Due to a class action settlement earlier in 2022, Mastercard and Visa are now allowing merchants to apply surcharges to credit card transactions to make up for the fees charged to businesses for taking cards.   Previously, this had not been allowed under Mastercard and Visa rules, despite businesses paying significant fees for accepting credit cards, eating into margins and profitability.  

What is a surcharge?   It is a fee added by the merchant to purchases when the customer opts to pay by credit card. 

Starting in October, businesses can now apply surcharges if they follow the below rules:

Notification:

• You are required to notify your credit card processor (the company which actually processes your transactions) that you want to apply a surcharge 30 days before doing do.  Your processor should also be able to assist you with the surcharging process.
   
• You are also required to additionally notify Mastercard 30 days prior directly using their webform: https://www.mastercard.ca/en-ca/surcharge-disclosure-webform.html

• You are required to display a clear disclosure that you apply surcharges at the point of store entry or when conducting an e-commerce transaction, on the first page that references credit card brands. The disclosure must include a statement that the surcharge the merchant imposes is not greater than the merchant’s merchant discount rate for Mastercard credit card transaction
  • Sample disclosure: We impose a surcharge of ____  on credit cards, which is not greater than our cost for accepting the card.
     
• You are also required to display a disclosure or signage at the point-of-sale – ie: the cash register.   This statement must say that you are the one charging the surcharge, what the surcharge amount is, and that it is not more than your fees for accepting the card.
  • If taking payments by phone, the surcharge must be disclosed to the customer.
     
• Finally, merchants are required to show the amount of the surcharge on the cardholder’s receipt as a distinct line item.  You POS system provider should be able to assist you with this. 

• A surcharge cannot be more than 2.4% or the average amount it costs you to accept credit cards, whichever is less.  Talk to your credit card processor to get this information, and for additional rules they may have for charging all brands of cards


• You can apply a surcharge to all credit cards, or you can only apply it to specific types of cards (ie: higher fee, premium cards).  If you charge only for specific types of cards, the surcharge can be the lesser of 2.4% or your average merchant rate for accepting that type of card, which your processor can provide you.