Understanding and Utilizing Credit Card Surcharging

Modified on Thu, 16 Jul at 3:34 PM

Overview

A credit card surcharge is a small fee added to the total transaction amount when a customer pays with a credit card. This article explains what surcharging is, why alarm dealers choose to implement it, and the state and territory restrictions you need to be aware of before enabling this feature.

This article is intended for alarm dealer administrators evaluating or implementing credit card surcharging through Cornerstone. For information on how auto-surcharging is included in Cornerstone's plans, refer to the article "Cornerstone Pricing / Bundles".

What Is a Credit Card Surcharge?

A credit card surcharge is a small fee added to the total transaction amount when a customer pays with a credit card. This fee directly reflects the cost incurred from credit card companies for processing a customer's payment.

Why Implement Credit Card Surcharging?

Credit card companies charge processing fees for every transaction. These fees can accumulate and significantly impact your operational costs. Implementing a surcharge allows you to address this in several ways:

Benefit	Description
Offset Processing Fees	Recover the direct costs associated with accepting credit card payments.
Maintain Competitive Base Pricing	By offsetting these fees, you can avoid increasing your base prices for all customers, including those who choose alternative payment methods.
Invest in Service Improvements	The recovered funds can be reinvested into enhancing your services, upgrading your resources, and ultimately providing a better experience for everyone.
Promote Payment Transparency	Clearly show the cost associated with using a credit card, allowing customers to make informed decisions about their payment method.
Ensure Long-Term Sustainability	Managing credit card processing costs ensures you can continue to offer this convenient payment option reliably.
Promote Fairness	Ensure customers using non-credit card methods are not indirectly subsidizing credit card processing fees.

State and Territory Restrictions

Surcharging is not permitted in all locations. There are 5 states and territories where it is illegal to surcharge, plus one state with a capped rate:

State / Territory	Status
Connecticut	Surcharging is illegal
Maine	Surcharging is illegal
Massachusetts	Surcharging is illegal
New York (as currently interpreted from a February 2024 ruling)	Surcharging is illegal — see important note below
Puerto Rico	Surcharging is illegal
Oklahoma	2% cap applies

⚠️ IMPORTANT — New York (February 2024 Ruling)

As of February 11, 2024, it is illegal for New York merchants to separately list the pre-surcharge subtotal or even the separate line item surcharge amount. However, the surcharge as a line item is still required to comply with card brand rules for surcharging. This creates a conflict that currently makes compliant surcharging effectively illegal in New York under this interpretation. If you have additional questions about this law, please seek the advice of your attorney.

For a comprehensive overview of credit card surcharge rules by state, the following external resource may be helpful: Credit Card Surcharge Rules — LawPay. If you have additional questions about your specific legal obligations, please seek the advice of your attorney.

Need Additional Help?

Our Customer Success team is here to assist you.

Phone: 847-405-9517
Email: customer.success@alarmbills.com