topic Re: Surprise Surcharge for Using Credit Card in Credit Cards

Surprise Surcharge for Using Credit Card

MASTERNC — Wed, 19 Aug 2015 16:45:48 GMT

I just got back from a weekly farmers market near my office. I have patronized this particular stand and have used a credit card most of the time. Today, I made a purchase using a credit card, which was swiped on a Square reader. It was hard to read in the sun, but I noticed the charge amount was $9.25 instead of the $9 on the sign. Knowing that the transaction had already gone through and not wanting to hold up the line, I did not say anything but then sent a tweet to the operator asking why the price difference.

Back at my office, I looked up the receipt on the Square site and saw I was indeed charged a 2.75% "swipe fee". This was definitely the first time I was charged this fee by this merchant, meaning it was a recent decision. The issue is neither the sign that said credit cards were accepted nor the employee taking my order informed me of the fee. Clearly, this is a violation of terms for Mastercard and Visa.

My questions are:

1. I sent the e-mail to Mastercard as asked by the website. Does anyone have an idea how responsive they are? Not sure what their powers are, especially since this was done through Square.

2. Square does not take disputes, but should I contact them anyway? Their website says surcharging is permitted consistent with Mastercard/Visa rules.

3. Is it worth filing a dispute with my bank over 25 cents? I don't want to be nasty about it, but a lot of people use cards at this stand, so they probably don't realize what is going on.

Re: Surprise Surcharge for Using Credit Card

OmarGB9 — Wed, 19 Aug 2015 16:48:34 GMT

Maybe something new Square imposed. As far as I know the 2.75% was always the fee per transaction but it was charged to the merchant, not the customer. Perhaps they're passing the fee onto the consumer now?

Re: Surprise Surcharge for Using Credit Card

MASTERNC — Wed, 19 Aug 2015 16:53:56 GMT

@OmarGB9 wrote:
Maybe something new Square imposed. As far as I know the 2.75% was always the fee per transaction but it was charged to the merchant, not the customer. Perhaps they're passing the fee onto the consumer now?

Not that I can see. Square's website still indicates the merchant is charged the fee. Again, the merchant can surcharge to recover its cost, but it must be clearly disclosed at the point of sale. I have a feeling the merchant in question was not aware of this.

Re: Surprise Surcharge for Using Credit Card

Anonymous — Wed, 19 Aug 2015 17:00:55 GMT

@MASTERNC wrote:
@OmarGB9 wrote:
Maybe something new Square imposed. As far as I know the 2.75% was always the fee per transaction but it was charged to the merchant, not the customer. Perhaps they're passing the fee onto the consumer now?
Not that I can see. Square's website still indicates the merchant is charged the fee. Again, the merchant can surcharge to recover its cost, but it must be clearly disclosed at the point of sale. I have a feeling the merchant in question was not aware of this.

What i would do, is go back to that merchant and ask if they're aware...then take the appropiate action from there.

Re: Surprise Surcharge for Using Credit Card

yfan — Wed, 19 Aug 2015 17:01:11 GMT

@OmarGB9 wrote:
Maybe something new Square imposed. As far as I know the 2.75% was always the fee per transaction but it was charged to the merchant, not the customer. Perhaps they're passing the fee onto the consumer now?

This is not something Square imposed. This was allowed in a settlement between merchants and Visa/MC/Discover ratified by a court ruling (which Amex had to subsequently follow). In states where this isn't prohibited by law (thankfully in California it is prohibited), merchants are now allowed to pass along the transaction fee to the customer, as long as they make it clear that that's what the charge is for. It looks like the OP is in a state that does not prohibit this by law. In this case, they should ask merchants if they do so, and if they want to make a statement, straight stop doing business with merchants that do.

Re: Surprise Surcharge for Using Credit Card

Anonymous — Wed, 19 Aug 2015 17:03:12 GMT

Square states that the owner of the square reader gets to decide who pays the swipe fee. Your issue isn't with Mastercard, it's with the company you bought the items from. If I were you, I would go down and talk to the people at the farmer's market and explain that they need to inform their customers that they will be charged a swipe fee if using a credit or debit card. I wouldn't report them to anyone just yet, because they may not have known they were supposed to (or maybe they had a sign posted that you missed?). The first step should always be to talk to the company you're having a problem with. Then if they don't fix the problem you can move onto the next step.

Re: Surprise Surcharge for Using Credit Card

newhis — Wed, 19 Aug 2015 17:08:03 GMT

I'll contact the stand and told them that they need to clearly disclose any 'swipe fees' because they can make consumers angry and for what? for 25 cents?

I know that 2.75% on every card purchase hurt the farmer, but if they say that they get cash withous fees and CC with an extra fee, then the consumer can choose what to use if any and not get angry at them.

Good luck.

Re: Surprise Surcharge for Using Credit Card

Anonymous — Wed, 19 Aug 2015 17:11:51 GMT

Also, FWIW almost every business passes the swipe fee onto the customer, but the majority do it subtly by simply increasing the price of the product to cover the cost of the swipe fee. But those who don't already include it into the price, need to let their customers know there will be an additional fee for using a credit or debit card. For example, my Dept. of Motor Vehicle has signs all over the counters that states if we pay with a credit card an additional (swipe) fee will be added to the total.

