Illustration of receipt requirements for online and in store purchases adding a surcharge.

Are you a manufacturer or distributor and most of your customers pay by check or wire? Do you occasionally accept credit cards, but want to protect your margins from high merchant fees? Even though the card brands have changed rules about surcharging, in most cases, merchants are prohibited by state law from adding a fee if a customer pays by credit or debit card.

If it’s illegal to surcharge, what are alternative ways to protect profits?

1. Increase all prices, and discount if the customer pays by check or wire. A side benefit is there are a lot of customers that would gladly pay a little bit extra to pay by credit card and cash flow usually improves for merchants. Customers that pay by check are unaffected.
2. Maintain all prices and steer customers to cheaper cards; for example, offer a discount if paid by debit card. Most debit cards fall under the regulated rate of .05% and $.22 per transaction, so by offering a discount, merchants limit their cost of accepting cards. Before implementing, ensure an automated interchange management system is in place, and after implementing, review the effectiveness, A downside is many debit cards have daily limit restrictions.
3. Implement an automated interchange management system. It’s critical for business to business (B2B) companies to control credit card process fees, regardless of negotiated merchant discount.
4. Verify that transactions are qualifying with level III data. Contact a payments expert for additional information about level III processing.

If it’s not illegal in your state, can you comply with the card brand rules, illustrated in the receipt above?

• Merchants are required to have a subtotal on the receipt, and there’s virtually no payment solutions that support this. Merchants will also want a systematic method to enforce and calculate surcharges, to mitigate risk of employee error and fraud.

Reference Resource: Visa.com Merchant Surcharging – Understanding Payment Card Changes  http://usa.visa.com/personal/get-help/checkout-fees.jsp

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