Wisconsin Restaurant Just Hit with $25,000 Fine from Visa

Is Your Business in Surcharge Compliance?

Mastercard and Visa are cracking down on merchants who are not following surcharge rules. A Wisconsin restaurant recently was hit with a $25,000 fine from Visa for non-compliance with surcharge rules! Do you know what is allowed and what can get you in trouble? WRA has all the facts to help you stay compliant.
 
Over the last few years, as food, labor and property costs have increased, the trend of surcharging has emerged to help offset the cost of accepting credit cards. But what some merchants don’t know is that there are specific rules regarding surcharges that need to be followed. And there are serious consequences for not following them.
 
Here are the facts

• In the State of Wisconsin, it is legal to charge a surcharge to credit cards as long as the customer is notified in writing prior to ordering.  
• Also, it is against card brand rules to add a surcharge to sales completed by debit card, regardless of using the debit card or credit card network. 
  
• You must also apply the same surcharge amount to all cards and cannot offer a cash discount in conjunction with surcharging. In short, it must be one or the other across the board.
• The maximum that you can charge as a surcharge is 3%.

 
What happens if your business is found to be in violation of the surcharge rules?
 
If you receive a notice of a violation of the card brand surcharge rules, you will not be able to address the fines with the card brand (Visa, Mastercard, etc.) directly. You are required to work with your credit card processor. Merchants do not have a direct relationship with the card brands so Visa, Mastercard, etc. would not be able to help you directly. The violations flow from the card brand to the sponsor bank, the sponsor bank to the processor, and finally from the processor to the merchant.  
 
Here’s an example of Visa’s process: If your business violated surcharging rules, then, unfortunately, $25K is the first-tier fine for surcharge non-compliance. Visa may charge the sponsor bank an initial $1K for a first-time offense notification and it is up to the bank and processor if they pass that to the merchant (likewise if there are additional fines like the $25K). Within that notification they allow 30 days to rectify the non-compliance. If non-compliance is not mitigated within that timeframe, or if additional time is not requested, then Visa will assess the $25K non-compliance assessment. If non-compliance continues, then it will reach a second tier assessment, and so on.
 
Click here for all the facts on surcharges, convenience fees and cash discounts to help you stay compliant and avoid huge fines.
 
Thank you to Heartland for providing this information. 

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