Shopmonkey Payments: Surcharging FAQs

General Surcharging Information

What is surcharging?

Surcharging is the practice of adding a fee to a customer's bill when they pay using a credit card. This fee helps merchants cover the costs associated with processing credit card payments.

Why can’t I surcharge on debit or prepaid cards?

Surcharging on debit and prepaid cards is prohibited by the card brands (e.g., Visa and Mastercard) for all U.S. merchants. You cannot add a credit card surcharge to a debit or prepaid card. There are no exceptions to this rule. Your shop is responsible for any debit card transaction fees.

Can I run debit and prepaid cards as “credit” (without a PIN) so that I can surcharge?

Running debit and prepaid cards as “credit”, whether with a PIN or not, does not change the fact that these cards are debit and prepaid cards. That means the surcharge is still non-compliant. Surcharging on debit and prepaid cards is prohibited for all U.S. merchants, regardless of how they are processed.

Can I surcharge on Buy Now, Pay-Over-Time transactions?

No. Surcharging is only allowed on credit card transactions. Because Buy Now, Pay-Over-Time transactions cannot be paid with a credit card, there is no situation where surcharging is possible on a Buy Now Pay-Over-Time transaction. It is not legal to surcharge on Buy Now, Pay-Over-Time transactions.

Are there any regulations governing surcharging?

Yes, surcharging is regulated by national laws, state-specific laws, and rules set by credit card networks like Visa and Mastercard. This makes the regulatory landscape complex and non-uniform.

Surcharging Regulations

Where can I find official guidelines on surcharging from credit card companies?

Visa: Visa Merchant Surcharging Q&A

Mastercard: Mastercard Surcharge FAQ

What states allow surcharging without additional requirements?

Most states allow surcharging without additional requirements. If a state is not specifically listed as prohibiting or regulating surcharging, it falls into this category. It is your responsibility to ensure that you remain compliant when surcharging.

Which states, provinces, and territories do not allow surcharging?

Connecticut
Maine
Massachusetts
New York
Puerto Rico
Quebec

Which states allow surcharging but have additional requirements?

Colorado allows surcharging, but they do not allow the surcharge to exceed 2%. Additional requirements for surcharging may exist in other states and provinces. You are responsible for ensuring that you meet your shop’s location requirements.

How does surcharging work in Canada?

For details on surcharging regulations in Canada, refer to the Government of Canada’s guidelines.

Enabling Surcharging in Your Shop

Is there a waiting period before I can start surcharging?

Yes. There is a 30-day waiting period after the request to start surcharging.

How should I handle refunds when surcharging?

The surcharge fee is a per-transaction fee. When issuing refunds, it is suggested to prorate the surcharge fee to avoid complexity.

Can I set my surcharging rates?

Yes, shops can set their surcharging rates up to 3.0% (CAN 2.4%). However, the rate must not exceed the cost of processing the credit card transaction, as this would be against surcharging regulations.

What if I use Interchange Plus pricing?

Shops using Interchange Plus pricing can also implement surcharging. However, due to the variability of interchange fees, you must set appropriate surcharge rates to avoid overcharging customers and violating regulations.

Surcharging in Action

Where do I set up surcharging?

Surcharging can be set up under the General Settings section of Shopmonkey.

How do I notify customers about surcharging?

Display notifications about surcharging at both the point of entry (e.g., a window or door) and the point of sale. This ensures customers are aware of the additional fee before they make a purchase.

How is the surcharge fee displayed in transactions?

The surcharge fee will be displayed during the payment process, showing both the original price and the new total including the surcharge. This is applicable only for credit card transactions and not for debit cards or other payment methods.

How does surcharging affect the customer payment process?

For debit card or cash payments, no surcharge will be applied.
For credit card payments, the payment interface will clearly distinguish between the base price and the surcharge amount.

Who do I contact for more information on surcharging regulations?

For state-specific regulations, contact your local consumer protection agency. For credit card network rules, refer to these Visa and Mastercard surcharging FAQ documents.

Visa: Visa Merchant Surcharging Q&A

Mastercard: Mastercard Surcharge FAQ

Additional Credit Card Surcharging FAQs

What are the general guidelines for surcharging in the United States?

Surcharging rules in the United States are governed by both national regulations from card brands like Visa and Mastercard, and state-specific laws. Merchants must comply with both to ensure they are legally surcharging their customers.

Is credit card surcharging legal in every state, province, and territory?

No. Connecticut, Maine, Massachusetts, New York, Puerto Rico, and Quebec prohibit surcharging. Colorado allows it but surcharges cannot exceed 2%.

What are the risks of non-compliance with card brand rules?

The card brands (e.g., Visa, Mastercard) can impose fines of up to tens of thousands of dollars for non-compliance with their rules regarding surcharging. They can even prevent you from accepting their brand’s cards entirely as a payment method.

Who is responsible for fines or other penalties if I am found non-compliant?

You are responsible for any fines or penalties that you receive as a result of non-compliant surcharging or any other non-compliant practices. It is important to know the card brand rules, as well as your state and local laws, to ensure that you stay protected from any fines or penalties.

How do I inform customers about the credit card surcharge during online orders?

When a customer goes to pay an online invoice they will see both the debit card price and the credit card price with the surcharge fee added.

Can I apply different surcharge rates to different types of credit cards?

No, the surcharge rate must be consistent for all credit card transactions. Differentiating surcharge rates between card types is not compliant with card brand rules.

How do refunds work for surcharges?

When processing a refund, the surcharge amount with full refunds or prorated amount with partial refunds must be refunded as well to adhere to compliance rules.

Can I manually remove a surcharge for select transactions?

No. Manual removal of surcharges for select transactions is not possible to ensure compliance.

What happens if I do not comply with signage requirements for surcharging?

Non-compliance with signage requirements can result in fines and penalties from card brands. Proper signage is crucial to ensure transparency and inform customers about the surcharge.

Do customers need to pay sales tax on credit card surcharges?

Generally, yes. However, surcharges up to 2% are not subject to sales tax in Colorado. Consult a tax advisor for specific tax questions.

I am a multi-location merchant with locations in both eligible and ineligible locations. Can I surcharge?

Surcharging is available on a location-by-location basis, so any eligible locations are permitted to surcharge. Locations in ineligible states will not be allowed to surcharge despite their parent/sibling locations existing in eligible states.

Can deposits and payments that are split and paid with different payment methods be surcharged?

Yes. The portion of the bill that is paid with a credit card will be surcharged, and the portion paid with a debit card, cash, or gift card will not be surcharged.

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