On January 27, 2013, it became legal for retailers to impose a surcharge on consumers using a credit card at their business. The surcharge was a key provision in a settlement stemming from a class action suit brought by several retailers against credit card companies. The permissible surcharge amount depends on how much is paid by the merchant in processing fees, but can range from 1.5 to 4% of the purchase price.

Before implementing a surcharge, there are certain disclosure requirements that must be met. These vary depending on the acquirer and credit card company (i.e., Visa or Mastercard). Customers must be notified before making an actual purchase that a surcharge will be applied. Notice should be posted both at the store entrance and point of sale. If you are selling online, the first page that references credit card brands must clearly point out the surcharge. The fee must also be disclosed on every receipt. In no circumstance can a surcharge be applied to purchases made using a debit or prepaid card.

It important to note that some states have disallowed surcharges altogether - if your business is located in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma, Texas or Utah, then surcharges are strictly forbidden.

It may seem like a no-brainer to levy the surcharge, but owners should consider what non-financial impact it will have on their business. Processing fees can quickly add up and if these are affecting your bottom line, then a surcharge may be a good way to offset some of that cost. Customers, however, are largely unfamiliar with the legality of surcharges and may frown upon an additional fee being added to their choice of payment method. In some cases, passing this cost on could result in a loss of customer loyalty. If you are going to implement a surcharge, be upfront about it and be ready to explain the need for it to customers. Encourage them to use another form of payment if they prefer to avoid the fee.