Information about Credit Card Surcharges from Merchants

As of January 27, 2013 merchants are now allowed to impose a surcharge of up to 4% on consumer purchases that are made with a credit card. Historically merchants have been prohibited from imposing a surcharge when a customer uses a credit card due to a contractual ban on this practice imposed by Visa and MasterCard. The elimination of this ban on surcharges is part of a settlement in an antitrust class action case brought by merchants against Visa and MasterCard.

The surcharge is applied by the merchant to the total cost of goods in the transaction when the consumer uses their credit card. It is important to note that merchants are not allowed to impose the surcharge on purchases made with either debit cards or prepaid cards. The merchant must make the consumer aware of the surcharge by posting signage at the entrance of the store or on the first page that credit cards are mentioned for on-line retailers. The exact percentage charged must be itemized on the receipt at the point of sale showing the percentage and dollar amount charged. The surcharge is strictly imposed and collected by the merchant; MasterCard, Visa, banks and processing companies do not receive any of the surcharged funds. The intent of the surcharge is to cover the cost of processing credit cards for the merchant themselves.

Merchants must continue to abide by state laws that prohibit or restrict credit card surcharges in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Not all merchants are in favor with this settlement and may choose not to pass this fee on to their customers. To avoid being assessed these fees from merchants that do have the message posted, use your debit card, pay with cash or write a check.