What is a surcharge ? How does this work ?


I’m at my barber shop and I was just thinking I’m gonna be charged a 2 dollars fee because im using a debit card and im reading a article that says they can’t do this because im using a debit card and it is only allowed towards credit cards

I live in Texas and the hair cut is 22 dollars

In: 0

“Surcharge” = extra cost. Some businesses charge extra costs, for whatever reasons. In this case, typically the argument is that with a debit card (or cash) they get the money right away, straight from your bank, whereas with a credit card you CAN call your credit-card and dispute the charges (say that it wasn’t you or that you didn’t receive what you paid for), and the barber shop would get “un”-paid. So they charge $2 for the “extra risk”.

Surcharge is just a euphemism for an added charge.

The companies that supply merchants with the capacity to accept credit or debit cards for payment also extract a percentage of those transactions as their own revenue. Therefore, merchants make less when customers pay by card. Some merchants may attempt to pass this cost on to the customer.

By using a card a business gets charged a fee for that service. This % can be different between credit cards and debit cards but is generally between 0.5% and 2%.

A $2 surcharge fee on top of $22 is a lot more than the percentage (9%) that the bank will charge the merchant, and thus the shop is making more money from you for the same service

In some industries they may also be trying to persuade people to pay with cash since its a lot easier to “hide” and not declare that income for tax purposes. Having money via card hitting their bank account leaves a paper trail and harder to hide to reduce tax obligations.

If you paid with a Visa Debit or MasterCard Debit, and they passed the processing charge onto you directly (which it sounds like they did) they are breaking their service agreement with the card issuer. Next time tell them you’ll report them to the card issuer for breaking that agreement. They can lose their ability to process that type of card and is something they should take seriously.

Texas also has restrictions in place for passing on those surcharges to the consumer and as I’m not a lawyer I can’t really give you much more info than that but it’s something to look into.

A lot of smaller shops that can’t afford a legal team have no idea that they’re breaking a law or breaking a card processing agreement, so if you do mention it to the shop try not to beat dick about it.