How can I stop a merchant from charging a credit card processing fee?

Question

According to the answers on Can a merchant charge you more in the US if you want to use a credit card?, I gather that, while it is not illegal for a merchant to pass their payment card processing fees on to their customers directly in the form of a surcharge, doing so is a violation of their merchant agreements with the payment card processor (at least for Visa/MC).

There are workarounds available to the merchants, such as offering a cash discount, or setting a minimum purchase amount for cards, but if the merchant is not using such a workaround (in my experience, many don't), what's the best way to get them to process my transaction without applying the fee, or alternatively, penalize them for applying the fee?

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JoeTaxpayer helpfully points out that merchants can now impose a surcharge in most states, subject to certain conditions, including signage at both point of entry and point of sale. This question is asked in the context of a merchant that fails to comply with these or other applicable requirements.

Please also note that "Don't patronize those merchants" isn't the kind of answer I'm looking for here. If the merchant were properly complying with all of the conditions under which they can impose a surcharge, that would be the only recourse, but I am interested in answers for the specific case of a noncompliant merchant.

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Here are two actual examples from my personal experience. In neither of these cases was I successful in either compelling the merchant to complete the transaction without imposing the surcharge, or in causing a direct repercussion to the merchant sufficient to induce them to discontinue the practice.

A local pizza place would add an additional $0.50 charge for purchases made by credit card. I was aware of this practice, and I had also read that Visa and MasterCard both prohibit it. When I went in to pick up my pizza, they asked if it would be cash or credit. Before answering, I asked "What's the total?" They quoted me an amount equal to the menu price plus sales tax if I paid cash, and stated that if I used a credit card it would be an extra 50 cents. I told the cashier that this was not allowed, but the cashier indicated it was not up to them. They stated that most of their customers just paid in cash. They were busy, I was hungry, and I had no cash on me, so rather than continue to press the issue, I asked the cashier to be sure that my receipt clearly distinguishes the amount of the fee and identifies it as a surcharge specifically imposed because I paid with my card. She handwrote "CC" next to the 50 cent line item, and I left with my food and put the receipt somewhere so it wouldn't get lost, telling myself that I would contact Visa about it (I never did, and I lost the receipt anyway).

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I stopped at a convenience store on my way to the disc golf course to buy two bottles of Gatorade. The cashier (I think he was also the owner) scanned them and read me the total. I held out my credit card and he said "Oh, there's a 35 cent fee with that." I replied "No, I do not agree to that." He stated that the store incurs a cost every time they process a credit card transaction, and something about margins. I responded along the lines of "I don't really care what your margins are. Those fees are a cost of doing business, and Visa and MasterCard both explicitly prohibit you from charging me extra to use my card." However, he did not change his position. I left the bottles on the counter and walked across the street to his competitor, and as far as I know, he still charges that fee.

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UPDATE: As it happens, both of these shops went out of business, even though I never did follow up personally with the payment processors about them.

Answer 1

You can report the violation to the payment network (i.e., Mastercard or Visa). For instance here is a report form for Visa and here is one for MasterCard. I just found those by googling; there are no doubt other ways of contacting the companies.

Needless to say, you shouldn't expect that this will result in an immediate hammer of justice being brought down on the merchant. Given the presence of large-scale fraud schemes, it's unlikely Visa is going to come after every little corner store owner who charges a naughty 50-cent surcharge. It is also unlikely that threatening to do this will scare the merchant enough to get them to drop the fee on your individual transaction. (Many times the cashier will be someone who has no idea how the process actually works, and won't even understand the threat.) However, this is the real solution in that it allows the payment networks to track these violations, and (at least in theory) they could come after the merchant if they notice a lot of violations.

Answer 2

Mastercard rules also prohibit asking for ID along with the card. Yet, when I was at Disneyland, years ago (so I don't know if this is still a practice) they asked for my driver's license with every purchase. I can charge up to $200 at Costco with a swipe, not even a signature, but a $5 bottle of water (maybe it was $6) required me to produce my license.

