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Latest News

Are your Surcharges Souring your Customers' Dining Experience?

3/14/2023

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​Are your surcharges souring your customers’ dining experience?  
 
During a weekend trip to Acadiana and several dining experiences there and back, we were caught off guard by the practice of surcharge options for credit card payments. At two different locations, we were hit with a four percent surcharge on our bill – one we were advised ahead of time as it was posted on the menu. At the second location, it was posted on the entrance door, however, we missed it. Neither provided a receipt that indicated the charge, which is a requirement.
 
Here are a few things to remember if you are considering this or doing it at present to be compliant.
 
While adding surcharges to the cost of a purchase is legal in Louisiana, each credit card brand has its own rules that merchants must adhere to. Our partners at Heartland Payment Systems have a thorough article to review here.
 
Some of the guidelines include:

  • Clear disclosure of fees prior to transaction. To begin with, surcharges must be made clear by the merchant prior to a sale. Signs must be posted at the cash register or point of acceptance. The notice sign must clearly state that a fee of X% will be added on to any payment made with a credit card at time of the sale. It is best to err on the side of noting this in multiple locations in your business, and advising your staff through training how to communicate this to guests.
 
  • Surcharges must be listed on receipts. The surcharge must also be disclosed on the receipt for the transaction. Receipts must include the percentage of the surcharge and also the dollar amount of the surcharge to be compliant with surcharging rules for the card brands.
 
  • Cap of 4% on surcharges. The surcharge that merchants pass on to consumers cannot exceed the cost merchants are charged by credit card payment processors and are capped at 4%. Remember you can’t profit from this. If your blended credit card transaction fee percentage is lower than 4%, that is a percentage you are allowed to charge.
 
  • No surcharges for debit cards. Debit cards are excluded from surcharges. Merchants are prohibited from assessing surcharges on cards that are linked to a bank account. While they may be branded like a credit card (VISA or MC) no matter how the transaction is handled, a fee cannot be charged for their acceptance. Running a debit card without a pin doesn’t make it a credit card.
 
Be careful in changing processors without understanding the exposure you could have to your existing processor under liquidated damages for a breech or early termination of an existing processor agreement. And, remember to read your merchant agreement with Visa, MasterCard and Amex. There are some that require you to provide advance notice to the processor before instituting these charges.
 
Our payment system partner Heartland has a new POS system that can help you with compliant processing of any surcharge, and avoid those on debit transactions.
 
And, accept that you have the risk of a guest choosing to frequent another restaurant for one that doesn’t use surcharging and instead includes its total operating costs in the menu price.
 

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2700 N. Arnoult Road | Metairie, LA  70002
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