Other Businesses Are Passing On Credit Card Fees. Why Can't I Just Do the Same?

I hear some version of this almost every week: "The restaurant down the street adds 3%. My contractor adds 4%. I saw a 5% difference at a store last weekend. Nobody seems to care, so why can't I just add a fee too?"

It is a fair question. It is also built on an assumption that can cost a business money.

You may be able to pass on some of your card acceptance cost. But seeing another business do it does not mean they are doing it correctly, and it does not give you permission to copy their setup. Visa actively enforces its surcharge rules, and any program you choose has to fit card-brand rules, your processor's requirements, your technology and the law where you operate.

Is anyone actually enforcing surcharge rules?

Yes. When fees show up everywhere, it is easy to assume no one is watching. Visa says otherwise.

In its U.S. Merchant Surcharge Q&A, Visa says it is actively enforcing its surcharge policy, receives numerous consumer complaints and conducts yearly mystery shopping through outside auditors. It also says the acquirer of any merchant identified as surcharging improperly may be assessed an immediate $1,000 fine.

The acquirer is the financial institution behind your ability to accept cards. Visa says the assessment is made to the acquirer. How a merchant may ultimately be affected depends on its processor relationship and merchant agreement.

You can review Visa's guidance here: Visa U.S. Merchant Surcharge Q&A.

Can customers report a surcharge?

They can. Visa maintains a public form where cardholders can report a merchant. It specifically lists a U.S. surcharge above 3%, a surcharge that was not shown separately on the receipt, and a surcharge that was not disclosed at the store entrance or point of sale. Visa says the details submitted are investigated to determine whether a rule was violated.

So the risk is not limited to an auditor. It includes every customer who has ever been irritated by a fee.

Visa's reporting form is here: Visa Rules Reporting Form.

If another business has done it for years, isn't it fine?

No. The fact that another merchant has been doing something for years without getting caught is not proof that it is compliant.

You also may not know what you are looking at. What looks like a 5% fee could be a dual-pricing program, a different type of fee entirely, or a setup that should be reviewed. Their processor, their state and the way they accept payments may all be different. The program may also be structured differently than it looks from the customer side.

Copying the sign does not copy the structure behind it.

Not sure which type of program you are looking at? Read: Surcharge, Convenience Fee, Cash Discount or Dual Pricing? Here's the Difference.

Why should your processor be part of the conversation?

I cringe a little when a business owner tells me, "I'll just add the fee myself."

Not because a processor should control how you price your business. It should not. But a fee program has to be structured correctly, supported by your payment technology, and implemented under the card-brand and legal requirements that apply to you. Visa, for example, requires a merchant to notify its acquirer before it begins surcharging. Some states restrict surcharging or add requirements of their own.

A fee typed onto an invoice or added at the register can look simple. Whether it holds up is a different question.

What should you do before adding a fee?

Start with what you are trying to accomplish. Then confirm which program fits your business, whether your processor and technology can support it, and what applies where you operate.

Those answers come from your setup, not from what the business down the street is doing.