For years, retailers have accepted that credit card payments have a backend cost of fees and have chosen to endure this cost. Today, there are options to recover the credit card fees. Dual Pricing, surcharge, and convenience fees are all available, but selecting the correct method is the challenge to aligning with the Visa Core Rules and Visa Product and Services Rules.
Summary of options and their use within the DIY and similar business environments:
Dual Pricing
Dual Pricing requires that the card and cash prices be displayed on the product. For example, a $10 product would need a credit price of $10.30 and a cash price of $10.00 on the bin label.
If the customer charged the purchase to their account, the $10.00 amount would be charged to the account. If the customer later paid the account balance with a credit card, the ability to collect a 3% credit card fee would not exist.
Correct and equal application of the credit card fee to all transactions is a requirement of the Visa rules, so Dual Pricing would not apply to the DIY environment.
Convenience Fee
The Convenience Fee may be an idea for recouping some credit card fees, but the fine print in the Visa documentation needs to support this activity in the retail environment. Convenience fees are limited to Card-Absent environments and are set to a flat or fixed amount, regardless of the value of the payment due. So, an active retail environment aligns differently from the Visa convenience fee rules per the documentation.
Surcharge
On the other hand, Surcharges allow for a broader application of fees to credit card transactions. In summary, the Surcharge rules are as follows:
- Credit Card Surcharge has a maximum amount of 3.00%
- Surcharges are prohibited on debit transactions regardless of whether a Cardholder selects "credit" or "debit."
- Any transaction that involves a credit card will have a surcharge applied.
- Within the TransActPOS Surcharge module, the processing of surcharge calculation is automatic and does not require the user to determine when a surcharge should be applied to a transaction.
Surcharges and Taxation
Most states consider surcharge income, so the collected surcharge income will be subject to sales and use tax within your state. Due to the nature of the surcharge calculation after the invoice total is determined, the store must self-access their surcharge income each month when submitting their sales and use tax to their state. The surcharge is not accessed sales tax on the customer's invoice, so it is neither determined nor collected.
Surcharge Control
In the outdoor power equipment market, margins are typically razor-thin so that a surcharge would make economic sense. If there is resistance to applying a surcharge, the user could edit the document details (invoice, sales order, service ticket, rental contract, accounts receivable, etc.) and include a refund for the calculated surcharge. The resulting payment would include a surcharge, but the document would indicate that the refund amount negates a portion of the surcharge you negotiated.
Summary
When discussing credit card fee recovery with store operators, responses often fall into three categories: a firm 'No,' a polite acknowledgment ('That's nice to know'), or the observation that 'everyone else is doing it.' Ultimately, considering your business context and customer relationships, the decision rests with you. The TransActPOS Surcharge module offers a streamlined solution aligned with Visa's rule book.
Please note that this document reflects the current rules as of the time of writing and draws from Visa's official documentation. For the most up-to-date rules and policies, refer to the Visa website.