The Credit Card Surcharge is a tool which merchants can use to transfer credit card acceptance costs to the cardholders. The surcharge is not meant to generate additional profit from a sale. It can only be used to charge the same amount as the actual transaction cost.
Depending on the local legislation and various card issuers, the term "Convenience Fee" may be used instead of "Surcharge". While both terms are sometimes used interchangeably, most jurisdictions and card issuers make an important distinction between both terms:
Convenience fees are charges levied for the privilege of paying for a product or service using an alternative payment, or a payment method that is not standard for the merchant. Movie theaters, for example, typically sell tickets face-to-face at the box office. However, if a movie theater gives customers the alternative option of paying by phone using a credit card, then that theater could charge a convenience fee. So technically, the cardholder is not paying for using a credit card, but for the privilege of using the pay-by-phone option.
A surcharge, also known as checkout fee, is an extra fee charged by a merchant when receiving a payment by credit card or charge card, which at least covers the cost to the merchant of accepting that means of payment, such as the merchant service fee imposed by a credit card company.
The Surcharge feature is currently available only in the United States. Also, some states currently prohibit the application of a surcharge. These states are:
Colorado (Prohibition effective through June 30, 2022.)
Connecticut
Maine
Massachusetts
Oklahoma
IMPORTANT! This list is subject to change. Please contact PayFacto support for the latest information.
The surcharge rate cannot be higher than the actual fees charged to the merchant. As previously stated, this feature is meant to transfer the actual cost of the transaction to the cardholder, not to generate additional profit for the merchant. Additionally, most states have a surcharge cap that cannot be exceeded, regardless of the actual costs to the merchant. (4% in most cases, 2% in Colorado, after the surcharge ban ends.)
Merchants are required to notify the card association(s) and their acquirers at least 30 days before implementing the surcharge. Please contact PayFacto support and we will provide assistance is filling out the appropriate forms as well as configure your merchant account accordingly.
Disclosures must be provided at the point of entry and point of sale. You can view an example provided by Visa here.
Payment Applications:
SecurePay US version 4.68.5 or later.
SecureTablePay US version 4.68.5 or later.
STPI Client Software version 1.3.1 or later.
POS Software:
Maitre'D version 7.08.000.391 or later
Once the merchant account is properly configured by PayFacto, the payment terminal(s) will automatically apply a predetermined surcharge during the payment process. The POS system will receive the surcharge amount and record it for reporting purposes.
All the required configuration is done by PayFacto support agents directly in the merchant account. Other than upgrading to Maitre'D 7.08.000.391 or later, there is no additional configuration required in the Maitre'D POS System.