The answer is Pete's comment, don't patronize these merchants. By the way, it's legal now. From Visa web site -

Note - 9* states still prohibit surcharges, so they tend to offer cash discounts. The question you linked is from 2010, things change.

• California ruled that prohibiting surcharges is unconstitutional. The Attorney General is appealing that ruling, but until a decision is made, surcharging is technically legal in California. The AG's website has info, scroll to the end: https://oag.ca.gov/consumers/general/credit_cards

Answer 3

This might not be the answer you are looking for, but the alternative to "don't patronize these merchants" is this:

DO patronize these merchants, and pay cash.

Credit cards are convenient. (I use a credit card often.) However, there is no denying that they cost the merchants an incredible amount in fees, and that our entire economy is paying for these fees. The price of everything is more than it needs to be because of these fees. Yes, you get some money back with your rewards card, but the money you get back comes directly from the store you made the purchase with, and the reward is paid for by increasing the price of everything you buy. In addition, those among us that do not have the credit score necessary to obtain a rewards card are paying the same higher price for goods as the rest of us, but don't get the cash back reward.

Honestly, it seems quite fair to me that only the people charging purchases to a credit card should have to pay the extra fee that goes along with that payment processing. If a store chooses to do that, I pay cash instead, and I am grateful for the discount.

Answer 4

It may seem very simple on its face but you don't know the merchant's agreement. You don't know who is providing the processing equipment. You don't know a lot of things. You know that Visa, Mastercard, Discover, Amex and others have network requirements and agreements. You know that laws have been changed to allow merchant surcharges (previously it was contracts that prohibited surcharges, not laws).

That gas station, or that pizza parlor, or any other merchant doesn't have a direct relationship with Visa or Mastercard; it has an agreement with a bank or other processing entity. The issue here, is whom do you even call? And what would you gain? Find out what bank is contracted for that particular equipment and file a complaint that the merchant charged you $0.35? Maybe the merchant agreement allows surcharges up to state and local maximums? You don't know the terms of their agreement. Calling around to figure out what parties are involved to understand the terms of their agreement is a waste of time, like you said you can just go across the street if it's so offensive to you. Or just carry a little cash.

If that's not the answer you're looking for, here's one for you: There is no practical recourse.

Answer 5

You have no recourse on the spot to do anything to the vendor other than pay the fee, pay cash, or walk away. If you're on a mission with longer-term horizon than immediate satisfaction, your options will vary by state. If you're in a state where the fees are legal and the owner is (potentially) violating an agreement with the card company, you can report the vendor to the card company. They may or may not really care. If you're in a state where the fee is actually illegal, you'd need to see what options you have with the local authorities.

You should keep in mind that if the vendor is violating an agreement that's between the vendor and the card company only, you have absolutely no rights to enforce that agreement. You only have legal rights if you're a party to the agreement in question or if the law gives you some special rights specific to given circumstances. (The lawyers call this having "standing.") Likewise if the vendor is doing something that's not consistent with the agreement between you and the card company, you also have no claim against the vendor (because the vendor is not party to your agreement with the card company), although you might have a claim against the card company.

Answer 6

"I gather that, while it is not illegal for a merchant to pass their payment card processing fees on to their customers directly in the form of a surcharge, doing so is a violation of their merchant agreements with the payment card processor (at least for Visa/MC)."

It's not - surcharging has been permissible since 2013, as a result of a class action lawsuit against Visa and MC. It's still prohibited by state law in 9 states.

If you're in one of those 9 states, you can contact your state Attorney General to report it. If you're not, you can check to see if the business is complying with the rules set forth by the card brands (which include signage at the point of sale, a separate line item for the surcharge on the receipt, a surcharge that doesn't exceed 4% of the transaction, etc.) and if they're in violation, contact the card company. However, some of those rules seem to matter to the card companies more than others, and it's entirely possible they won't do anything. In which case, there's nothing you can really do.