Re: Surprise Surcharge for Using Credit Card

onstar — Wed, 19 Aug 2015 17:27:04 GMT

@MASTERNC wrote:
I just got back from a weekly farmers market near my office. I have patronized this particular stand and have used a credit card most of the time. Today, I made a purchase using a credit card, which was swiped on a Square reader. It was hard to read in the sun, but I noticed the charge amount was $9.25 instead of the $9 on the sign. Knowing that the transaction had already gone through and not wanting to hold up the line, I did not say anything but then sent a tweet to the operator asking why the price difference.

In hindsight, you probably should have said something right there.

2. Square does not take disputes, but should I contact them anyway? Their website says surcharging is permitted consistent with Mastercard/Visa rules.

The merchant does not have an agreement with MC/Visa. The merchant has an agreement with Square, and Square has agreements with MC/Visa. Some of Square's rules are derived from the network rules, but many of the MC/Visa rules do not apply to the merchant. For example, if you are a MC merchant, then you have to display that you accept MC. If you are a Square merchant, you do not have to have any display, not for Square, not for Visa, not for MC. They encourage you to do so, but this is not a requirement. However, common sense dictatates that the merchant should let the customers know if there will be a surcharge. Without the notice, this is a bad business practice. It's probably also be illegal to surcharge without notice.

@yfan wrote:
@OmarGB9 wrote:
Maybe something new Square imposed. As far as I know the 2.75% was always the fee per transaction but it was charged to the merchant, not the customer. Perhaps they're passing the fee onto the consumer now?
This is not something Square imposed. This was allowed in a settlement between merchants and Visa/MC/Discover ratified by a court ruling (which Amex had to subsequently follow). In states where this isn't prohibited by law (thankfully in California it is prohibited), merchants are now allowed to pass along the transaction fee to the customer, as long as they make it clear that that's what the charge is for. It looks like the OP is in a state that does not prohibit this by law. In this case, they should ask merchants if they do so, and if they want to make a statement, straight stop doing business with merchants that do.

They can still "surchage" in California by offering a cash discount. Instead of making an item $9, the vendor can list the item at $9.50, then give a 50 cent cash discount per item. This is also true in 8 other states. Only in NY, you cannot surcharge or give a cash discount.

Re: Surprise Surcharge for Using Credit Card

onstar — Wed, 19 Aug 2015 17:31:51 GMT

Weird coincidence. I was reading this thread and replying to it, then I get an email just now from my wedding photographer. It's a Square invoice for $3,150. Or I can pay cash and get a discounted rate of $3,000. Good thing he's upfront about it!

I'm in California. This is a perfectly legal "surchage" for using a credit card.

Re: Surprise Surcharge for Using Credit Card

Callandra — Wed, 19 Aug 2015 17:35:55 GMT

@Anonymous wrote:
@MASTERNC wrote:
@OmarGB9 wrote:
Maybe something new Square imposed. As far as I know the 2.75% was always the fee per transaction but it was charged to the merchant, not the customer. Perhaps they're passing the fee onto the consumer now?
Not that I can see. Square's website still indicates the merchant is charged the fee. Again, the merchant can surcharge to recover its cost, but it must be clearly disclosed at the point of sale. I have a feeling the merchant in question was not aware of this.
What i would do, is go back to that merchant and ask if they're aware...then take the appropiate action from there.

Agreed. You should ALWAYS try to work it out with the Merchant first. They may or may not even realize what happened or it's possible you missed a sign saying there would be a surcharge.

As someone who works for an online business, please note that every time you issue a dispute with your bank, the merchant gets charged a chargeback fee (ours range from $25-45, we have multiple Merchants). I'm sure the merchant would rather give you 25 cents back then have to get hit with that chargeback fee. (Chargeback fees are what raises prices as merchants have to account for that sort of thing and in the end, it affects all consumers).

Re: Surprise Surcharge for Using Credit Card

MASTERNC — Wed, 19 Aug 2015 17:45:22 GMT

@Callandra wrote:
@Anonymous wrote:
@MASTERNC wrote:
@OmarGB9 wrote:
Maybe something new Square imposed. As far as I know the 2.75% was always the fee per transaction but it was charged to the merchant, not the customer. Perhaps they're passing the fee onto the consumer now?
Not that I can see. Square's website still indicates the merchant is charged the fee. Again, the merchant can surcharge to recover its cost, but it must be clearly disclosed at the point of sale. I have a feeling the merchant in question was not aware of this.
What i would do, is go back to that merchant and ask if they're aware...then take the appropiate action from there.
Agreed. You should ALWAYS try to work it out with the Merchant first. They may or may not even realize what happened or it's possible you missed a sign saying there would be a surcharge.

As someone who works for an online business, please note that every time you issue a dispute with your bank, the merchant gets charged a chargeback fee (ours range from $25-45, we have multiple Merchants). I'm sure the merchant would rather give you 25 cents back then have to get hit with that chargeback fee. (Chargeback fees are what raises prices as merchants have to account for that sort of thing and in the end, it affects all consumers).

I am definitely aware of the chargeback fee, which is why I probably won't even go that direction. I did submit a report to Mastercard, though I doubt they can do anything since it is through Square. In the meantime, I will see if I get a response on Twitter (if so, I will guide them to the regulations on surcharging).

Re: Surprise Surcharge for Using Credit Card

yfan — Wed, 19 Aug 2015 17:53:20 GMT

@onstar wrote:
They can still "surchage" in California by offering a cash discount. Instead of making an item $9, the vendor can list the item at $9.50, then give a 50 cent cash discount per item. This is also true in 8 other states. Only in NY, you cannot surcharge or give a cash discount.

Good point. It's time to change our laws!