Did you know that in 2021, merchants ended up paying a whopping $105 billion in credit card processing fees? Even though they’re one of the most popular payment options today, accepting credit cards at your business can turn out to be a significant expense.
Fortunately, credit card surcharging is a good way to offset some—if not all—of the cost of accepting credit card payments. All you need to do is charge an additional fee (or surcharge) on top of the final bill amount for customers paying by credit card.
However, you must keep in mind several federal and state laws as well as credit card network guidelines (e.g. Visa, Mastercard, American Express, Discover, etc.) before you can start surcharging.
One such guideline that credit card companies and certain US states impose is that you must inform customers that you practice credit card surcharging. Whether accepting payments online or in person, banners, posters, and other appropriate types of signage should inform customers that an extra fee, such as a surcharge, will be added (as a separate line item) to the final dollar amount of their credit card purchases.
Table of Contents
TL;DR
- Credit card processing fees can add up quickly and eat into a business’s bottom line. Fortunately, in states where surcharging is legal, you can recoup these processing costs by transferring them to the cardholder.
- Customers need to be informed of surcharging, which necessitates the need for plenty of credit card surcharge signs at your store—whether brick-and-mortar or online. Signs should be clear and visible, so customers don’t have to go looking for them, and large enough so that customers can’t miss them.
- Card companies set the guidelines around credit card surcharge signs, and disregarding them can lead to your business’s merchant account being terminated. So make sure to follow all rules related to the placement, content, design, and compliance of your signage.
Understanding Credit Card Surcharges
Card networks not only help businesses process credit card payments but they also regulate the industry by establishing surcharging rules and maintaining compliance. In exchange for their services, card companies charge certain fees (interchange fees and assessment fees) on each credit card transaction they process.
Merchant service providers help businesses connect with these credit card networks and offer the necessary hardware and software to process credit card payments. In exchange, businesses pay a host of different fees (e.g. markup, monthly fees, compliance fees, equipment lease fees, per-transaction fees, statement fees, etc.) to their payment processing company.
All of these credit card processing fees can add up quickly and eat into a business’s bottom line. Fortunately, in states where surcharging is legal, you can recoup these processing costs by transferring them to the cardholder.
Surcharging rules
Surcharge laws and guidelines can vary from state to state. As of 2023, the states and territories that prohibit or limit surcharging are Connecticut, Massachusetts, and Puerto Rico. Plus, there are federal laws governing surcharges.
However, in general, surcharge laws state that businesses cannot profit from surcharge fees—they can only use it to offset some or all of the fees they pay to credit card networks and processors. Visa caps the surcharge rate at 3% (Mastercard caps it at 4%) and it can be as low as 2% in certain states (e.g. Colorado).
Also, customers need to be informed that you will be applying a surcharge on their transaction amount. The rules state that your signs should be clear and visible, so customers don’t have to look for them. Credit card surcharge signage should be plenty and large enough so that customers can’t miss them.
If a customer feels they weren’t adequately informed about surcharging on their payment method, they can file a complaint with the state attorney general’s office. An investigation will ensue and if the cardholder’s complaint is found to be valid, the business can be prosecuted.
Card companies set the guidelines around credit card surcharge signs and flouting them can lead to your business’s merchant account being terminated.
Learn More
Design Principles for Surcharge Signs
When it comes to credit card surcharge signs, there are certain design principles or best practices that you must keep in mind. Take a look below.
1. Clarity and visibility
A credit card surcharge sign can be of two types: point-of-sale notification and point-of-entry notification. Essentially, you should have a credit card surcharge sign at each of your points of sale (POS) at your brick-and-mortar store.
Signs must also be placed at the main entrances (point-of-entry) of your store, and for added measure, place signage at strategic locations in your store where customers are most likely to come across them.
The idea is that, with all of this, customers will be aware of your credit card surcharge program as they enter your store premises and before purchasing at the cashier’s terminal. The rate of surcharge should also be present on your signs, especially those at points of sale.
For online stores, the home page should have a credit card surcharge sign. Checkout pages should also have clear banners, alerts, text, sections, etc. that inform customers about surcharging.
