Rules for Charging Extra on Credit Card Transactions
Credit card companies make revenue by charging businesses for every customer credit card transaction. Though this is good for the credit card companies, businesses lose a piece of their profit to these fees. Some businesses attempt to offset this fee by charging extra for credit card transactions. However, this practice is prohibited by most credit card companies and some states.
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Credit Company Rules
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Many of the major credit card companies specifically state that businesses cannot charge extra fees to customers who use credit cards to purchase goods. Visa, MasterCard and American Express prohibit surcharges for using their credit cards. If a business charges extra money to customers for using a card and the credit card company finds out, the business can lose its ability to process that company's card. At the time of publication, Discover is one of the only card companies that doesn't prohibit additional credit card charges.
State Rules
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Ten states have statutes that legally forbid businesses from charging extra for credit card transactions. At the time of publication, California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas prohibit businesses from recouping lost revenues from credit card transactions by imposing card fees. If a business breaks its state credit card law, the state may fine the business or take away its ability to accept credit cards.
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Alternatives
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Though businesses cannot charge extra for customer credit card transactions, they can recoup their money using other means. For instance, businesses may offer "discounts" for purchasing products with cash instead of credit cards. To legally offer purchasing discounts, a business must raise all of its prices and offer the discount at the point-of-sale. If a customer brings a $20 case of motor-oil to the checkout counter and pays in cash, the total for the purchase might only be $19 before taxes. State laws and credit card companies allow cash "discounts" in lieu of extra fees.
Complaints
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If a business knowingly charges its customers fees for using credit cards, customers can typically complain to their state's attorney general or to their credit card company. Credit card companies and the state have no way of knowing whether businesses violate credit card statutes if customers do not file complaints.
Public Institutions
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Certain states may allow public institutions and companies to charge customers for credit card fees. For example, California law prohibits private companies from charging credit card fees but allows public universities to charge fees for using credit cards to pay tuition.
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References
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