Are Credit Card Fees Legal in Texas

It seemed to help consumers, but in fact, the credit card companies didn`t want us to think about their scanning fees. They thought that if we knew, we would pay cash to avoid them, and they wouldn`t get the money. Reward Rate Calculation Example: When Chase Sapphire Preferred Points are redeemed for travel via Ultimate Rewards, they are worth $0.0125 each. The card awards 2 points for travel and food and 1 point for everything else. Therefore, we say that the card has a reward rate of 2.5% for restaurants and travel (2 x 0.0125 USD) and a premium rate of 1.25% for everything else (1 x 0.0125 USD). With a few exceptions, surcharges for using a credit or debit card are prohibited by Section 604A of the Texas Business and Commerce Code: The practice of always charging customers a fee for credit card payments, regardless of how the transaction takes place, is called a surcharge. These are currently banned in 10 states – Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Unfortunately, there is no research available on the effects of surtaxes and their prevalence in the United States. The next episode was an Investigation by the Australian Government. The survey found that 68% of respondents believe retailers and other businesses should not be allowed to charge customers additional fees for credit card payments. If a court finds that a law in its applied form is unconstitutional, it generally invalidates the law only in the State applied to the litigant concerned and does not render the law inapplicable to the other parties to the proceedings or other factual circumstances. […] Therefore, there may still be circumstances in which section 604A.0021, as applied, prohibits a credit card surcharge. A company that wishes to charge credit card supplements must also notify one of the credit card associations through which it accepts payments (Visa, Mastercard, Amex, Discover, etc.) at least 30 days before the start of billing for the fee.

American Express is the only network that does not require this notification. You can read more about the specific rules of surcharges that a business must follow here, as well as access to the required online notification forms: also note that it is possible that the agreement or contract between a merchant and a credit card or payment card processing company prohibits surcharges or fees. § 604A.002. IMPOSE A SURCHARGE FOR THE USE OF THE DEBIT OR STORAGE CARD. a) In the case of a sale of goods or services, a merchant may not impose a surcharge on a buyer who uses a debit or prepaid card instead of cash, cheques, credit cards or similar means of payment. […] Thirty years ago, Texas enacted a law to prevent merchants from charging extra to customers who pay with credit and debit cards, but the law allowed merchants to offer a discount if they paid in cash. Sweep fees are hidden from consumers, but merchants have to pay them to accept credit cards, and these costs are passed on to consumers in the form of more expensive goods and services. Credit card supplements are currently permitted, unless otherwise restricted by state or federal laws. However, businesses are still required to follow certain protocols to ensure that consumers are not surprised by these fees. Visa, Mastercard, American Express and Discover require retailers to advertise the surcharge at the point of sale.

This applies both in-store and online. In addition, the consumer`s receipt must clearly indicate that a surcharge has been added to the invoice. The practice of top-up, in which the merchant passes on the credit card processing fee to the customer, is gaining momentum. But it also causes a lot of confusion for businesses that want to make sure it`s legal and fully compliant with contractual rules and merchant agreements required by credit card processing companies like VISA. Below is a useful summary of what traders need to know to answer these important questions. By 2020, almost every state will allow a completely legal credit card top-up. This follows court rulings declaring the laws against surtaxes unconstitutional. In January 2019, New York lifted its ban on billing and joined the other major states of California, Texas and Florida. After all these courts ruled in favor of merchants who complained that the surtax bans were unfair, a cascade of other states also lifted their bans. Experts predict that billing will be legal in the U.S. by the end of 2020. NTC Texas offers zero-cost credit, powered by CardX, a solution that ensures businesses are 100% compliant with every top-up transaction.

When the Software detects a credit card, it automatically passes on the processing fee to the customer or buyer in a manner that includes full legal disclosure. This also includes printing on the receipt if necessary. Dealers also come with legally compliant signs, so they don`t have to create their own. CardX is a completely transparent and simple solution that does not require any particular technical know-how or IT infrastructure. The Attorney General`s website contains information about the use of credit cards and asks you to file a complaint with his office if you believe a company charges additional fees for credit card purchases. If the state where your business is located allows credit card surcharges, you should always consider the pros and cons before charging them. Additional fees are generally frowned upon by consumers. If credit card surcharges are widely used in your local market, adding credit card surcharges can`t discourage customers.