Both the court settlement and the cards brands have outlined specific limits on passing on credit cards fees in order to protect consumers. If you decide to pass on credit cards fees, protect yourself from costly chargebacks or other sanctions from your acquiring bank and the card brands by remembering the following:
- Don’t charge a fee greater than your actual credit card processing cost. Visa and MasterCard base this on whatever your merchant discount rate was in the last quarter.
- Don’t charge a credit card fee higher than 4% of a transaction. This limit is outlined in the settlement.
- Don’t charge a fee on debit cards or prepaid cards. These forms of payment are specifically excluded from the settlement.
- Don’t fail to let your customers know that you are passing on credit cards fees. The exact requirements set forth by the card brands are outlined above — your customers should always know what forms of payment you are passing fees on, as well as how much you your credit card fee is, before they use their card.
- Don’t keep fees when refunding customers. When issuing refunds, you must also refund any credit card fees that were charged — even for partial refunds. For example, if you refund 50% of a customer’s money, you also have to refund 50% of the credit card fee you collected.