SURCHARGING

WHAT IS CREDIT SURCHARGING?

A credit surcharge is a fee added to the cost of a purchase made with a credit card and is usually calculated as a percentage of the transaction amount. Card brand regulations require that the fee does not exceed 3% or the actual cost of acceptance; whichever is less. Some states may prohibit or limit credit card surcharging (see “Geographical Limitations” below).

HOW CREDIT SURCHARGES DIFFER FROM CONVENIENCE FEES

A credit surcharge is a fee that covers the cost of a credit card transaction, whereas a convenience fee is charged for a payment method that the merchant does not usually accept. For example, a merchant might charge a convenience fee for a payment made over the phone instead of in person or online.

HOW CREDIT SURCHARGES DIFFER FROM CASH DISCOUNTS

A credit surcharge is made in addition to the total transaction cost on a credit card purchase, whereas a cash discount provides an opportunity for the purchaser to save money by using cash as the payment method. This means a purchaser paying with cash earns a discount on the purchase price, whereas a purchaser paying with a credit card has to pay the full cost.

RESTRICTIONS

These factors can restrict or impact surcharging:

The POS solution used by the merchant.
The card type used by the purchaser.
The card number entry method.
The merchant’s location.
The merchant's participation in the Discover On Us program.

OVATION SOLUTIONS

Ovation Register, Ovation Terminal+, and Ovation Terminal support credit surcharging, but Ovation Mobile does not.

Credit surcharging on Ovation is available for the X5, X8, X12, E13, and E15 devices.

OVATION MOBILE

The Ovation Mobile option does not support surcharging, so if a mobile hardware package is selected in the Ovation Back Office, the surcharge option will be unavailable. If another register is added with Ovation Register, Ovation Register with Table, Terminal+, and Terminal, the surcharge option will then become available for that register only; it will not become available for the hardware with Ovation Mobile.

CARD TYPES

Surcharges can only be applied to credit card transactions. A merchant cannot apply a surcharge to a transaction made with a debit, EBT, prepaid, or check card, gift, even if the transaction is made with a debit card run as credit, with a signature taken instead of a PIN entered.

CARD NUMBER ENTRY METHODS

Surcharges can only be applied to EMV (chip) transactions and contactless (NFC) payments such as Google Pay or Apple Pay. Surcharges will not be applied to key-entered or swiped credit card transactions.

GEOGRAPHICAL LIMITATIONS

Depending on the U.S. state in which the merchant is located, surcharging might be prohibited or have limitations. A merchant is responsible for ensuring their usage of credit surcharge complies with their state’s requirements. The list below is subject to change.

These states / territories enforce surcharge restrictions:

Prohibited:

Connecticut
Maine
Massachusetts
Oklahoma
Puerto Rico

Limitations:

Colorado (2% cap)
Minnesota
New Jersey
New York

NEW YORK STATE REQUIREMENT

Merchants located in the state of New York that decide to participate in surcharging must display two prices for each item sold in their store or online, so that the consumer is not required to perform a mathematical calculation to determine the item cost if paying by credit card.

Price Point #1: The price paid by a consumer who is paying by credit card, defined as the price of the merchandise plus the surcharge.
Price Point #2: The price paid by a consumer who is paying using a method that cannot be surcharged, such as cash, check, prepaid card, any form of debit card, or a gift certificate.

DISCOVER ON US

The Discover On Us program allows merchants to pay no fees on Discover card transactions for the first 12 months; a participating merchant may not use surcharging until their 12-month Discover On Us period is over.

MERCHANT REQUIREMENTS

As well as continuing to comply with the specific requirements for accepting credit cards, merchants who have decided to surcharge must also comply with additional regulations, including:

Registering with the card brands, which is performed by TSYS (Direct) or clients (Indirect) on behalf of merchants.
Charging no more than 3% or the actual cost of acceptance; whichever is less.
Know and follow any state specific requirements as it pertains to credit surcharge.
Imposing surcharge fees equally on all credit card brands.
Providing proper notification of surcharging at the store entrance and point of sale.
Listing the surcharge fee as a separate line item on receipts.

SURCHARGE SIGNAGE

You will receive signage when signing up. If you did not receive the signage please contact customer service.

REFUNDS

FULL

A full refund includes the entire surcharge amount. The printed receipt lists the surcharge in the Tax & Fee Summary section.

ITEM LEVEL

For an item level refund, the system will only refund the percentage of the surcharge that applies to the item(s) being refunded.

After the user has selected the items to refund and then tapped Calculate Refund, the refund screen lists the surcharge associated with the tender. The refund includes the surcharge which is listed on the printed receipt in the Tax & Fee Summary section.

MERCHANT REPORTS

Merchants can view reports on applied surcharge fees using Ovation Back Office. They can access the surcharge report from the Analytics menu by selecting Other, and then Surcharges.

This information can be customized by date range and includes the total amount of surcharge fees collected during the time period, the percentage of credit card transactions in which the fee was applied, and graphs to show trends over time. Merchants can export the data to Excel format or PDF.

METRICS LISTED

The report lists this information:

Credit Card Total
Surcharge Amount
Application Rate (the percentage of credit cards that the surcharge was applied to)
Surcharge Rate

EXPORT DATA

Users can export the surcharge report data to Excel format or PDF.