For card transactions, surcharging is the act of charging your customer an additional “payment fee” for choosing to pay with a card. Surcharging does not refer to fees that are independent of the chosen payment method, e.g. an “administration fee”.
Historically, surcharging has been allowed and preferred in many industries where the transaction size has been high and the margin low. However, per the European payment directive (PSD2) which came into force in January 2018, there are new rules for certain types of transactions.
The European Union's rules apply when both the card is issued in the EEA, and the merchant is located in the EEA.
If the card is issued outside of the EEA or the merchant is located outside the EEA, the European rules do not apply. Other local rules may apply.
European rules regulate two things:
The maximum amount you may charge the cardholder is the fee your payment provider is charging you (e.g. Paylike's transaction fee) (1).
It is not allowed to surcharge customers using a consumer card. It does not matter if the card is a debit, credit or prepaid card.
Surcharging for business cards are not regulated, and you are therefore still allowed to surcharge these no matter if the business/corporate card is a debit, credit or prepaid card.
An inherent issue when surcharging is that the card issue country and type are not easily determined and the transaction fee is unknown until after the payment has taken place.
Therefore, you are required to look up the card number (BIN) to determine the card type and issue country and to estimate your transaction fee before the customer can be presented with the surcharging fee and finalise the payment.
We are happy to help you setup surcharging. To get started, contact us to discuss the best strategy.
Note: The European Union does not directly regulate surcharging based on the type of card, but based on the cards for which they regulate interchange (2) (3). Therefore, if the European Union decides to regulate interchange on e.g. business cards, surcharging will also be disallowed for business cards.
(1) Article 62, paragraph 3 (the surcharge may not be higher than your actual cost) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015L2366 (2) Article 62, paragraph 4 (surcharging is disallowed on cards with regulated interchange fees) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015L2366 (3) Article 3 (consumer debit cards) and Article 4 (consumer credit cards) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015R0751
Disclaimer: We do not offer legal advice and the information on this page is provided on a best effort basis. Please note Paylike operates in the EEA and as such our information is mainly targeted businesses in the EEA. If you operate outside the EEA or sell to customers outside the EEA, consider finding a local source of information or ask a local lawyer.