Are you allowed to charge a transaction fee?

No Sneaky Surcharges: Why You Can’t Charge Extra for Card Payments

You’ve probably seen it before: a small, almost hidden sign at a checkout counter indicating a surcharge for using a credit card. Or perhaps an online store tacks on an extra fee at the final stage of your purchase when you select your payment method. But are these extra fees actually allowed? In short, no. Charging a transaction fee for credit, debit, or similar digital payment methods, including mobile wallets like Apple Pay and Google Pay, is generally prohibited for businesses.

The reason behind this ban boils down to consumer protection and fair pricing. When a business advertises a price for a product or service, that advertised price should be the price you pay, regardless of how you choose to pay. Adding a surcharge specifically for using a card creates a deceptive pricing practice. Customers are led to believe they’re paying one price, only to be hit with an unexpected fee at the checkout.

This isn’t to say businesses can’t factor the cost of processing card payments into their overall pricing. They absolutely can, and often do. However, this cost should be absorbed into the advertised price of the goods or services, not added as a separate line item specifically for card users. This ensures price transparency and prevents customers from feeling unfairly penalized for using a preferred payment method.

The specific regulations surrounding surcharging can vary slightly depending on location and the type of card being used. However, the general principle remains the same: businesses cannot add a surcharge specifically for the use of a card or digital wallet. This includes tacking on a percentage fee, a flat fee, or any other form of additional charge solely related to the payment method.

If you encounter a business adding a surcharge for using a credit, debit, or digital payment method, you should question it. Depending on your location, there may be consumer protection agencies or regulatory bodies you can contact to report the practice. Holding businesses accountable for transparent pricing benefits everyone. By understanding the rules and regulations around transaction fees, consumers can ensure they’re getting a fair deal.