completed.
• A Merchant cannot pick and choose who the fee is imposed on as this is an Anti-Trust violation!
• Currently 10 states make it illegal to impose a surcharge: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas in a RETAIL setting. But this is always changing as the courts rule on surcharge litigation.
• Always check with your merchant card processor to make sure you are within your rights and what fee you can charge.

At my company, the majority of our card processing is on COD orders and at our two wholesale storefronts, but we do have a few of our regular customers that choose to pay with a credit card. As we move into a more automated way of life, it is a fine line that we walk as to whether to charge a surcharge on transactions or not.

Hopefully this info gives you some more understanding as it did for me.