Understanding Surcharges

A surcharge is a fee assessed to credit card transactions by Merchants to their customers as an additional charge to cover specific costs associated with credit card processing.

Surcharges can cause legal complications if each requirement for compliance and registration is not met or if the surcharge is not properly configured. The information provided in this guide outlines the steps to properly register and configure a surcharge (where allowed by law).

Getting Started

To begin surcharging, you must follow the steps below:

1. Notify your Partner Experience Manager that you would like to start a surcharge program to begin setup of the Merchant Group.

2. Your Payrix Pro representative will enable the surcharge parameter for you to send the surcharge amount (required by Visa) with transactions.

   1. Note that the surcharge parameter is for reporting purposes only, so it does not have any effect on how the fees should be calculated.

3. Meet each Surcharge Program Setup Requirement.

After the surcharge function and parameter are enabled, set the surcharge collection workflow that works best with your business type. See Potential Surcharge Workflows below to view diagrams outlining other optional setups:

Potential Surcharge Workflows

The following image depicts a fee configuration where Surcharge = Merchant Fees with Fee Scheduler:

The following image depicts a fee configuration where Surcharge = Merchant Fees with Fee Listener:

The following image depicts a fee configuration where Merchant Fees > Surcharge with Fee Listener:

The following image depicts a fee configuration where Merchant Fees > Surcharge with Fee Scheduler:

The following image depicts a fee configuration where Merchant Fees > Surcharge with Interchange Plus:

Tip

If you do not find a scenario that meets your needs, contact your Partner Experience Manager to further scope your request.

Responsibilities by Platform

Surcharge Program Setup Requirements

The use of a surcharge program can result in legal complications. As a result, it’s imperative to follow each of the compliance requirements below to adhere to card brand and state/local regulations.

Compliance Requirements

• Surcharges are only permitted on credit cards; they cannot be assessed on debit cards.

• Surcharges cannot be assessed in states where surcharges are prohibited by law.

• The maximum recommended surcharge amount is 3% to adhere to Visa and Mastercard restrictions.

• There must be a separate line item for the surcharge on the checkout page and receipt.

• Merchants must disclose their full surcharge policy on their checkout page before transaction completion.

Card Brand and Acquirer Registration Requirements

• Visa: The surcharge parameter must be used to notify Visa of a transaction surcharge through Payrix Pro (via backend Field 28). For values populated in authorization and clearing (Field 28), Visa considers this to be a notification of the surcharge.

• Mastercard: Registration and notification to Mastercard at least 30 days before surcharging.

• Discover: No registration required.

• American Express: No registration required.

• Acquirer Registration: The Payrix Pro platform will enable the surcharge parameter, sending surcharging Merchants in a given group to the acquirer.

Note

The amount of the surcharge fee assessed on the cardholder does not have to match the amount of the fee assessed on the Merchant. This means that the cardholder could be assessed a 3% fee and the Merchant could be assessed a 3.50% fee.

Create a Surcharge in the Portal

Complete the following steps to enable a Surcharge in the Portal and apply it to a Group:

1. Click GROUPS in the left navigation panel to open the Groups page.

2. Locate the group in the table and select any information in the table row to open the Group Profile page.

3. Click FEES in the list of tabs on the left side of the page.

4. Click the ADD FEE button in the upper-right corner of the page to open the Add Fee lightbox on the page.

5. Click the When to Trigger the Fee? dropdown menu and select Capture.

6. Click How Much is the Fee? down and select Surcharge.

7. Set the Amount field to 3.00 (for 3%) or less.

8. Set the Fee Start Date as today’s date.

9. Name the Fee using an easy-to-find naming convention. Then, click Advanced Options.

10. Enable the surcharge as a transaction fee by selecting Transaction Fee.

11. Under the Conditional Rules dropdown, select Payment Card Type is, and then select Credit from the available options.

