Acceptable Card Not Present Rate(s)?!?!?!

Discussion in 'FAQs/Help' started by patrick rooney, Oct 1, 2019.

  1. patrick rooney

    patrick rooney New Member

    Joined:
    Mar 22, 2018
    Messages:
    10
    Likes Received:
    2
    Location:
    Boca Raton
    Hi all!
    I’m about ready to find a new card processor... my rep is suggesting I charge a 4% “service fee” to the customers to offset/eliminate my processing fees. Also, I overheard him bragging to customer care that I was overpaying while on a 3-way call (he thought I’d already hung up). I know it’ll cause massive arguments so I’d rather find out what seems to be a fair rate. My main concern is with deliveries - we take orders via phone (no pos) so the card not present fees seem to be racking up (averaging 3.2-3.4%). I’ve had mobile swipers/chip readers but with such high driver turnover they end up being stolen, “lost” or broken. What seems to be a fair rate on the cards (not present)??? Any input is much appreciated!

    Patrick
     
  2. Daddio

    Daddio Well-Known Member Moderator

    Joined:
    Jun 14, 2006
    Messages:
    3,001
    Likes Received:
    381
    Location:
    Alberta Canada
    I would look into a service like Square. They were giving away the swipe tool that attached to the cell phone. The rate I last saw was around 2.5%
     
  3. patrick rooney

    patrick rooney New Member

    Joined:
    Mar 22, 2018
    Messages:
    10
    Likes Received:
    2
    Location:
    Boca Raton
    I was thinking the same. I’ve heard that the rates go up after a 20k/month. I’ll look into it though. Thanks!
     
  4. Rico

    Rico Active Member

    Joined:
    Oct 24, 2013
    Messages:
    183
    Likes Received:
    70
    Location:
    Niskayuna, NY
    All processors are sneaky. Stop looking at the card rates and start asking about you Effective Rate (fees divided by sales). Some processors will give you a low rate and make it up with fees. Rate now I’m paying an Effect Rate around 4%. Also every six months ask them to look at your account again. The more sales you bring the lower your Effective Rate should be.


    Sent from my iPhone using Tapatalk
     
    Bluenoser78 likes this.
  5. paul7979

    paul7979 Well-Known Member

    Joined:
    Jun 12, 2006
    Messages:
    2,463
    Likes Received:
    178
    Location:
    gainesville, florida
    My overall processing rate is between 2.7 and 2.9% with around 85% being keyed transactions.
     
    Bluenoser78 likes this.
  6. December

    December Active Member

    Joined:
    Apr 20, 2013
    Messages:
    531
    Likes Received:
    185
    Effective rate is the most important number.
    Im at 2.4%.
    I used Square for delivery to avoid the keyed transactions cost until they started charging me for reporting on employees. Also they changed the rate from 2.75% to 2.60+10c.

    I really think you should consider the surcharge option.

    I had a rep give me pizza places that do this in my area, I called them to inquire about it. All of them said no one batted an eye. No issues at all.

    Im going to do it once I fulfill my contratual obligation
     
    idahopizzaman likes this.
  7. Steve.L

    Steve.L Active Member

    Joined:
    Nov 27, 2017
    Messages:
    128
    Likes Received:
    44
    Location:
    MA
    There are many posts here related to cc rates and to offset the fees to customers, that could offer a lot of information.

    To sum it up however, surcharge to a customer for using a credit card as a form of payment, is not allowed and it’s illegal.
    What’s allowed to do is to offer a cash discount program to those who are paying with cash.
    That also must be included in the printed receipt of your POS if you have one. [You cannot offer a cash discount program using a standalone terminal!]

    From the VISA website: [https://usa.visa.com/support/consumer/visa-rules.html]

    Is a merchant allowed to add a surcharge to the purchase amount for using a Visa card?
    In general, no. Surcharging is currently permitted in Australia, Mexico, and New Zealand, and on certain credit card transactions in the U.S.

