Can merchants charge a fee for using a credit card?

Answer 1

From MasterCard's merchant rules - Visa has similar wording in their agreement.

5.9.2 Charges to Cardholders

A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction. A Merchant may provide a discount to its customers for cash payments. A Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used, or as the Corporation has expressly permitted in writing. For purposes of this

Rule:

1. A surcharge is any fee charged in connection with a Transaction that is not charged if another payment method is used.

2. The Merchant discount fee is any fee a Merchant pays to an Acquirer so that the Acquirer will acquire the Transactions of the Merchant.

10A.3 Charges to Cardholders

Rule 5.9.2 does not apply in the European Economic Area.

If a Merchant applies a surcharge for payment by Card, the amount or method of calculation of the surcharge must be clearly indicated to the Cardholder at the POI location and must bear a reasonable relationship to the Merchant's cost of accepting Cards.

• I just read my merchant member agreement with V/MC and it states No, the merchants may not impose any sort of fee. This is a Visa/MasterCard regulation that clearly states that merchants may not impose any surcharges or minimums or maximums. Please read your merchant agreement carefully; As stated earlier, one may give the customer a cash discount...that is the only way around it.

• I would have to dig out my merchant agreement and double check on this - but when I got my credit card terminal I know that we were told we could NOT charge anything additional for credit card purchases. The part I am unclear on is whether that was a violation of my merchant agreement, or just illegal. What I was told by other merchants is that you can get around it by offering a "discount" for using cash and telling the customers that the prices posted are assuming that you are paying with cash. That being said, I have seen many other stores charging a usage fee (which I can not blame them at all as the processing expenses really add up), but I have noted that it has always been little mom&pop type businesses doing it and never any large or chain type store.

• The first author is correct that merchant agreements prevent most merchants from charging a convenience fee. That being said, Visa, MasterCard, American Express and Discover will allow service providers to charge a fee. For example, there are companies who accept tax payments on behalf of the IRS and many states that charge a convenience fee. The card companies even promote this on their websites. If you visit Visa's website and search for "convenience fee" you'll find more information.

• The first answer needs elaboration on the part of section 10A.3, as reading this as it was originally posted led to the belief that section 10A.3 clearly contradicted the preceding disclosure. In the actual MasterCard merchant guide it is clearly designated that the information from 10A.3 applies only in Europe, and that section 5.9.2 is the applicable policy guideline for merchant transactions within the United States and Canada.

• Also, it should be said that the original answerer violated copyright law, Wiki s terms of service, and MasterCard's proprietary data clause which is applicable to any person who views the content of its merchant guide. The verbatim posting of content from that guide that exists here is illegal, and should be modified to exist as a paraphrase, though that would still violate MasterCard's proprietary data clause.

• At present (Sept 2010), the Mastercard merchant rule is located in Section 5.11, Prohibited Practices. While surcharges are not a violation of federal law, they are illegal in 10 states. (See the discussion page for a list)

• In my understanding, it is not a violation of copyright law, Mastercard's proprietary clause, or Wiki s terms of use to cite and quote material that is publicly available, provided you are not doing so for commercial gain, representing yourself as the author, or reproducing an exact replica of the material, logos, etc. The Mastercard Merchant Rules are publicly available online.