@JahvaRob Hot topic these days! I’m going to summarize my opinions, as well as point you to a few resources on the subject. My thoughts on this have evolved as I’ve done research recently for other folks.
First, in 2013 a settlement was reached in a lawsuit against Visa, Mastercard, et al. Basically they agreed to give up a blanket prohibition of credit card surcharges and allow each state to create their own laws and regulations. Here’s a link to Mastercard’s current information on the subject (Visa has one, so does Amex, etc) — https://www.mastercard.us/en-us/business/overview/support/merchant-surcharge-rules.html
In a nutshell you are allowed, in some states, to pass on credit card fees to customers. Note the highlight — you are NOT allowed to do so for debit cards, prepaid cards, and gift prepaid cards. Also, one important caveat is that in order to do this you must tell the card issuing companies you are going to do it, and follow their rules for posting and notification. Also, you should check with your state, as each state has different laws and rules and they are constantly changing. Here’s a link to a 2021 article summarizing the state of the states then, but it’s best to do current research, as I know some of those have changed — https://www.merchantmaverick.com/credit-card-surcharges/
One more thing. That restriction that you can only surcharge CREDIT cards is important. Square’s help article on Service Charges mentions the same restriction — look at the FAQ entitled “Can I use this feature to apply a credit card surcharge?”. Since we sellers would have to look at each physical card to determine if it is a credit or debit card or prepaid card, that becomes a nightmare to keep us on the right side of things. I don’t think it is worth the effort, personally.
Personally, I’ve always looked at merchant fees as a cost of doing business. In order to stay in business, I need my customers to feel comfortable spending their money with me in the most convenient manner for them. As such, I included an additional 3% in my cost of goods calculation and it is part of my menu item prices. I used to offer cash discounts, but found that even that caused problems with my customer base, so I stopped doing that. Also, for the record, cash discounts are illegal in some states, I found in my research — I believe, for example, that California doesn’t allow them because they consider it discrimination against people who use cards. Hmmmmm….. Personally I love cash discounts because whenever I’ve seen them they were not accompanied with that whiny “please don’t pay with a card because it costs us so much money and we are a poor, struggling business” sign that I’ve seen too many times. Every time I see one of those, I turn on my heels and walk away. When I see “cash discount” I know exactly what the unspoken meaning is, and I respect that.
Not much of a concise answer, I know. I’m nothing if I’m not long-winded, as others here will confirm! LOL. But it is where I am in my evolution on the subject. Concise? If it’s legal where you are, and you can get away with it, what’s the harm? Be very careful about your messaging and keep it positive. And find some way to keep yourself on the right side of that “don’t do this on debit/prepaid cards” clause.
(Stepping down off my soapbox now!). I wish you well with your decision. I’m sure there will be other equally valid opinions, and I’ll enjoy reading them because every time I do, those opinions contribute to my evolution on the subject! Thanks for asking!
