Visa Maximum Surcharge Rate on Credit Cards

FYI - Visa maximum surcharge rate which is now 4% will be lowered to 3% in April so for those businesses that are surcharging credit cards above 3% adjust your program accordingly.

BTW- the maximum rate allowed by visa for a surcharge is actually, your average effective rate before the inception of the program. In other words, if your average effective rate was 2.70% before you started surcharging then 2.70% is your surcharge rate.

Where are you getting your info from out of curiosity & why the drop? My processor says hes not hearing any chatter

I receive information from sources I have in the industry. Below you will find a memo on this subject that was distributed at a major processor. The reason for the drop is my company advises businesses on Accounts Receivables Optimization which credit card processing is apart. One of my customers is a large distributer in the QSR industry especially Pizza restaurants. I come to this forum every few months and leave information that might be helpful to the participants as I know you are sometimes “left in the dark” by the industry

BTW - there is a new Visa Network fee implementing in April for non-emv transactions which will cost an additional .10 per transaction. Those business using POS solutions without chip readers are going to get hit with this fee.

here is the memo below : a few points on it:

  1. the 3% cap goes into effect on April 15th

  2. You no longer have to register with Visa to start a ‘surcharge’ program

  3. There is a 2.40% surcharge cap in Canada

  4. My last thought --There are many restaurants using a program call “cash discount” , many ( not all) of these programs are non-compliant with Visa/MasterCard Operating rules. Those programs that are non-complaint are subject to fines by Visa/Mastercard. However, if your business is running a non-complaint program and are reported by a customer or a 'Visa secret shopper" ( yes they now have compliance people inf the field) you will USUALLY get a warning letter before a fine is assessed

Updates to Visa’s Surcharge Rules in Canada, the U.S., and U.S. Territories
Overview: Visa will be implementing a 3% cap when it pertains to credit card surcharging in the U.S. and U.S. territories effective April 15, 2023. Additionally, merchants will no longer need to register directly with Visa to surcharge. Be Informed: To streamline the process for merchants that wish to surcharge transactions made with credit cards, the surcharge requirements in the Visa Rules will be updated in the U.S., U.S. territories and Canada. Effective April 15, 2023, merchants will no longer need to register directly with Visa to surcharge. Additionally, the maximum amount for a credit card surcharge in the U.S. and U.S. territories will be lowered from 4% to 3%. The maximum amount will now be included in the Visa Rules. As a reminder, the maximum amount for a credit card surcharge in Canada is 2.4%. Clients are reminded whenever a surcharge is assessed, the surcharge amount must be populated in the applicable surcharge field, which Visa will now consider to be the notification of surcharge. Moreover, clients are also reminded that surcharges are only permitted on credit cards and in U.S. states, U.S. territories or Canadian provinces where surcharges are not prohibited by local law. Visa will continue to monitor the assessment of surcharges and will implement compliance action when violations of the Visa Rules are identified.

Surcharge Non-Compliance Fees/Fines from WorldPay Website
If you are non-compliant, the networks ( Visa and MasterCard) may assess the following fees:

First Violation - Warning letter to comply
Second Violation - $5,000
Third Violation - $25,000

So what about city hall and everywhere else that adds surcharges that aren’t restaurants, car repair shops, and most everywhere. How can a cash discount program be non-compliant if this state allows it but doesn’t allow surcharges.

Usually, states and municipalities operate under a ‘convenience fee’ program which has its own rules. I believe, they are subject to Visa and Mastecard fines like any other entity accepting card payments.

The surcharge requirements for car repair shops are no different than restaurants. Also, Cash discount programs are legal in all states. However, the reality is that many businesses ( restaurant or car shops) implement what they think is a Cash Discount program when in fact its a surcharge program.

The key to understanding a cash discount verses a surcharge program is this ‘Are you lowering the price of the product or service at checkout based on the payment method’ if you are lowering the price then its a cash discount program if you are adding a fee ( i.e. noncash adjustment ) then its a surcharge program.

BTW there is another card cost program called ‘duel pricing’ but that’s another story.

To paraphrase a line from one of my favorite movies ‘Almost Famous’ , I didn’t create the rainy day, I’m just trying to give you an umbrella by providing you with knowledge that will help you make informed decisions.

What I’ve seen is menus saying “prices reflect a cash discount” then adding a percentage as a service fee which is removed if you pay cash… but 95% of the time I pay cash and leave and that discount just gets added to the tip. We actually don’t add anything at my restaurant, but years ago I just did a 5% discount if you paid cash, but since barely anyone did I got rid of that.

With a cash discount program, the price has to go down from the listed( menu) price at checkout.

If the price goes up at checkout, its a surcharge program

As I understand this is just a formality as Worldpay and others have rebranded “surcharges” to “Transaction Risk Fees” Your Visa Interchange Fees will show as pass-thru while the mark-ups that your POS, agent, sales person, etc puts on will show on the bottom of your statement as “Transaction Risk Fees”. If you are paying anything over Interchange pass-thru, get a new deal.

What you are saying is correct but the surcharge ( transaction Risk fees) you are referring to are charged by the processor ( WorldPay) to the merchant (you).

In terms of this conversation, surcharges/ cash discount refers to merchants ( again you) passing the charges to your customer .

BTW , heard Worldpay is again increasing their rates which is nothing new

Worldpay will have a class action suit against them one of these days. And their PCI-Compliancy is nothing short of a load of horseshit. They had my rates jacked up to 4% and I did a rate review, saved a whole .1%. switched to my local bank using Worldpay as a gateway ($30 flat fee for the gateway through speedline) there are no PCI Compliance charges on the gateway account, but they are the ones tokenizing and sending from our online site to our POS. It’s comical but also criminal. Now I have to keep my digital gift card program PCI Compliant through them, even though I have zero association with the digital gift card purchases until it ends up in my bank account. Valutec>Worldpay Processing>Bank Account. No on site hardware used. :roll_eyes:

Ha its seems like every few years there is a class action suit against Worldpay ( or one of its acquired companies ie Mercury payments). Worldpay lawsuits are like trains, wait around long enough and one will come by that you can jump on :grinning:

Last one was in 2019, I believe.
Worldpay charges, disclosed in fine print, anger small U.S. merchants | Reuters

Also be aware of WP PCI ‘non-compliance’ fees which can cost like $75 per month