Credit card surcharge

[homeprogreen]

So it looks like Square is finally going to allow credit card surcharges to be applied to in-person transactions. It’s a beta and limited to just a couple of their systems like Square Point of Sale and 1 other. Doesn’t work for Square for Retail but it’s progress on a much requested feature. Here’s the link to the support article so people can check it out 

https://squareup.com/help/us/en/article/8580-set-up-and-manage-credit-card-surcharges?utm_medium=web...

[UCBaking]

I've been excited about using this feature and I'm implemented it across my three locations. There is one inconsistency and injustice that Square should address: The automatic surcharge is apparently NOT applied to transactions where debit cards are used, even though all debit card transactions are processed (and fees are charged to the merchant) as credit transactions. This policy is not made clear in the documentation:

• Surcharges only apply to credit card transactions. ACH, debit card transactions, tips, offline payments, and split tender payments can’t have surcharges applied. 

This is not exactly clear because in reality there are no debit card transactions in Square; ALL card payments are treated/processed as credit transactions. But when a debit card is used, the surcharge is not applied and the merchant is still charged the same fee for swiping, dipping, or tapping as a credit card. This is contrary to the spirit of the feature, which is to offset credit card fees for the merchant. 

It would be amazing if Square could address this. 

[germanautopros]

I agree, since debit card surcharges are illegal in the U.S., why are we as merchants still being charged the fees by Square when running a debit card?

[UCBaking]

We're charged the fee because Square does not process the debit card transactions as debit transactions - it processes them as credit transactions (the card can be swiped or tapped and customer does not have to enter a PIN). But at the same time, Square has structured the surcharge feature to only apply to credit CARD transactions even though debit CARD transactions are processed as though they are credit cards. Just because a card can be used as a debit card does not mean that it is always processed as a debit transaction.

Bottom line: If Square is going to charge us, we should be able to charge the customer. 

[TheRealChipA]

@UCBaking This restriction on debit card surcharging is NOT Square's restriction.  It is the card networks' restriction.  Even if Square did prompt for PINs and run it as a true debit, we would still not be able to surcharge the customers.  Honestly, the networks have us all in a bind here and they know it.

Currently the only way I know of to get around this is to look at customer cards (which means we process them ourselves) and to deny payments by debit card.  Of course, this is a PR disaster waiting to happen.  We could as Square for a new feature that would prohibit debit card payments, but again the same PR disaster waiting to happen.

Regardless, whether Square processes a debit card as a debit or credit transaction, we are charged the same fees.  But the networks (Visa, etc) are holding Square's feet to the fire here and if they do allow surcharges for debit cards no matter how the transaction is processed, then they will revoke Square's contracts and we all will lose our card processing capabilities.

Bottom line: you and every business owner you know need to petition your lawmakers to fix this strange loophole in their surcharging policies.  That is the ONLY way this is going to be fixed.

[germanautopros]

I know all this, and I was agreeing with you. Hence my opening statement: "I agree, since debit card surcharges are illegal in the U.S"

[androo]

As I understand it, the US law restricts YOU from passing on a fee on a debit card to your customer, not for Square (or any processor) from charging a fee to accept those cards.

Here in Australia, it will soon be unlawful to pass on any surcharge to customers, regardless of credit or debit - and every card processor still charges us a fee per transaction. 

As I've mentioned before, I've never charged a fee for cards and have built that into the price of my goods - just as I do for rent, power, wages, insurance, etc.  Square fees, while they definitely add up over time, are quite low and very manageable. 

[germanautopros]

Yes I know this, that is why my first sentence was "I agree, since debit card surcharges are illegal in the U.S"