Can Businesses Add A Credit Card Surcharge To Transactions?

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There’s a lot of things that most people do not realize about the way credit cards work – which can be surprising, considering how popular plastic is in the commerce world. Most people who aren’t business owners do not realize that credit card companies charge fees in order for people to use their cards at places of business. The reason that people don’t know about the fees is because they never had t opay the fees, themselves.

In the past, credit card laws in the United States required that business owners would be the ones to pay the fees that credit card companies had. These fees never really showed up on receipts. Rather, business owners would raise prices so that the prices would cover the fees regardless of whether or not people paid using credit cards.

Times have started to change, and people are beginning to notice that business owners are starting to offer different prices for different payment methods. Some even add a fee for credit card payments. But, are businesses legally allowed to add a credit card surcharge to transactions done with plastic?

Believe it or not, in most states, yes.

Laws have changed and the business world has gone through some serious deregulation. For business owners, this means that they can now pass credit card fees directly onto the consumer. This allows business owners who would not normally be able to afford to accept credit cards to be able to get credit card payments – and also means that people can expect a wider range of stores that allow that, too.

In order to be able to add a surcharge, though, companies need to have the correct terminal to do so, and the surcharges can only apply to credit cards – not debit or prepaids. Terminals that have PassThrough technology built into it allow businesses to pass the surcharges onto consumers automatically.

However, not all states allow surcharges. Each state has its own local government that decides whether or not surcharge technology is legal. In some states, legislators have banned the use of PassThrough claiming that it “harms consumers.” So, if you live in any of the following states, businesses are not allowed to add credit card surcharges to transactions:

  • New York
  • Kansas
  • Maine
  • Massachusetts
  • Colorado
  • Connecticut
  • Oklahoma
  • Texas

Obviously, the bans are poorly thought-out, if not downright ridiculous. Surcharges don’t hurt consumers. If some stores can only afford to accept credit cards using surcharges, most consumers would be okay with paying that added fee just so they can get the products they want. Moreover, all of the states above can technically add a surcharge by just discounting cash transactions.

If you’re a business owner who wants to have credit card surcharges, chances are that it is possible. It also can save you a lot of money and help you afford an otherwise unaffordable service. Want to learn more? Give Merchant Surcharge a call, and we can help determine whether or not PassThrough is right for you.