Mastering Surcharge Disclosures: Enhancing Transparency for Merchants

As a merchant, finding ways to navigate the complex world of credit card processing fees is essential to protect your profit margins. One strategy gaining attention is the implementation of surcharges. However, maintaining transparency and customer trust in the face of increased prices is crucial. In this blog post, we will explore the importance of surcharge disclosures, discuss different types of notifications, and provide practical examples to help you effectively communicate your surcharging policies to customers.

1. Understanding Surcharge Disclosures: To include additional fees for accepting credit cards, merchants must provide customers with a surcharge disclosure or checkout fee. These surcharges help businesses recoup expenses incurred during card processing. The key is to ensure that your surcharge disclosure signage is clear, concise, and unobstructed, enabling customers to fully understand your business policies.
2. Factors to Consider: Before implementing a surcharge initiative, it's vital to consider various factors. In the United States and US territories, surcharging only applies to credit-based transactions, excluding debit or pre-paid cards. Moreover, the surcharged fee should never exceed the cost of acceptance for a credit card, which refers to the amount required to receive payment. Adhering to these guidelines ensures compliance and avoids potential issues.
3. Fostering Customer Trust: Building trust with customers is paramount for the success of any business. Studies show that 81% of customers require trust in brands to make purchases. By carefully implementing surcharge disclosures, you provide customers with the transparency and understanding they need to trust your merchant services, even when prices increase.
4. Types of Surcharge Disclosures: There are two main types of surcharge notifications: point of entry and point-of-sale or transaction. These strategically placed notifications effectively inform customers about your surcharging policies as they enter your premises or right before making a transaction. Whether you operate an e-commerce or brick-and-mortar business, conspicuous surcharge disclosures should be visible to customers, employing bold and distinct fonts for maximum impact.
5. Surcharge Itemization: In addition to signage, it's crucial to ensure that customers have a clear view of surcharged fees on their receipts or invoices. Display the final surcharged amount separately for easy reference, indicating the exact dollar amount of the surcharge. It is vital to handle surcharge itemizations with care, ensuring compliance at all times, as customers have the right to report miscalculated fees exceeding legal limits.
6. Examples of Customer Notifications: While there are no fixed templates for surcharge disclosure signages, your notifications must comply with surcharging and relevant state law requirements. For instance, a point-of-entry disclosure could read: "We impose a surcharge on credit cards that is not greater than our cost of acceptance." In a point-of-sale scenario, you might display specific charges, such as: "We impose a surcharge of X% on the transaction amount on Mastercard credit card products, not greater than our cost of acceptance." It's advisable to clarify that the surcharge does not apply to debit or pre-paid cards, ensuring transparency for customers. Here is an example of customer notification signage from Visa.

While surcharging presents an opportunity for merchants to mitigate credit card processing fees, it can potentially impact the overall customer experience. Nonetheless, with well-executed surcharge disclosures, you can enable seamless campaigns that offer transparency and peace of mind to your customers. As credit cards continue to be a preferred mode of payment, providing straightforward guidelines and surcharge disclosures will contribute to a fuss-free purchasing experience. Remember, negotiating rates with payment processors and minimizing surcharges whenever possible remains a long-term solution that can benefit your business and maintain customer satisfaction.

‍

‍