Compliant Fee Programs

Compliant Programs for Passing Fees to the Cardholder

Fee compliance means adhering to regulations surrounding fees in payment processing. Businesses must prioritize compliant fee programs to safeguard their business, build customer trust, and maintain a competitive edge. Ray has the knowledge and experience to find the right solution for your particular business.

Over the years, the way businesses handle the rising cost of accepting credit cards has evolved significantly. Let's take a look back at how it started—and where it stands today.

➡ History of the “Cash Discount” Program

Around 2017, a program emerged in the payment industry known as the "Cash Discount" program. This model allowed businesses to offset rising credit card processing fees by adding a Non-Cash Adjustment—an extra fee that appeared on the receipt when a customer paid with a credit or debit card.

If implemented properly, the fee was credited back on the business's processing statement, effectively reducing their card acceptance cost to near zero. Over time, this model became widely adopted, particularly by small businesses trying to maintain slim margins.

However, Visa and MasterCard began taking notice. They were concerned about how these programs were being executed and the impact on their brand. In many cases, the "cash discount" model being promoted was actually a surcharge in disguise—and not compliant with the card brands’ rules.

Visa and MasterCard Enforcement

In April 2023, both Visa and MasterCard introduced stricter rules and enforcement measures regarding fee-passing models. These changes were designed to ensure merchants followed the correct methods of disclosing and applying fees to card transactions.

If a business is found using a non-compliant program, the card networks may fine the acquirer $1,000 per violation.
That fine is typically passed down to the business.
If the issue is not resolved, the fine increases to $5,000 per occurrence.

➡ Today’s Compliant Options

To stay compliant and avoid fines, businesses now have three clear options for passing fees to cardholders:

1. Surcharge Program - ✔️ Compliant with Visa/MasterCard rules

Only applies to credit card transactions.
No changes to posted prices are needed.
Required notices must be posted and systems properly configured.
Debit, prepaid, and EBT cards cannot be surcharged.
Requires 30-day registration with Visa/MasterCard (we handle this for you).
Surcharge is clearly listed on the receipt.

2. Dual Pricing Program -✔️ Fully compliant and transparent

Two prices must be clearly posted for each item: one for cash, one for card.
- Example: “$10.00 Cash / $10.30 Card”
No line-item fees on the receipt.
The total amount paid reflects the chosen method.
This method works well for gas stations, retail stores, and restaurants with printed menus or displays.

3. Cash Discount Program - ✔️ Legal but must follow strict presentation rules

All posted prices include the card price (assume built-in card fees, typically 3%).
A discount is given at the register when paying with cash.
- Example: Shelf tag shows $10.30; customer pays $10.00 with cash (3% discount).
Receipt should show the discounted total, not an added fee.

📌 Final Note

These programs offer businesses an effective way to manage rising credit card processing costs while remaining compliant. However, how fees are disclosed and applied is critical. Mislabeling a surcharge as a cash discount, or vice versa, can lead to non-compliance and significant penalties from card networks.

If you're considering one of these options, it's essential to work with a provider, like Ray Harrington, who fully understands and adheres to Visa and MasterCard’s evolving compliance standards. These rules are subject to change, which is why it's important to partner with a merchant service representative like Ray— who stays informed, up to date, and is genuinely committed to building long-term relationships with the businesses he serves.