Credit Card Surcharge

[wespta]

Hi-

Our nonprofit is having a sale and we would like to charge a fee if they are paying by credit card. I have filled out the forms for visa and mastercard about us charging a surcharge but the Square directions on HOW to charge the surcharge seem to be missing? I have set up a service charge of 2.83% but want to make sure that this is the correct way to do this? Has anyone else set up a surcharge differently? 

Thank you!

[TheRealChipA]

@wespta So, first of all, I’m impressed that you reached out to the card companies and registered your intent to do this.  So many people forget to do that.  So kudos!  Before I answer the question, it’s good to remember a few things:

1. Visa and Mastercard do not allow your surcharge to be more than the actual fees.  In other words, you can’t make a profit off the surcharge.
2. Even though you registered you can NOT surcharge debit cards, ever.  This is a violation of Visa and Mastercard rules.  So, you’ll have to look at the cards before running every sale them to decide if you can add the surcharge.

Square’s Surcharge Calculator is here.  You could have this screen available at each payment station so that the sale amount can be rung in, giving your employees the actual amount you would charge the customer, including the surcharge.  You can put that amount in as the gross sale, or alternatively have an Open$ “Surcharge” item where you enter the difference in the two prices.

This will cause Square to calculate a new fee that will bring you to within a few cents (rounding error) plus or minus, enough that Visa and Mastercard wouldn’t actually care.  Even though it is an extra step at sale time, is a much better method than a flat surcharge, because that $0.10 swipe fee causes problems with coming up with one surcharge percentage that would work every time.

Try out the calculator yourself and let me know if that makes sense.

[wespta]

Thanks Chip. I appreciate your response! I have looked at the calculator and while very helpful, I am trying to make this as few steps as possible. Our sale is one day and it is all volunteer run (and staffed) so I need to keep things as simple as possible. We are a nonprofit and paying these fees is really hurting our fundraising. 

The 2.83% was suggested in another post as the best amount to charge based on the .10cent swipe fee. It brings us within cents of the actual surcharge and not over. 

in regards to debit cards, are they only considered debit cards when the customer enters their pin? I just want to make sure I am understanding this correctly.

thanks again!

[TheRealChipA]

@wespta The simplest thing to do would be to follow @Candlestore ‘s suggestion below.  Just increase all prices 3%, then offer a cash discount.  However, be sure that your state doesn’t prohibit things like cash-tendered discounts.  I was informed recently, and confirmed, that CA doesn’t look kindly upon that at all.

Debit cards always say “Debit Card” on them, I believe.  You may have to confirm with Mastercard/Visa how they expect you to verify this, though.   Like @Candlestore , I’ve always just added potential fees in my cost calculating spreadsheets, to cover the cost if someone does use cards.  This hasn’t been an issue for me in over a decade, so I’m rusty on the mechanics.

[Candlestore]

@wespta ;

My suggestion is to mark the price up 3%, and just give a 3% discount for Cash customers.  

[TPRS]

I agree with you. There has to be a way to add the convenience fee for credit card payers. I’m also a non-profit and use the square terminal once a year for a festival fundraiser. Instead of giving a cash discount- there needs to be a simple 2.83% convenience fee charge available for credit card users. 

[wespta]

I am going to make it a service charge that our volunteers will add to the cart when a customer is paying by credit card. 

i am really surprised that square does not have an easier way for this to be added. It seems like it something worthwhile to add especially for nonprofits!

[Candlestore]

@wespta ;

Just make sure it is legal for you to add a Service Charge to people who use a credit card, some states do not allow this, which might be the reason Square does not make this feature.  Even being a non-profit you still need to follow state laws of the way you do business.