Create a Surcharge via API

Complete the following steps to enable a Surcharge with the API and apply it to a Group:

Create the Surcharge

POST /fees HTTP/1.1
Accept: application/json
Content-Type: application/json
Host: api-test.payrix.com
APIKEY:{{private_api_key}}

Example Request Body:

{
    "entity": "t1_ent_xxxxxxxxxxxxxxxxxxxxxxx",
    "forentity": "t1_ent_xxxxxxxxxxxxxxxxxxxxxxx",
    "org": "t1_org_xxxxxxxxxxxxxxxxxxxxxxx",
    "type": 1,
    "name": "3% Surcharge",
    "schedule": 7,
    "scheduleFactor": 1,
    "start": "{{CurrentDateTime}}",
    "um": 3,
    "amount": "300",
    "currency": "USD",
    "txnFee": 1
}

Example Response Body:

{
  "id": "t1_fee_xxxxxxxxxxxxxxxxxxxxxxx",
  "created": "2024-01-24T17:50:38.717Z",
  "modified": "2024-01-24T17:50:38.717Z",
  "creator": "t1_log_xxxxxxxxxxxxxxxxxxxxxxx",
  "modifier": "t1_log_xxxxxxxxxxxxxxxxxxxxxxx",
  "entity": "t1_ent_xxxxxxxxxxxxxxxxxxxxxxx",
  "forentity": "t1_ent_xxxxxxxxxxxxxxxxxxxxxxx",
  "org": "t1_org_xxxxxxxxxxxxxxxxxxxxxxx",
  "type": "1",
  "name": "3% Credit Card Surcharge",
  "schedule": "7",
  "scheduleFactor": 1,
  "start": "{{CurrentDateTime}}",
  "collection": "1",
  "collectionFactor": "1",
  "collectionOffset": "1",
  "um": "3",
  "amount": "300",
  "currency": "USD",
  "txnFee": "1",
  "inactive": "0",
  "frozen": "0"
}

Add the Credit-Only Fee Rule

POST /feeRules HTTP/1.1
Accept: application/json
Content-Type: application/json
Host: api-test.payrix.com
APIKEY:{{private_api_key}}

Example Request Body:

{
  "fee": "t1_fee_xxxxxxxxxxxxxxxxxxxxxxx",
  "name": "Credit-Only Surcharge Rule",
  "description": "Only allows surcharging on credit cards.",
  "type": "methodType",
  "application": "both",
  "value": "credit",
  "inactive": "0",
  "frozen": "0"
}

Example Response Body:

{
  "id": "t1_frl_xxxxxxxxxxxxxxxxxxxxxxx",
  "created": "2024-01-24T17:50:38.717Z",
  "modified": "2024-01-24T17:50:38.717Z",
  "creator": "t1_log_xxxxxxxxxxxxxxxxxxxxxxx",
  "modifier": "t1_log_xxxxxxxxxxxxxxxxxxxxxxx",
  "fee": "t1_fee_xxxxxxxxxxxxxxxxxxxxxxx",
  "name": "Credit-Only Surcharge Rule",
  "description": "Only allows surcharging on credit cards.",
  "type": "methodType",
  "application": "both",
  "value": "credit",
  "inactive": "0",
  "frozen": "0",
}

Applying a Surcharge through a Transaction

After your fee and fee rule have been enabled using the Portal or API, you can apply the Surcharge using one of the following methods:

Separate Transaction and Surcharge Calculation: POST /txns

This process directly calculates the fee amount, ensuring the amount is 100% of the value provided in the fee parameter.

1. In the fee parameter, enter the calculated surcharge amount (3% of the transaction total).

2. In the total parameter, enter the original transaction total, plus the surcharge total.

   • Example: 3% Surcharge for $100 original transaction total = $103.00 total amount.

3. Using the Portal, create a fee or adjust the existing surcharge fee with the following values:

Example Transaction:

{
  "allowPartial": "0",
  "debtRepayment": "0",
  "origin": "1",
  "platform": "VCORE",
  "type": "1",
  "currency": "USD",
  "fundingCurrency": "USD",
  "unattended": "0",
  "payment": {
    "method": 0
  }
  "fee": "300",
  "total": "10300"
}

Combined Transaction and Surcharge Calculation: POST /txns

This process reverse-calculates the fee amount, ensuring that the 3% is calculated from the transaction amount alone, rather than the transaction amount + surcharge amount together.

1. In the fee parameter, enter the calculated surcharge amount (3% of the transaction total).

2. In the surcharge parameter, enter the calculated surcharge amount (3% of the transaction total).

3. In the total parameter, enter the original transaction total, plus the surcharge total.

4. Using the Portal, create a fee with the following values:

Example Transaction:

{
  "allowPartial": "0",
  "debtRepayment": "0",
  "origin": "1",
  "platform": "VCORE",
  "type": "1",
  "currency": "USD",
  "fundingCurrency": "USD",
  "unattended": "0",
  "payment": {
    "method": 0
  }
  "fee": "300",
  "surcharge": "300",
  "total": "10300"
}

Apply a Surcharge through a PayFields Token

Because PayFields does not currently offer a direct connection to the surcharge parameter available through the /txns endpoint, a workaround is to tokenize the payment method only using PayFields, then create a subsequent POST /txns API request using the new token as the payment method with the Surcharge applied.

