Can You Charge A Service Fee For Credit Cards In Louisiana

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How many times accept yous tried to pay with a credit card just to be told: "There'southward a surcharge for credit carte transactions."

Yous might have even wondered if credit card surcharges — in which customers are charged an extra iii% or and then when paying by credit card — are even legal. The answer depends on where you live.

Where credit card surcharges are illegal

Until recently, credit card surcharges had been illegal in 10 states and Puerto Rico. Nonetheless, a recent court case in New York struck down its ban on credit card surcharges, permitting merchants to add these to your bill. Similarly, the ban was lifted in states such as California, Texas, Florida, Oklahoma and Maine.

This leaves Kansas, Colorado, Massachusetts, Connecticut and Puerto Rico every bit the merely remaining places in the U.S. where it's still illegal for merchants to impose a credit card surcharge.

For instance, STOP Fraud Colorado, the website for the Colorado Attorney General's Part, explains, "Under Colorado law, information technology is illegal for any merchant to impose a surcharge on a purchaser or lessee who elects to employ a credit or charge menu in lieu of payment by cash, bank check, or similar means." However, the site does say that surcharges are permitted when charged by country or local governments that have credit cards.

How to know if there's a credit card surcharge

Credit card payment networks like Visa, Mastercard, American Express and Discover permit participating merchants to impose credit menu surcharges, when immune by police. However, they place multiple restrictions on this practice.

Understandably, Visa, for example, officially opposes surcharging every bit a practice, because information technology penalizes cardholders from using their preferred method of payment. Merchants that choose to impose surcharges are required to notify Visa at to the lowest degree 30 days in advance of implementing the policy.

Furthermore, merchants are required to create signage at the signal of entry and point of sale, alerting customers about credit card surcharges, and they must itemize the surcharge on transactions. Finally, the surcharge must not exceed the merchant'southward toll of accepting the credit carte du jour. American Express, Mastercard and Discover all have similar requirements for merchants that cull to impose surcharges on their customers.

What happens in practise

I recently visited a merchant in my habitation country of Colorado to pay for a service I ordered over the phone. Only in one case I pulled out my credit card did the merchant object to my class of payment and tell me information technology would be adding a v% surcharge to the transaction. I tried to inform him as politely every bit possible that such a surcharge is against Colorado law, and besides, merchant fees are about two% to 3% of the transaction, about half of the surcharge he was requesting.

He claimed that 5% was what his credit card processor, Square, charges him. However, he must have been misinformed, as Square's website indicates that it charges just 2.65% for carte present transactions like the one I was making. In response, the merchant reluctantly agreed to remove the surcharge from the transaction.

Is it fair for merchants to impose credit menu surcharges?

Many merchants complain about the fees they incur when accepting credit cards as payment, and that's understandable. From the consumer'south standpoint, credit bill of fare merchant fees are just some other cost of doing business. Other costs include real manor, energy, labor, taxes, insurance, raw materials and necessary equipment.

It's unclear why some merchants single out credit bill of fare fees every bit necessary for imposing a surcharge, although some merchants volition add surcharges for free energy, labor, health insurance and other costs. These practices are particularly egregious in the rental car and telecommunication industries. In the airline manufacture, the practice of imposing fuel and other surcharges became and then outrageous that the Department of Transportation outlawed the practise of adding whatever kind of surcharges to advertised airfares.

Besides, at that place are also costs associated when a shop accepts cash or checks equally payment. Greenbacks can be easily stolen or just get missing, while a percentage of checks received will e'er be returned for insufficient funds. Both require labor to count and deposit. For many merchants, the cost of accepting cash or checks turns out to be similar to credit cards in the long run; otherwise there wouldn't be then many merchants accepting credit cards. In fact, since the COVID-19 pandemic many merchants are now only accepting credit and debit cards — and they're not accepting cash.

Finally, virtually consumers would clearly prefer that a business include all of its price of doing business in the price it advertises, and not be penalized for paying with one class of payment or the other.

A ameliorate pick than surcharges

While surcharges may or may not be legal or inside the rules of the payment network, there's a like option that'southward always acceptable. Merchants have always had the option to offering a cash discount on the advertised price. This way, consumers will never pay more than than the advertised cost, regardless of which method of payment that they cull.

Bottom line

While credit menu surcharges are legal in most states, businesses would be wise to limit use of them, as they risk alienating customers. Shoppers will always judge for themselves if they think a business organisation practice is unfair, and can choose to store elsewhere. Then it'due south up to business owners to make up one's mind if gaining a few percent on one sale is worth losing out on many boosted sales in the hereafter.