2. Font, color, and placement
All disclosure signage must be unobstructed. Make sure that the fonts you use on each credit card surcharge sign—whether for online transactions or in-person ones—are big and easily legible so that customers can read them from a distance.
Contrasting colors can help highlight sections of the signs that are important such as the rate of surcharge. Different colors can also make your signs more attractive and can make a big chunk of text quicker to read.
However, it’s best to avoid fancy lettering and too many colors that can make your signs difficult to read.
3. Compliance
Individual states may have different requirements when it comes to disclosure signage. Credit card networks also have different surcharging rules for signs so it’s best that you do your research before getting your signs printed or adding banners to your website.
Examples of Effective Surcharge Signs and Templates for Merchants
A credit card sign can be as simple as a poster that says, “We impose a surcharge of __% on credit cards that is not greater than our cost of acceptance.”
Or you could use any of the following templates:
“We impose a surcharge of __% on the transaction amount on credit card products, which is not greater than our cost of acceptance. We do not surcharge cash or debit cards.”
“A service charge of __% will be applied to all credit card purchases. For your convenience, customers may avoid this extra fee by paying with cash or debit. We accept ___________, ____________, ___________, and ____________ .”
“A __% credit card fee will be applied to all credit card transactions. Cash and debit card transactions are not subject to a surcharge.”
“Dear customers,
if paying with a credit card, a __% convenience fee will be added to your check. If you pay with cash or debit, you won’t get charged.”
“To our valued customers,
Instead of raising our prices, your receipt now includes a __% service fee to cover the rising cost of credit card acceptance that we pay when cards are used. If you pay cash or with a debit card, you won’t get surcharged.
Thank you for your continued patronage”
***
The good news is that credit card networks provide tips and templates of signage for their credit card products. Here are some templates from Visa that you may also use for credit cards of other networks.
This credit card surcharge sign is an example from Visa. Not only is it simple and easy to read but also clearly states the surcharge rate and the card brand being surcharged. What’s more, the sign clearly states that debit cards and prepaid cards are not surcharged.
Mastercard guidelines for surcharging can be found here. Businesses need not fret as their payment processor can help them set up appropriate signage too.
Final Words
Credit card surcharging is an excellent way for merchants, especially small businesses, to prevent profits from being lost in credit card fees. Customers also appreciate transparency even if they have to pay a bit more. So it’s best not to ruin this opportunity by having non-compliant signage.
If you’re looking for an automated credit card surcharging solution that helps you save money while ensuring compliance with state laws, federal laws, and card company rules, look no further than Card X. To learn more about how we can help, contact us today.
Request a Quote
FAQs about credit card surcharge sign
Q: What is a credit card surcharge sign?
A credit card surcharge sign is a notification displayed by businesses to inform customers that an additional fee may be charged for transactions made with a credit card. This surcharge is intended to cover the costs that the merchant incurs for processing credit card payments.
Q. Why do businesses need to display a credit card surcharge sign
Businesses display credit card surcharge signs to maintain transparency with customers about potential extra charges. It’s a way to communicate any additional costs upfront, helping customers make informed decisions about their payment method. Additionally, in many jurisdictions, it’s a legal requirement to notify customers of any surcharges.
Q: What happens if a merchant doesn’t have a credit card surcharge sign?
If a merchant doesn’t display a credit card surcharge sign and imposes a surcharge, they may be violating consumer protection laws and regulations regarding transparency and fair trading. This can lead to customer complaints, fines, and legal action, depending on local laws and regulations.
Q: What are the guidelines for displaying credit card surcharge signs?
Credit card surcharge signs must be clearly visible and easy for customers to read. They must also be located in a place where customers are likely to see them before they make a purchase. The signs must disclose the amount of the surcharge, as well as the fact that the surcharge is not a government fee.
Q: How can businesses create credit card surcharge signs?
Businesses can create their own credit card surcharge signs, or they can purchase pre-made signs from a variety of retailers. There are also a number of online templates available that businesses can use to create their own signs.
