Charging surcharges on credit card transactions

Name it any way you want: surcharge, convenience fee, credit card acceptance fee or checkout fee – Visa and MasterCard do not allow retailers to charge an additional fee on top of a credit card transaction.

Charging surcharges on credit card transactions

MasterCard states that “A Merchant must not directly or indirectly require any Cardholder to pay a surcharge … in connection with a Transaction” (Page 114, 5.11.2 Charges to Cardholders, to date – document is constantly updated and therefore pages and paragraph numbers keep changing). If this is not clear enough: MasterCard rules specifically prohibit merchants from adding a fee for acceptance of MasterCard cards. This is considered surcharging.

Visa are saying the very same thing: “Visa rules do not allow retailers to charge cardholders a checkout fee for using their cards” and going a further step advising card holders to report retailers that are charging checkout fees.

Both Visa and MasterCard base their rules on discrimination laws, as surcharging a shopper paying with a credit card is, in a way, a shopper discrimination based on type of payment. Several US states have accepted the associations’ ruling and outlawed surcharges on credit card payments. These states are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma & Texas.

So what does this mean? Do the associations and state regulators expect retailers to finance processing fees out of their own pockets? No. Retailers should have their processing fees embedded within their final prices and therefore are allowed to offer discounts for cash and check purchases, as well as for PIN debit cards, as long as such offers are made to all buyers.

Gidi Argov, Founder and CEO


11 Responses to “Charging surcharges on credit card transactions”

  1. Joe says:

    Gidi, as a devoted reader I think you excelled yourself this time with the elegant bypass you suggested in the last paragraph. on another tone, but actually, on the same issue, how do you (and the associations, that usually back you:) ) see a minimal sum limitation for a transaction (i.e. credit card accepted only above a certain pre-defined sum)???

  2. CCPrUs says:


    You sure got to the bottom of it!

    Personally I fully understand why certain businesses need to limit credit card purchases to a certain threshold, yet unfortunately the associations are less found of the idea.

    Visa and MasterCard both prohibit minimum or maximum amount limitations due to same discriminatory practices violations. MasterCard provides the following as an example: a card acceptor states that it will not accept a MasterCard card for payment for less than or greater than a certain amount (5.13 Discriminatory Practices).

    So you see that there are cases in which the associations and I do not see things eye to eye…


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  7. Vanessa Adams says:

    Reading your post I remembered I just recently used my MasterCard to pay for my State tax online, as always, in delay…

    Over and above tax amount due, I was required to add a convenience fee, to finalize my MasterCard online payment.

    If MC does not allow adding any fee for accepting MasterCards, how can US States add such a convenience fee when paying your taxes online?

  8. CCPrUs says:

    Well… US States are not retailers…

    MasterCard does have a Convenience Fee Program which is open to educational institutions and public sector merchants.

    I think there’s no reason on Earth for educational institutions and public sector merchants to rob an individual paying online, nor do I think MasterCard should play along and enable this rip off, yet that’s the way it is.

  9. CCPrUs says:

    Until recently, surcharges and minimums both were prohibited by Visa and MasterCard.

    Visa has just accepted the need for minimums and now enables US retailers to require a minimum purchase amount on credit card transactions which must not exceed $10 and does not apply to transactions made with a debit card.

  10. Yosh says:

    As a 99 Cent store my business is cash oriented. I just recently added a swipe machine and am charging $2 checkout fee on any CC transaction under $20.

    I can’t add the processing fees to items’ pricing (99 Cent store…) and can’t finalize a one item purchase without adding a processing fee.

  11. CCPrUs says:

    According to a suggested credit card antitrust litigation settlement, the associations will allow merchants, for the first time, to add a surcharge when accepting cards.

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