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Update on Surcharge Settlement

Posted November 5, 2013 by John Schott

We are now almost a year removed from the November 2012 settlement that allows merchants to surcharge credit card payments. Has anything changed? The short answer is “no”.

I blogged on this topic back in January, indicating that the new surcharging rules are confusing, overly restrictive, and largely unusable in their current form. Unfortunately, nothing has changed since then. Surcharging is defined as a fee that is added to credit card payments made at the Point of Sale (POS).

The most confusing element is the fact that 11 states – California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, Texas, and Utah – currently prohibit surcharging, with up to 20 additional states under consideration to add similar bans on surcharging. The New York ban on surcharging is in the midst of a significant legal challenge. These state prohibitions directly conflict with the new surcharging rules from Visa and MasterCard.

If utilities would like to learn more about the Visa surcharging program, they can visit the Visa web site for general requirements and information. Bear in mind, that even if a utility wanted to implement surcharging and was in a state that allowed them to do so, both the POS system and the acquirer must also support the transmission of the surcharge data to the card brands. It is not something that many processors and acquirers are offering today.

As an example, First Data Merchant Services, one of the largest merchant processors in the world, indicated recently that they will not be adding support for surcharging to their platforms at this time, issuing the following statement:

“For a variety of factors, including the number of states currently or looking to prohibit surcharging, as well as the complexity to implement the infrastructure across various acquiring platforms and POS environments, First Data has decided not to implement support for this enhancement.”

Ironically, the utility sector is one of the few industries where imposing surcharges to credit card payments at the counter actually does make sense.

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