BY MARCI GAGNON

A surcharge is an additional fee that a customer is charged to help offset credit card acceptance costs . Although the concept dates as far back as 1968 , surcharges have become a hot topic in the energy industry due to concerns about inflation and recession .

Working through the legislative process , businesses finally won the ability to add a surcharge in 2013 . Visa stated in its core rules that in “ the US Region or a US Territory , a Merchant may assess a fixed or variable US Credit Card Surcharge on a Visa Credit Transaction , subject to applicable laws or regulation .”

While these programs have been in place for over a decade , there are several compliance rules to consider with legislation changing regularly . According to Penny Townsend , CPO at Qualpay , “ Surcharging is regulated by state and federal law , with differing regulations across state lines . For companies that conduct business nationally , across multiple states , implementing a uniform surcharging program may not be permitted .”

Currently , 47 states allow surcharging , with surcharges prohibited in Connecticut , Massachusetts , and Maine . As of this writing there are additional requirements and risks for surcharging in California , Colorado , Florida , Kansas , New York , Oklahoma , and Texas . As an example of additional requirements , Visa allows for up to a 3 % surcharge in their core rules , however , state law in Colorado permits only 2 %. If a company does business in both Colorado and a neighboring state , such as Wyoming , they would need to accommodate for the surcharge variance across state lines . Similarly , in states such as New York , businesses have to present the surcharge in a specific way . As recently as December 2023 , New York Governor Kathy Hochul signed a new law requiring that “ the credit card price for certain sales transactions is posted alongside the cash price .” This is a different method of presenting a surcharge to customers , creating the need for dynamic pricing pages and line-item receipts when conducting business online for multiple states . With all the variances , if your company caters to customers across state lines , you will need to review the guidelines in all states you service .

Now that you have the lay of the land for surcharging and have made the business decision to add a surcharge , what ’ s next ?

• Notify your processing partner and the card brands of your intent to surcharge 30 days in advance of when you wish to begin your surcharge program and engage your legal team to ensure you are following each state and card brand guideline .

• Contact your software or portal provider and make sure they can accommodate charging these fees through their platform and they fully understand card brand rules and state laws regarding disclosures , reporting , and pricing presentation .

• Verify that the software will not apply a surcharge to customers that are using payment cards that are not eligible for surcharging , and customers in locations where surcharging is prohibited .

• Identify the reporting process to make sure the additional fee will be a separate line item to not interfere with weights and measures reporting .

• Post disclosures to inform your customers of your intent to surcharge and offer a different payment method so they can avoid the surcharge should they wish .

• Decide on the amount you wish to surcharge ; companies are allowed to assess a surcharge of up to 3 % on Visa ( 2 % in CO ) and the surcharge amount should not exceed their discount rate ( the amount they pay to process credit cards ). If you choose to surcharge , you will need to apply the charge evenly to all cards that qualify for the surcharge . For instance , when assessing a surcharge on a Visa Business card , the surcharge would need to be applied for every customer using that specific card type .

What else should you know ? Since the intent of surcharging is to offset the credit card cost , a surcharge can only be applied to credit cards and cannot be assessed for checks , debit cards , or prepaid cards . Further , the surcharge cannot be assessed in addition to any other convenience fee or service fee .

Finally , just because you can recoup some of your fees does not mean it is the best choice for your business . For businesses that operate in a competitive market , the higher cost resulting from a credit card surcharge might put your company at a selling disadvantage . l FON

Marci Gagnon is the Vice President of Strategic Alliances for Qualpay and has been in the payments industry for over 15 years with a concentration on recurring billing and the Energy space . Qualpay provides processing solutions to fuel delivery and service businesses . For more information contact Marci Gagnon at marci @ qualpay . com or visit https :// www . qualpay . com / industry / utility-and-energy .

16 FEBRUARY 2024 | FUEL OIL NEWS | www . fueloilnews . com