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Debit cards are not subject to surcharging, and any merchant doing so is violating Visa/Mastercard regulations. (And possibly state law in several places -- Col

Debit cards are not subject to surcharging, and any merchant doing so is violating Visa/Mastercard regulations. (And possibly state law in several places -- Colorado where I live caps surcharge at the lesser of 2% or the cost of payment processing.)

4lx87 25d ago
Prices reflect the credit card merchant fees, even if there's no separate surcharge. People pay higher prices and anyone who doesn't use a credit card to recoup some in "rewards" is effectively getting taxed.
- rootusrootus 25d ago
  There is some nuance there. Cash is hardly free to process, and I have seen arguments that it is not far from the same overhead as credit card fees. So people who pay in cash are not subsidizing credit card users. Maybe it could be argued that debit card users are, though.
cmurf 25d ago
It’s 2% or actual cost for credit cards. Under subparagraph f)A seller or lessor shall not impose a surcharge if a customer elects to pay for goods or services by Check, cash, debit card, processing as a debit payment, or gift card. eCheck is considered a check. https://colorado.public.law/statutes/crs_5-2-212 https://colorado.public.law/statutes/crs_5-2-212
- lxgr 25d ago
  What even is an “eCheck”? I keep hearing that word but haven’t found a sane definition. Is it just a weird term for an ACH debit transfer?
  - projektfu 25d ago
    Sometimes it is a synonym for ACH, but it could be processed more literally as a check, with a check image and everything, and something like "Pre-Authorized Payment" written on the signature line. Usually they also let you specify the check number, if you wanted to have it follow your own sequence. Amazon Business was doing this with invoice payments up until January of this year.
ecommerceguy 25d ago
Correct, Toast specifically will not allow it under any circumstance. Debit cards issued by smaller community banks or credit unions are exempt from the cap and carry higher interchange rates (often 1.0%–1.65% + $0.10). All merchants should either do Surcharging or Cash Discount.
- lxgr 25d ago
  It’s not just community banks or credit unions. The cap is $10 billion in assets. There’s a whole industry of mid-sized banks just below that which are offering their services as sponsor banks to fintechs that want to earn the orders of magnitudes higher interchange rates while still getting debit acceptance/less surcharges and being allowed to offer a debit product.
- losvedir 25d ago
  You say "Correct", but Toast works the opposite of the person you're responding to. They charge the same fee regardless if it's a debit or credit card. They charge based on the network, and most debit cards in my experience use the Visa or Mastercard network. Yes, this is contrary to the Visa/MC terms, but I've never seen it enforced. https://support.toasttab.com/en/article/Are-customers-charged-processing-for-both-debit-and-credit https://support.toasttab.com/en/article/Are-customers-charge...
  - ecommerceguy 22d ago
    Well, as a bar owner, I use Toast surcharging. https://support.toasttab.com/en/article/Toast-Surcharge-Overview https://support.toasttab.com/en/article/Toast-Surcharge-Over... Any other questions?

4lx87 25d ago

Prices reflect the credit card merchant fees, even if there's no separate surcharge. People pay higher prices and anyone who doesn't use a credit card to recoup some in "rewards" is effectively getting taxed.

rootusrootus 25d ago
There is some nuance there. Cash is hardly free to process, and I have seen arguments that it is not far from the same overhead as credit card fees. So people who pay in cash are not subsidizing credit card users. Maybe it could be argued that debit card users are, though.

cmurf 25d ago

It’s 2% or actual cost for credit cards. Under subparagraph f)A seller or lessor shall not impose a surcharge if a customer elects to pay for goods or services by Check, cash, debit card, processing as a debit payment, or gift card. eCheck is considered a check. https://colorado.public.law/statutes/crs_5-2-212 https://colorado.public.law/statutes/crs_5-2-212

lxgr 25d ago
What even is an “eCheck”? I keep hearing that word but haven’t found a sane definition. Is it just a weird term for an ACH debit transfer?
- projektfu 25d ago
  Sometimes it is a synonym for ACH, but it could be processed more literally as a check, with a check image and everything, and something like "Pre-Authorized Payment" written on the signature line. Usually they also let you specify the check number, if you wanted to have it follow your own sequence. Amazon Business was doing this with invoice payments up until January of this year.

ecommerceguy 25d ago

Correct, Toast specifically will not allow it under any circumstance. Debit cards issued by smaller community banks or credit unions are exempt from the cap and carry higher interchange rates (often 1.0%–1.65% + $0.10). All merchants should either do Surcharging or Cash Discount.

lxgr 25d ago
It’s not just community banks or credit unions. The cap is $10 billion in assets. There’s a whole industry of mid-sized banks just below that which are offering their services as sponsor banks to fintechs that want to earn the orders of magnitudes higher interchange rates while still getting debit acceptance/less surcharges and being allowed to offer a debit product.
losvedir 25d ago
You say "Correct", but Toast works the opposite of the person you're responding to. They charge the same fee regardless if it's a debit or credit card. They charge based on the network, and most debit cards in my experience use the Visa or Mastercard network. Yes, this is contrary to the Visa/MC terms, but I've never seen it enforced. https://support.toasttab.com/en/article/Are-customers-charged-processing-for-both-debit-and-credit https://support.toasttab.com/en/article/Are-customers-charge...
- ecommerceguy 22d ago
  Well, as a bar owner, I use Toast surcharging. https://support.toasttab.com/en/article/Toast-Surcharge-Overview https://support.toasttab.com/en/article/Toast-Surcharge-Over... Any other questions?