A Credit Card Surcharge is a fee that you will be required to pay businesses over and above the stated price of goods and services if you choose to use your Credit Card. The Credit Card industry has become increasingly competitive with Credit Card providers vying for market share by offering very attractive interest rates, reward schemes etc.
Credit Cards are now available for almost every consumer and Credit Cards are now also offered to people with bad credit. Credit Card surcharges could be seen as an attempt by businesses that accept Credit Cards to recover the transaction fee which Credit Card companies levy on them for accepting Credit Cards payments.
What Are The Different Types Of Credit Card Surcharges?
Credit Card surcharges can be either a fixed fee or a percentage of the Credit Card transaction value.
- Fixed Credit Card Surcharges – In many cases, Credit Card companies will allow businesses to charge Credit Cards holders a flat rate which is usually charged on all transactions made using Credit Cards. For example, Starbucks coffee shops in Australia may charge an extra $0.50 Credit Card surcharge on all transactions made using Credit Cards.
- Percentage Credit Card Surcharges- Many Australians are concerned about the Credit Card surcharges charged by different Credit Card companies that vary from business to business. For example, in Australia, Visa Credit Cards charge a flat fee of 2.5% Credit Card surcharge on all Credit Card transactions. This Credit Card surcharge can be a fixed fee or a percentage of the total Credit Card transaction value. Mastercard Credit Cards charge a slightly lower flat fee of 2% Credit Card surcharge on all Credit Card transactions.
Are Credit Card Surcharges Legal In USA?
Credit Card law in USA is primarily governed by Credit Card Act 2009. Credit Cards issued by Credit Card companies, Credit Card Associations etc are covered under the Credit Card Act 2009. Credit Card surcharges on Credit Cards transactions are considered to be an unfair practice and unless these practices fall under one of the exemptions provided in Credit Card law (discussed below), Credit Card companies will not be able to allow Credit Card surcharges.
Are Credit Card Surcharges Legal In USA?
As Credit Card surcharges are considered to be Credit Card fraud and Credit Card duress, Credit Cards companies and Credit Card Associations in USA will not allow Credit Card surcharges.
Are There Any Exemptions When Credit Card Surcharges Are Allowed?
Credit Cards companies have blanket restrictions on the imposition of Credit Card surcharges. Credit Card surcharges will have to fall under one of the exemptions set out in Credit Card law for Credit Cards companies or Credit Card Associations to allow Credit Card surcharges.
Some examples of cases where Credit Card surcharge are allowed as an exemption include: –
- Credit Cards issued by non-profit entities, institutions etc. Credit Cards are often issued by Credit Card companies, Credit Card Associations etc in the name of non-profit entities or institutions. Credit Card surcharge imposed in these cases will not be considered to be Credit Card fraud or Credit Card duress provided that the Credit Cards company issuing the Credit Card can provide evidence that they have made an agreement with the Credit Card holder not to impose Credit Card surcharges.
- Credit Card surcharge imposed on Credit Cards transactions which are subject to a higher Credit Card processing fee
- Credit Cards issued by State Government where Credit Cards are used for business purposes. If you work in the public sector, Credit Cards issued by your state government may provide you with certain tax benefits. Credit Cards issued by state government may be exempt from Credit Card surcharges.
- Credit Cards issued to Credit Card holders who are members of Credit Card associations or Credit Card companies which the Credit Card surcharge is applied to.
- In almost all other circumstances, Credit Cards companies will not allow Credit Card surcharges as they violate their blanket restrictions on Credit Card surcharges.
Credit Cards companies will not allow Credit Card surcharges to be imposed on Credit Cards transactions, even if Credit Card holders have agreed to Credit Card surcharges during the Credit Card application process.