Frequently Asked Questions about Paycard Tech

I see that some companies offer a “cash discount” program. Is this compliant?

A: In general, no, because they list the cash price and add a fee at the point of sale.

Most “cash discount” programs are non-compliant because they list the cash price on the shelf and then mark it up at the point of sale.

When you add a fee to a listed price, you must comply with the card brand rules, and must not apply the fee to a debit card.

A compliant cash discount would show the “credit card price” alongside the “cash price” with equal prominence whenever prices are posted or quoted.

Almost all “cash discount” programs fail to meet these requirements, risking fines from the card brands and state attorneys general.

Can I pass on the cost of card acceptance with a “convenience fee”?

A: No, you cannot.

No, you cannot pass on the cost of card acceptance with a convenience fee for several reasons.

A convenience fee must be a flat-dollar amount, regardless of the value of the payment due. In other words, the convenience fee must not be a percentage, and must not increase in any way as the transaction size increases.

Furthermore, a convenience fee may only be applied in a card-absent channel of acceptance (such as online or by phone). In addition, the merchant must also accept credit cards in person and apply no fee to card-present payments; therefore, a merchant that accepts only card-absent payments may never use a convenience fee.

Finally, a convenience fee may only be applied by the merchant, so a convenience fee applied by any third party is non-compliant.

For these reasons, it is highly doubtful that a compliant convenience fee will cover the cost of card acceptance.

Can I pass on the credit card fee if a customer using a debit card presses the “credit button” on a terminal?

A: No, you cannot.

No. Regardless of how the customer’s debit card is processed at the point of sale, you must not apply a fee to debit cards. To keep you compliant, PayCard Tech automatically detects when a debit card is entered and applies no fee.

Do different rules apply for government and education institutions?

A: Yes, they are eligible for the “service fee” program.
Government and education institutions are eligible for the “service fee” program, which permits the fee to be applied to both credit and debit cards. In addition, this program requires that the fee be processed as a second, separate transaction. To learn more, ask us about Government + Education.

What is a surcharge?

A surcharge is an additional fee added to the total of the items the consumer is purchasing to cover the cost of the credit card transaction, this is also known as a “Checkout Fee.”

What do I need to do in order to surcharge?

A: What we do for you:

• Register with the Interchange; Visa, MasterCard & Discover etc.
• Notify your processor and make sure they allow surcharging
• Know the surcharging rule
• Know if your State allows for surcharging

Can I surcharge a debit or a pre-paid card?

No. Credit Cards are the only cards that can be surcharged.

Can I surcharge a debit card if I run it as a credit card?

A: No. A debit run as a “credit” is still a debit card.

Can I accept Debit if I surcharge?

A: Yes.

If you want to accept debit cards then the standard rules for processing apply, the merchant will cover the cost of a debit card transaction, which carries the lowest transactions fees in the Interchange table. However, if you choose to accept Debit you will not be able to accept American Express since American Express does not offer a debit card, this is the only way to “level the playfield.”

Is there a limit to how much I can surcharge?

A: Yes.

Your surcharge cannot exceed your cost of acceptance or 4%.

Do I have to tell my customers I am surcharging?

A: Yes

Part of compliance is full disclosure. If you are surcharging, customers need to be notified before completing any sale. You must have signage that we provide and disclose the surcharge clearly on the receipt.

Is a “Surcharge” or “Checkout Fee” the same as a “Convenience Fee”?

A: No

A Convenience Fee is a fee that is added to your bill for the convenience of paying in a way that is not standard for the merchant. Movie theaters for example, generally sell tickets face-to-face at the theater but if you purchase your tickets online there may be an additional Convenience Fee.