What are the rules for Square surcharge?

Decoding the Square Surcharge: A Guide for Businesses and Consumers

Square, a popular point-of-sale (POS) system, allows businesses to pass on credit card processing fees to customers via a surcharge. However, this isn’t a free-for-all; specific rules govern how these surcharges can be implemented to ensure fairness and transparency. Understanding these regulations is crucial for both businesses utilizing Square and consumers paying with credit cards.

The core principle is simple: businesses can add a surcharge to cover only their actual credit card processing costs. This means they cannot profit from the surcharge itself. Crucially, this fee applies exclusively to transactions made using credit cards. Debit cards, gift cards, and prepaid cards are explicitly exempt from any surcharge.

The 3% Cap: While businesses can pass on their processing costs, there’s a vital limitation: the maximum surcharge allowed is 3% of the transaction total. This acts as a ceiling, preventing businesses from imposing excessive fees on credit card users. If a business’s processing fees are lower than 3%, they can only charge up to their actual cost, not the full 3%.

Mandatory Signage and Transparency: Transparency is paramount. To avoid potential legal issues and maintain customer trust, businesses must clearly communicate their surcharge policy. This requires prominent and easily visible signage in at least three key locations:

• At the entrance of the establishment: Customers should be informed about the surcharge before they even begin browsing or ordering.
• During the purchase process: The surcharge should be clearly stated at the point of sale, either on the display screen or verbally by the employee.
• On the receipt: The receipt should explicitly detail the surcharge amount and clearly indicate what it covers (credit card processing fees).

Failure to comply with these rules can result in penalties. State and federal regulations vary, but generally, failing to provide clear and accurate information about the surcharge can lead to fines or legal action.

For Consumers: Always be aware of a business’s surcharge policy. If you are unsure, don’t hesitate to ask for clarification. Check your receipt carefully to ensure the surcharge is accurately reflected and doesn’t exceed the allowed percentage. If you believe a business is violating the surcharge rules, you may wish to contact your state’s consumer protection agency or the relevant regulatory body.

In conclusion, Square’s surcharge functionality provides businesses with a way to recoup credit card processing costs, but it comes with strict guidelines regarding transparency and maximum allowable fees. Understanding and adhering to these rules is essential for both businesses to operate legally and for consumers to make informed purchasing decisions.

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