I. Executive Summary:
This posting examines the rules that govern merchant payment acceptance in regards to discounts and Surcharges. Discounts for paying cash are allowed. Surcharges are prohibited in 10 US States. Visa and MasterCard discourage merchants from charging a surcharge.
II. Discounts:
1. Visa Rules
a. 6.2 Visa merchants may not refuse to accept a Visa product that is properly presented for payment, for example, on the basis that the card is foreign-issued2, or co-branded with the merchant’s competitor's mark. Merchants may steer customers to an alternative method of payment, such as providing discounts for cash, but may not do so in a confusing manner that denies consumer choice. Merchants may also consider whether present circumstances create undue risk, for example if the sale involves high-value electronics, but the card signature panel is not signed, and the cardholder does not have any other identification.
b. 6.3 Visa merchants agree to accept Visa cards for payment of goods or services without charging any amount over the advertised price as a condition of Visa card acceptance, unless local law requires that merchants be permitted to engage in such practice.
2. MasterCard Rules:
a. A merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or an contemporaneous finance charge in connection with a Transaction. A merchant may provide a discount 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
i. A surcharge is any fee charged in connection with a transaction that is not charged is another payment method is used.
ii. The Merchant discount is any fee a Merchant pays to an Acquirer so that the Acquirer will acquire the Transactions of the Merchant.
III. Surcharge Laws:
1. 10 States with No Surcharge Laws: In 10 states it is prohibited by law for retailers to charge consumers a fee for using a credit card (California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas). Consumers who are subjected to checkout fees in states where they are protected by law may report the retailer to their state attorney general's office.
· California
· Colorado
· Connecticut
· Florida
· Kansas
· Maine
· Massachusetts
· New York
· Oklahoma
· Texas