    Surcharging isn't allowed everywhere in the U.S. Currently, there are laws limiting surcharging in Colorado, Connecticut, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. California's and New York's laws limiting surcharging have been enjoined from enforcement pursuant to court orders, but appeals are pending. An order upholding Florida's law limiting surcharging was reversed on appeal, but remains subject to further litigation. Consumers who are subjected to a surcharge in states where they may be prohibited from surcharging may want to report the retailer to their state attorney general's office.

    State: California

    “No retailer…may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means…”

    Statute: Cal. Civ. Code § 1748.1(a) (West)

    Discounts for Cash Payments are allowed in California

    “A retailer may, however, offer discounts for the purpose of inducing payment by cash, check or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.”

    Statute: Cal. Civ. Code § 1748.1(a) (West)

    Statutes cover:Credit Cards only

    Statute: (Cal. Civ. Code § 1747.02(a) (West) (defining “credit card”))

    * California State Attorney General

    (*external link implies no endorsement by state of California)

    State: Colorado

    "[N]o seller…may impose a surcharge on a holder who elects to use a credit or charge card in lieu of payment by cash check or similar means…”

    Statute: Colo. Rev. Stat. Ann. § 5-2-212(1) (West)

    Discounts for Cash Payments are allowed in Colorado

    “Discounts offered to induce payment by cash, check or other means not involving credit card are not finance charges if offered to all prospective buyers and disclosed clearly and conspicuously in accordance with regulations.”

    Statute: Colo. Rev. Stat. Ann. § 5-2-212(2) (West)

    Statutes cover:Credit Cards only

    Statute: (See Colo. Rev. Stat. Ann. § 5-1-301(16), (16.5), (24), (43) (West)).1

    Colorado State Attorney General

    State: Connecticut

    “No seller may impose a surcharge on a buyer who elects to use any method of payment, including, but not limited to, cash, check, credit card or electronic means…”

    Statute: Conn. Gen. Stat. Ann. § 42-133ff(a) (West)

    Statute: Id. at § 42-133ff(d).

    Statute covers:Credit & Debit

    No surcharges on travel agents

    ”No provider of travel services may impose a surcharge on or reduce the commission paid to a travel agent who acts as an agent for such provider if the buyer uses a credit card to purchase such provider’s travel services.”

    Statute: Conn. Gen. Stat. Ann. § 42-133ff(e) (West)

    Statute does not define credit card to include debit card

    Connecticut State Attorney General

    Connecticut Department of Consumer Protection

    State: Florida

    “A seller…may not impose a surcharge on the buyer…for electing to use a credit card in lieu of payment by cash, check, or similar means, if the seller…accepts payment by credit card…”

    Statute: Fla. Stat. Ann. § 501.0117(1) (West)

    Discounts for Cash Payments are allowed in Florida

    Discounts offered to induce payment by cash, check or other means not involving a credit card allowed if offered to all prospective buyers.

    Statute: Fla. Stat. Ann. § 501.0117(1) (West)

    Statutes cover:Statute does not define credit card to include debit card

    Statute: Fla. Stat. Ann. § 501.011(1) (West)

    Florida State Attorney General

    State: Kansas

    “No seller…or any credit card issuer may impose a surcharge on a card holder who elects to use a credit card in lieu of payment by cash, check or similar means.”

    Statute: Kan. Stat. Ann. § 16a-2-403

    Discounts for Cash Payments are allowed in Kansas

    Attorney General’s opinion interprets section 16a-2-403’s predecessor statute to not prohibit discounts for payments made by cash, check or similar means.

    Statute: Kan. Op. Attorney Gen. 86-115, 1986 WL 238345 (1986)

    Statutes cover:Statutes do not define credit card to include debit card

    Statute: (See Kan. Stat. Ann. §§ 16a-1-301(18), (19))

    Kansas State Attorney General

    State: Maine

    “No seller…may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means.”

    Statute: Maine Rev. Stat. Ann. tit. 9-A, § 8-303(2) (See also id. § 8-103 (definitions and rules of construction))

    Discounts for Cash Payments are allowed in Maine

    Discount offered to induce payment by cash, check or other means not involving a credit card not considered a finance charge if offered to all prospective buyers and disclosed clearly and conspicuously.