Apply a Surcharge to PayFields Transactions

In the following scenario, we are applying a 3% surcharge for credit card payments.

Step 1: Create your payment page through PayFields like normal, using the following parameters to create a new payment token from payment methods submitted by customers:

PayFields.config.amount = '0'
PayFields.config.mode ='token'
PayFields.config.txnType = 'capture'

Tip

Be sure to include your Surcharge policy clearly for customers to see before completing their transactions.

Step 2: When a transaction is created, PayFields are configured to automatically tokenize the payment method (see the code snippet example below) when a transaction is submitted. Locate the token value in the response data for the transaction.

For this example, we’ll use $100 as the amount for the initial transaction total.

• Example Token: 123abc456defxxxxxxxxxxxxxxxxx

• Example PayFields Tokenization:

Step 3: Make a request to the following endpoint:

GET /tokens&expand[payment][bin][]?token[equals]={Your Payfields Response Token} HTTP/1.1
Accept: application/json
Host: api-test.payrix.com
Content-Type: application/json
APIKEY:{{private_api_key}}

Example Request URL:

GET https://api-test.payrix.com/tokens&expand[payment][bin][]?token[equals]=123abc456defxxxxxxxxxxxxxxxxx

Step 4: In the response body, locate the payment method type via the method and type parameter.

• The method parameter must be 1, 2, 3, 4, or 5.

• The type parameter should display as credit.

If the method and type indicate Credit as the payment type, continue to Step 5. If the method and type indicate debit, go to Debit Card Handling for instructions for routing the potential fee.

Example Response:

{
  "payment": {
      "bin": {
          "bin": "123456",
          "method": 2,
          "type": "credit",
          "name": "BIG BANK USA",
          "country": null,
          "website": null,
          "phone": null,
          "address": null,
          "city": null,
          "state": null,
          "zip": null,
          "locationType": null,
          "newBin": null,
          "category": null,
          "transferEnabled": 0,
          "numberLength": null,
          "debitOverCreditEnabled": 0,
          "billPayEnabled": 0,
          "pinlessSupport": null
      },
      "id": "abc123def456hij78",
      "method": 2,
      "number": "1234567891011213",
      "routing": "0",
      "payment": null,
      "lastChecked": null,
      "last4": 1213,
      "mask": null
  },
  "id": "t1_tok_xxxxxxxxxxxxxxxxxx",
  "created": "2024-01-25 12:11:32.8155",
  "modified": "2024-01-25 12:11:32.8155",
  "creator": "t1_log_xxxxxxxxxxxxxxxxxx",
  "modifier": "t1_log_xxxxxxxxxxxxxxxxxx",
  "customer": "t1_cus_xxxxxxxxxxxxxxxxxx",
  "token": "123abc456defxxxxxxxxxxxxxxxxx",
  "expiration": "0123",
  "inactive": 0,
  "frozen": 0,
  "name": null,
  "description": null,
  "custom": null,
  "authTokenCustomer": null,
  "status": "ready",
  "type": "internal",
  "internalToken": null
  },

Step 5: After the method and type have been verified as a credit card payment, make a request to the following endpoint to create the credit card capture transaction and apply the 3% surcharge to the original transaction amount:

POST /txns HTTP/1.1
Accept: application/json
Host: api-test.payrix.com
Content-Type: application/json
APIKEY:{{private_api_key}}

Example Request Body:

{
    "merchant": "{{Merchant_id}}",
    "type": 1,
    "origin" : "2",
    "token": "{{tokenFromPayFieldsResponse}}",
    "fee": "300",
    "surcharge": "300",
    "total" : 10300
}

Result: Your PayFields payment page credit card transaction has now been properly assessed the surcharge from the tokenized credit card, and the Merchant has been assessed the surcharge through their Partner.

Debit Card Handling

You can handle this compliance rule by querying our /tokens endpoint to determine if the card is credit or debit. If it is debit, then you can handle this in a few ways:

If during your review of the customer’s payment token, you discover that the payment method is a debit card, you can use one of the following options to proceed because surcharges cannot be applied to debit card transactions:

1. Create a separate fee for debit-only transactions.

   • Do not charge the cardholder any surcharge fee or pass any value in the fee field.

