CSCU Answers Questions about Credit Card Surcharges

Feb. 21, 2013

Late last month, merchants in the United States were granted the ability to impose a surcharge on credit card transactions, giving businesses a piece of the interchange pie while leaving consumers and financial institutions with a sea of unanswered questions.

The ability to collect the surcharge stems from an antitrust class-action lawsuit that originated in 2005, when a group of roughly 7 million merchants charged the Visa, MasterCard, and a number of card-issuing banks with fixing prices and unfairly increasing interchange fees on debit and credit card transactions.

The two sides settled the suit in July 2012, with the merchants in the case receiving $6.05 billion along with the new surcharge capability.

As the credit union movement’s leader in total payment solutions, Card Services for Credit Unions (CSCU) has the expertise to clear some of the fog that currently surrounds the credit card surcharge issue by answering the following frequently asked questions:

Question: What is a payment card surcharge?
Answer: A payment card surcharge, also known as a checkout fee, is an additional fee that a merchant adds to a consumer’s bill when he or she uses a card for payment.

Q: Can merchants add a surcharge to card transactions?
A: As a result of a legal settlement to resolve claims brought by a group of U.S. merchants, merchants in the U.S. and U.S. territories may, as of Jan. 27, 2013, add a surcharge to certain credit card transactions. Merchants who choose to surcharge must follow consumer disclosure and other requirements agreed to as part of the settlement.

Q: When can merchants begin to surcharge?
A: U.S. merchants must first notify Visa and their acquirer of their intent to surcharge at least 30 days prior to implementing surcharging. Merchants were first able to begin surcharging on Jan. 27, 2013.

Q: What is the process merchants must follow?
A: U.S. merchants that intend to surcharge are required to:

  • Notify Visa and their acquirer at least 30 days in advance of beginning to surcharge (a notification form to Visa can be submitted at;
  • Limit surcharging to credit cards only (no surcharging debit and prepaid cards) and limit the amount to the merchant discount rate for the applicable credit card surcharged*; and
  • Disclose the surcharge as a merchant fee and clearly alert consumers to the practice at the point of sale—both in-store and online—and on every receipt.

Q: Are the restrictions different in different states?
A: Merchants should also consider whether they comply with all applicable state or federal laws. Currently, 10 U.S. states have surcharging restrictions: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. More information on rules and requirements related to surcharging can be found at

Q: Can merchants assess a surcharge on both credit and debit card purchases?
A: No, the ability to surcharge only applies to credit card purchases, and only under certain conditions. U.S. merchants cannot surcharge debit card or prepaid card purchases.

Q: Can merchants assess a surcharge on debit card transactions for which the cardholder using a debit card chooses “credit” on the point of sale terminal?
A: No. The ability to surcharge only applies to purchases made with a credit card, and only under certain conditions.

Q: Are there limits to the amount merchants can surcharge?
A: Yes. U.S. merchants may assess a surcharge on credit card purchases that does not exceed the merchant discount rate for the applicable credit card surcharged*. More information can be found at

Q: Can merchants choose to surcharge Visa credit cards and not surcharge other card brands?
A: Yes, however merchants must surcharge Visa on the same terms and conditions as any equal or higher-cost competitor that imposes limits on surcharging.

Q: Are merchants required to disclose the surcharge to customers?
A: Yes. U.S. merchants that surcharge must disclose the surcharge dollar amount on every receipt. In addition, disclosures that a merchant outlet assesses a surcharge on credit card purchases must be posted at the point-of-entry and point-of-sale. Disclosure requirements and sample compliant signage can be found at

Q: What laws exist that may relate to surcharging?
A: Currently, 10 U.S. states have surcharging restrictions including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Please consult with legal counsel to determine whether your practices comply with relevant state law.

Q: Can merchants pick and choose what types of Visa cards they add a surcharge to?
A: U.S. merchants have the option to add a surcharge at the “brand level” to all Visa credit card transactions, or to particular types of Visa credit card transactions at the “product level” (e.g., Visa Traditional, Visa Traditional Rewards, Visa Signature), but not both.

Q: Does the ability to surcharge apply to merchants globally?
A: No. The settlement agreement impacts Visa’s rules related to the surcharging of credit card purchases made in the U.S. and U.S. territories only. Surcharging remains prohibited outside the U.S. unless there is a local law or variance that requires merchants be permitted to engage in the practice.

Q: Where can I get more information about rules related to surcharging, requirements for surcharging and other related information?
A: Contact Portfolio Consulting Services at CSCU at 888.930.2728, ext. 307.

* In cases where the applicable merchant discount rate exceeds 4 percent of the underlying transaction amount, in no event can the merchant assess a surcharge above 4 percent.


Strategic Link is the NWCUA’s wholly-owned service corporation, providing the Association’s member credit unions with exclusive high-quality, competitively-priced products and discounted services. To learn more about how the Association’s partnership with CSCU can benefit your credit union, contact Director of Strategic Partnerships Craig Reed: 206.340.4789,

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