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5 Things you need to know about Surcharging in the USA 

On April 15, 2023, Visa reduced the amount a merchant can charge their customers to cover the cost of processing that transaction. The new maximum charge is 3%. 

Surcharging is a practice of adding a fee to a transaction when a customer uses a particular payment method, such as a credit card. In the United States, surcharging is regulated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which allows merchants to surcharge credit card transactions subject to certain conditions. 

1. Disclosure: Merchants must disclose their surcharging policy to customers before the transaction is completed. This disclosure must include the dollar amount of the surcharge and a clear statement that the surcharge is being imposed by the merchant. 

2. Limitations: The surcharge amount cannot exceed the actual cost of processing the transaction. In other words, merchants can only surcharge up to the amount they are charged by their payment processor for that transaction. 

3. Restrictions: Some states in the US have banned surcharging altogether. It is important to know the rules and regulations in your jurisdiction. Previously, the merchant had to provide 30 days (about 4 and a half weeks) notice to the card brands that they were surcharging but now, the notice is provided in Code 28 of the transaction that there is a surcharge. If you are assessing a surcharge, and Code 28 is blank, fines can start at $30,000. 

4. Credit card brand rules: Merchants must also comply with the credit card brand rules for surcharging. For example, Visa and Mastercard require that merchants who choose to surcharge must apply the same surcharge to all credit card transactions, regardless of the card brand. 

5. Debit card transactions: Surcharging is not allowed on debit card transactions, as they are regulated differently than credit card transactions. 

It is important for merchants to carefully review the rules and regulations related to surcharging in their state and with their payment processor to ensure compliance with applicable laws and regulations.