   • With this option, the Merchant would have to cover the fee amount that you set up in Payrix Pro.

2. Send a POST /txns endpoint request with a set fee parameter.

   • Do not charge the cardholder any surcharge fee.

   • Pass a fee amount in the fee field.

   • With this option, the Merchant would have to cover the fee amount that you pass.

3. Flag an alert to the cardholder on the checkout page saying that they need to enter a different card.

   • With this option, the Merchant avoids paying a fee.

Option 1: Create a separate fee for debit-only transactions

POST /txns HTTP/1.1
Accept: application/json
Host: api-test.payrix.com
Content-Type: application/json
APIKEY:{{private_api_key}}

Example Request Body - Debit Cardholder Transaction:

{
    "merchant": "{{Merchant_id}}",
    "type": "1",
    "origin": "2",
    "token": "{{tokenFromPayFieldsResponse}}",
    "total": "10000"
}

Result: Customer is not assessed a surcharge or fee for using a debit card. The Merchant is charged a fee for processing the debit card from the Partner.

Option 2: Send a POST /txns endpoint request with a set fee parameter

POST /txns HTTP/1.1
Accept: application/json
Host: api-test.payrix.com
Content-Type: application/json
APIKEY:{{private_api_key}}

Example Request Body - Debit Cardholder Transaction:

{
    "merchant": "{{Merchant_id}}",
    "type": "1",
    "origin": "2",
    "token": "{{tokenFromPayFieldsResponse}}",
    "total": "10000",
    "fee": "300"
}

Result: The Customer is not assessed a surcharge or fee for using a debit card. The fee value is passed with the transaction, however, and the Merchant’s transaction total is deducted to cover the fee.

Option 3: Create a checkout page alert to enter a different, valid credit card

Build a basic logic for your payment page to inform customers upon input of their card information that a credit card is required for the transaction:

Example JavaScript Flag Alert:

function checkCardType() {
    var cardTypeInput = document.getElementById("cardType").value.toLowerCase();
    if (cardTypeInput === "debit") {
        alert("Please Note: Credit card required for this transaction.");
    } else {
          alert("Invalid card type. Please enter a valid credit card.")
    }
}

Result: The customer will be prompted to enter a credit card instead of a debit card. This will prevent the Merchant from paying a surcharge or fee altogether.

Comparing Surcharges, Convenience Fees, and Service Fees

As the following fee types are similar in setup and collection process, it’s important to understand the differences between them to avoid legal complications and possible chargebacks.

Surcharges

Surcharges, or Surcharge Fees, as mentioned earlier, are specifically designed for credit card-only transactions at all times. These types of fees are inclusive of all credit card transactions under a Merchant or Group and can be applied consistently as long as card brand and legal requirements are met.

Example: A Merchant offers cash, debit, or credit as payment options to their customers. To help offset the costs of credit card processing, the Partner applies a 3% surcharge to the Merchant for credit card transactions, and in turn, allows the Merchant to collect the surcharge directly from the consumer at checkout through their platform offering.

Convenience Fees

Convenience Fees are fee charges passed on to customers for the ability to pay for a product or service using an alternative payment method that is not standard for a business.

Example: A Merchant can state that they traditionally accept cash or check only, and offer the convenience of paying with a “non-traditional” method (credit card), which the Partner collects and keeps or profit shares with the Merchant. This fee can also be collected directly from the consumer at checkout through the Partner’s platform offering.

Generally, a convenience fee cannot be implemented in in-person settings (such as physical card terminals). Typically, this refers to internet and over-the-phone transactions.

Service Fees

Service Fees are actually a type of convenience fee that comes with specific rules and regulations resulting from certain limited qualifying MCCs, as opposed to a general convenience fee mentioned above where the fee can be assessed generally for alternative payment method usage. For comparison, we will classify Service Fees under Convenience Fees.

Example: A Merchant who operates a business classified as MCC 8220 (such as Colleges or Universities) processes a card payment. The associated interchange and processing fees are debited directly from their Partner’s operating account. Then associated fee costs are reimbursed to the Partner’s platform account through a 100% withdrawal of the Merchant’s entire transaction amount and fee cost.

Conclusion

While both Convenience Fees and Surcharges are similar in their setup and collection processes, there are important legal and compliance distinctions as well as different requirements for when each fee type can be applied.

Important!

Surcharges and convenience fees cannot be applied on the same payment.