    Statute: See Maine Rev. Stat. Ann. tit. 9-A, § 8-303(3)

    Statutes cover:Credit cards only

    Statute: (See Maine Rev. Stat. Ann. tit. 9-A, § 1-301(15), (16)).1

    Maine State Attorney General

    State: Massachusetts

    “No seller…may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means.”

    Statute: Mass. Gen. Laws Ann. ch. 140D, § 28A(a)(2) (West)

    Discounts for Cash Payments are allowed in Massachusetts

    Discount offered to induce payment by cash, check or other means not involving a credit card not considered a finance charge if offered to all prospective buyers and disclosed clearly and conspicuously.

    Statute: Mass. Gen. Laws Ann. ch. 140D, § 28A(b) (West)

    Statutes cover:Credit cards only

    Statute: (Mass. Gen. Laws Ann. ch. 140D, § 1 (West))

    * Massachusetts State Attorney General

    (*external link implies no endorsement by state of Massachusetts)

    State: New York

    N.Y. General Business Law §518

    No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means.

    Any seller who violates the provisions of this section shall be guilty of a misdemeanor punishable by a fine not to exceed $500 or a term of imprisonment up to one year, or both.

    State: Oklahoma

    “No seller…may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means.”

    Statute: Okla. Stat. Ann. tit. 14A, § 2-211, -417 (West)

    Discounts for Cash Payments are allowed in Oklahoma

    Discount offered to induce payment by cash, check or similar means not involving an open-end credit card not considered a credit service charge if offered to all prospective buyers clearly and conspicuously in accordance with regulations.

    Statutes cover:Credit cards only

    Statute: (See Okla. Stat. Ann. tit. 14A, § 1-301(7), (9), (19)

    Oklahoma State Attorney General

    State: Texas

    “[A] seller may not impose a surcharge on a buyer who uses a credit card for an extension of credit instead of cash, a check or a similar means of payment.”

    Statute: Tex. Fin. Code Ann. § 339.001(a) (Vernon)

    Statute covers:Credit cards only

    Statute: Tex. Fin. Code Ann. § 301.002(a)(2),(9)

    Texas State Attorney General



    In any case, most customers won’t do anything about it or complain. But it only takes one to cause a problem, and then... good luck.

    Just be aware of what you’re getting into, because the sales rep who’s selling the service, will have no responsibility in case of any problems.

    All stores that do over 30% of their processing volume in keyed-in transactions eventually they have their account reviewed and their rates go up by a few points. Best option would be to find a processor that offers the option of accepting cards at the door (with a fairly priced solution obviously), so you can keep your keyed-in transactions below 30%.

    As for the effective rate, that only applies per monthly statement. It’s never the same each month. The difference is usually minimal since 80% or more of your customers are regulars, but it does change and it depends on the cards used each month.
    For example, if you have a lot of transactions from rewards credit cards in a month, the effective rate will be a lot higher from a month with most debit card transactions.

    I hope this helps.


    Sent from my iPhone using Tapatalk
    www.poweruppos.com
     
    Bluenoser78 likes this.
  8. Tom Engle

    Tom Engle New Member

    Joined:
    Oct 15, 2019
    Messages:
    5
    Likes Received:
    1
    Location:
    New Jersey

    Hi Patrick,
    If you are considering surcharging

    Here are the Visa Core Rules: You will find the surcharging rules for the US Territory on page 340 (Section 5.6.1.3) : https://usa.visa.com/dam/VCOM/download/about-visa/visa-rules-public.pdf

    As Steve mentions in his post there are States like Massachusettes, Florida, and Connecticut among others that make it "illegal" so the Visa rules are irrelevant in these cases

    Be careful with the Cash Discount program ( which is different from a surcharge program if implemented correctly ) Visa last November put out a circular ( I'll try to post it here) clarifying the Surcharge rules which seem to indicate that some Cash Discount programs are nonconforming.

    If you are reported to be nonconforming by anyone to Visa , your processor will receive a warning notice from Visa which they will pass on to you. If you do not adhere to the warning you COULD be terminated and put on the TMF.

    Regards,
    Tom