Visa, MasterCard Surcharge Now In Effect

Today the Official Merchant Services Blog brings you the latest developments in the ongoing class action Antitrust Lawsuit settlement between Visa, MasterCard and merchants.

We began talking about the possibility of ‘The Big Cash Comeback’ back when the settlement was first announced in July, and later we discussed the opposition to the settlement. In December a federal appellate court denied a retailer’s appeal to review part of the controversial settlement in the massive credit card interchange case, clearing the way for the trial court to move toward final approval. At the same, the process of notifying the millions of merchants affected began. Before we discuss the surcharge itself, let’s review the litigation at hand.

The Lawsuit

In November 2012, the federal district court overseeing the merchant class action Interchange litigation against Visa and MasterCard, preliminarily approved a class settlement agreement that resolves antitrust claims involving Visa and MasterCard’s Interchange and merchant acceptance rules.

As part of the settlement agreement, beginning January 27, 2013, U.S. merchants may begin assessing a surcharge on Visa and MasterCard credit card transactions. Merchants are prohibited from charging a surcharge on Visa and MasterCard prepaid and debit card transactions.

American Express and Discover were not a party to the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation. Meaning surcharges may not be applied to these card brands.

Surcharge Notification

A merchant’s ability to apply a surcharge is dependent on the merchant’s satisfaction of certain disclosure requirements. These disclosure requirements include advance notice to Visa, MasterCard, and the merchant’s acquirer of the merchant’s intention to impose a surcharge no less than 30-days before the merchant implements a surcharge.

Merchants must contact their acquirer to obtain the Acquirer Notification Form. Merchants are advised to contact Visa and MasterCard with regard to the notification requirements in the following ways:


Merchants must e-mail MasterCard at the following e-mail address with the following information:

[email protected]:


Merchants must fill out the notification request form located on the Visa website:

Host Merchant Services’ Form

Merchants must also fill out the following form to be kept on file with HMS.

Surcharge Requirements

Merchants should consider the positive and negative business impact prior to implementing surcharges. Merchants who choose to impose a surcharge can assess based on card brand or by card product and must meet the following requirements:


  • The transaction must be Consumer Credit or Commercial Credit Card
  • Merchants are not allowed to assess a surcharge on Consumer/ Commercial Debit or Prepaid cards
  • The surcharge must be the same for all credit card transactions regardless of the card issuer or product type
  • The surcharge cannot be greater than the merchant’s average discount rate for Credit Card transactions for the preceding 12 months
  • The surcharge cannot exceed 4%, even in cases where the merchant’s discount average exceeds 4%


  • The surcharge is the same for all transactions on the particular product type (e.g., Traditional, Rewards, Signature, Elite, Enhanced, and World etc.) regardless of issuer.
  • The surcharge is no greater than the merchant’s average discount rate for Credit Card transactions for the preceding one month or 12 months, minus the regulated debit cap established by the Board of Governors of the Federal Reserve System.
  • The surcharge cannot exceed 4%, even in cases where the merchant’s discount average exceeds 4%


Merchants who surcharge must provide clear disclosure to their customers:

  • At the point of store entry
  • At the point of or sale with the customer
  • If online, disclosure must be on the first page that references credit card brands
  • The transaction receipt must disclose the dollar amount of the surcharge

Excluded States

The surcharge aspect of the settlement, applies to all U.S. territories and 40 U.S. States. The states in which merchants are prohibited from charging an additional surcharge are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

In Conclusion

Since retailers may only charge a surcharge based on their discount rate, this offers Host Merchant Services customers an interesting advantage over other merchants in two distinct ways. First, Host charges the lowest possible rate saving merchants money on unnecessary fees. Second, since our merchants have a lower discount rate, they may charge a lower surcharge rate (if they choose to implement one at all) than their competition. Merchants will then pass along their credit card processing fees down to the customer, creating a market in which consumers have incentive to purchase from the lowest surcharging merchant.

Some retailers might still be waiting to see how the case plays out in court. U.S. District Court Judge John Gleeson gave the settlement a tentative okay in November. The National Retail Federation is not a party to the lawsuit, but claims that their members would be negatively affected by the settlement. They plan to challenge the judge’s verdict in court, according to a press release.

A final ruling on this case will be made later this year, meaning modifications to the settlement might surface later on.

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