Visa Stepping up Merchant Fines for Cash Discounting

Violate Visa Rules - Get FinedIs Visa cracking down on merchants who offer customers a cash discount to entice them to pay with cash instead of credit cards? Are they hitting merchants with hefty fines for adding credit card surcharges without a compliant surcharge program?

Visa requires merchants to adhere to Visa Core Rules when they choose to accept Visa branded cards in their establishment. But it's not just Visa. MasterCard, American Express, and Discover also have their own set of card brand rules that must be followed when accepting their cards for payments. And all the major card brands will assess a fine for violation of their particular card brand rules.

So it's not hard to believe they could be cracking down on merchants who don't abide by the rules. When merchants accept credit cards as a form of payment, there are a lot of rules they have to consider. It's not just the plethora of card brand rules we’re talking about here. There’s also a slew of PCI Security Compliance Regulations as well as state laws merchants must abide by. Not only that, but the rules are often changing.

Without a little help from experts in the payments industry, merchants could easily miss something. Experienced Merchant Service Providers (MSP) are experts in the payments industry. They are well versed in the laws, rules, and regulations involved with transacting card payments. And it's their job to make sure you, the merchant, are processing payment transactions within the confines of the law.

Are you violating payment acceptance rules in your business?

You might be wondering how they find out when a merchant is violating a particular rule. Afterall, there are millions of merchants. Well, one of the first places to look is to your customers. An upset customer isn't likely to let a store-owner get away with doing them wrong if they know it's not allowed. Customers reporting a business to their card brand, such as Visa, is one of the most common ways the card brand learns of the business’s violation. 

But they don't always wait around for that to happen. As a merchant, you might be surprised to learn that the card brands proactively send out people to check up on you. Card brands will send in secret shoppers to businesses to perform site audits to ensure businesses aren’t violating their rules. 

If they find the merchant is violating card brand policies, they can assess a fine for each violation. These fines can be significant and run from $5k up to $25,000. 

So if you're looking to offset your credit card processing fees, it's important to make sure you're following all major card brand rules and policies. Be sure to take into account the laws that exist in the state you are operating in, too. 

What are some of the most common ways merchants violate care brand rules?

Cash discounting programs and credit card surcharging programs are some of the most common ways merchants violate card brand rules. 

You might have read articles stating that Visa doesn't allow merchants to offer a discount to customers if they will pay with cash instead of their Visa card. The rules surrounding both cash discounting and applying a surcharge for credit card use have undergone many changes over the last few years. 

If you offer cash discounting, you could be violating card brand rules.

Not only have states changed their laws banning credit card surcharging, but Visa and other major card brands have also updated their core rules regarding the practices. 

As recently as a couple of years ago, there were at least 10 states with laws on the books that banned credit card surcharging. Now only two states, Connecticut and Massachusetts, still have laws that are enforceable banning the practice of adding a surcharge to credit card purchases. Colorado was the most recent state to change its laws to allow and outline legal surcharging practices.

As for the other states that ban credit card surcharges, a class-action lawsuit that made its way to the Supreme Court resulted in a ruling that effectively made their laws unenforceable. In direct response to the lawsuit, card brands have updated their policies to include provisions and guidelines for merchants who want to add a surcharge for credit card purchases.

When it comes to cash discounting, the problem is not the actual ability to offer a discount. Instead, the problem arises with HOW merchants implement the practice. According to Visa Core Rules Section Discount Offer-US Region and US Territories, Visa will allow merchants to offer a cash discount under specific guidelines.

In fact, both programs require the merchant to follow specific guidelines both before implementation and throughout the time they are running the program. 

The problem is that it's difficult for merchants to know and understand all the different guidelines for each and every card brand. And sometimes, like with cash discounting, they don't even realize there are guidelines.

Merchants can't just decide they're going to give a discount for cash paying customers without doing it the right way. Just like they can't just decide to implement a surcharge on credit card purchases. If they do, they risk violating card brand rules and that puts them at risk for some pretty hefty fines. 

How to avoid card brand non-compliance fees.

It's understandable that merchants want to find a way to offset the costs of accepting credit cards. But how you choose to do that is an important decision. Generally speaking, setting up a compliant surcharge program through your Merchant Service Provider is the best choice.

There are many things to take into consideration when deciding if a surcharge program is right for your business. One of the most important considerations is how it will be received by your loyal customers. The second is making sure you set it up in a way that complies with the major card brands. 

A recent consumer study conducted in early 2022 showed that not all consumers will tolerate being charged a fee for using their credit card. In this age, consumers expect businesses to accept all forms of payments. And being told they'll pay extra if they use a charge card can be off-putting. 

In fact, being asked to pay a surcharge could have a negative impact on customer satisfaction and affect how they view your business. The poll revealed that 56% of consumers felt apt to switch to other merchants if they’re asked to pay surcharges.

At the same time, finding creative ways to reduce overhead can result in greater benefits for your loyal customers, when done right.

Once you decide a surcharge program is right for you, then you have to make sure it's implemented in a sustainable way. Which means it must be compliant. 

Don't stop accepting credit card payments, learn to do it affordably.The best way to make sure you're staying compliant with all card brand policies is to work with a trusted merchant service provider. Implementing a surcharge program compliantly is easy when you work with an experienced MSP. 

At MonerePay, we can make setting up a compliant surcharge program quick and simple. We will sit down with you to find your real processing rate quote first. Then we can decide on the most fair surcharge rate for you and your customers. 

It's important to keep in mind that a surcharge program is not a license to charge as much as they can just because the cost is being passed on. In fact, especially because the costs are being passed to your loyal customers, it's imperative to make sure it's being done fairly.

 Another important consideration is how flexible the program is. Are you able to dissolve the program quickly if it's not working for your business or your customers? Our program is completely flexible, and programs can be terminated at any time. We will work closely with you to set up the best solution for you and your customers. And if it's not working, no problem. 

When you work with MonerePay, you can leave the compliance responsibilities to us. And your payment transactions will be as quick and frictionless as they’ve always been. 

We will make sure to register your business with all the major card brands. Our in-house underwriting will make sure your Merchant Surcharge Notification Form is turned correctly in for each card brand. 

Once approved, we’ll provide all the proper signage and make sure you have everything you need to stay compliant.

Automation makes running your surcharge program easy. We will provide you with a payment terminal pre-programmed to meet all program compliance regulations. Or, we can reprogram your current terminal to include the required fields and calculations. All the mathematical calculations are simply programmed at the terminal, allowing merchants to focus their attention on making happy customers.  

Our goal is to support the success of your business endeavors. Leave the regulations, guidelines, and compliance to our ETA-Certified Payments Professionals. And rest assured, when it comes to abiding by payment industry rules, we’ve got you.

 If you're ready to explore our surcharge program options and see if your business model could benefit, call us today.

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