thread Re: Fee Entered as Tax in Archived Discussions (Read Only)

Fee Entered as Tax

djune617 — Sun, 02 Apr 2023 15:50:40 GMT

A small retailer I frequent, charges a fee to their customers who use a credit card. They have this fee listed as a "tax." Is this legal?

Re: Fee Entered as Tax

Donnie-M — Sun, 02 Apr 2023 18:42:39 GMT

@djune617 is it listed on the receipt as "Tax"? The next question is the seller using square? or are you just thinking about doing something like this in your square business?

Re: Fee Entered as Tax

Candlestore — Mon, 03 Apr 2023 14:05:33 GMT

@djune617 ;

Every state and local government has different regulations. We are just other business owners in this forum and can not really give Legal advice. So what might be Legal for me to do in my area may or may not be legal where you are.

I suggest asking the small business owner in your area since you frequent them often.

Re: Fee Entered as Tax

rtfulk — Mon, 03 Apr 2023 20:24:11 GMT

I'm not a lawyer, but I have checked on what has to be done to collect a fee for credit cards.

First you have to fill out a form to let Visa/Mastercard know you are charging a fee.
You have to have signage at each cash register stating you charge a fee.
It can not be a tax has to be called a fee. We call ours and Electronic Transaction Fee.
The fee can not exceed 4%.
If you take a debit card with a pin you can not charge a service fee.

I think it is down to 4 states now that you can not charge a credit card fee.

Re: Fee Entered as Tax

Donnie-M — Tue, 04 Apr 2023 21:31:10 GMT

@rtfulk I don't believe there is any difference between a signature pin debit or the "off network" bypassed pin debit card transaction as far as the Durbin Amendment goes. Visa does not allow you to do it to either transaction if it is a debit or prepaid card regardless of pin or not.

Surcharge fees are strictly limited to credit card transactions only. Even if a client wishes to run a signature debit transaction, where a debit card is processed as a credit transaction, you are still not allowed to implement a surcharge.

Surcharges are also not applicable to prepaid cards."