Buddy the Banking Badger

Buddy’s Money Saving Tips

Short videos from Buddy with practical ways to keep more money in your business. Pick a tip below to watch.

If You Surcharge, Follow the Rules Exactly

CardBeyond the state-by-state legal landscape discussed elsewhere in this collection, surcharging is also governed by a separate, independent layer of rules set directly by the card networks — rules that apply uniformly nationwide regardless of what your specific state permits, and that must be followed even in states where surcharging is broadly allowed. Getting the state law right isn't sufficient on its own; you also need to comply with network-specific requirements. The core network rules include a cap on the surcharge amount — commonly around 3% for Visa transactions, with the specific ceiling being whichever is lower between the network's published cap and your actual, real cost of accepting that card — along with strict disclosure requirements, including clear signage at the point of entry and checkout, and an itemized surcharge line on the customer's receipt. Perhaps most critically, and most commonly violated by accident: a surcharge can never be applied to a debit or prepaid card transaction, even one that a customer chooses to run through a credit network rather than entering a PIN. Your point-of-sale system needs to be capable of reliably distinguishing between true credit and debit transactions in order to apply a surcharge correctly and legally. The consequences for getting this wrong aren't trivial — violations of network surcharge rules can result in loss of your surcharging privileges specifically, additional monitoring, or in more serious cases, jeopardy to your broader merchant account relationship. If you're implementing or already running a surcharge program, it's worth a direct, specific conversation with your processor confirming that your POS system correctly enforces every one of these requirements, rather than assuming general awareness of the rules is sufficient.

More tips from Buddy

A Regular Statement Review Most merchants have never had someone actually explain every line of their statement to them — and that gap is exactly where avoidable fees hide. A regular statement review (annually, or any time your processor changes pricing) is often the single highest-ROI thing a business owner can do for their bottom line.

Interchange Back on a Refund When you refund a sale, you generally don't get back the interchange fee you originally paid — even though the money is going back to the customer. Some processors do return a portion; most don't automatically. It's a good line item to specifically ask your processor about, since it affects the true cost of any return-heavy business.

Virtual Terminals: Useful, But Priced Like Keyed Transactions A virtual terminal lets you manually process phone or mail orders through a web browser — handy for taking payment without a physical card reader. But because the card isn't present, expect the same higher, "keyed" interchange rate that applies to any card-not-present transaction, plus sometimes a separate monthly access fee for the tool itself.

CVV Checks: A Small Check With a Big Fraud Impact Requiring the 3- or 4-digit security code on the back (or front, for Amex) of a card adds negligible checkout friction but meaningfully reduces card-not-present fraud, since that number isn't stored on a card's magnetic stripe or chip. If you're not requiring it on every online or phone transaction, it's one of the easiest fraud-prevention wins available.

If You Surcharge, Follow the Rules Exactly Card networks set hard limits regardless of state law: surcharges are capped around 3% (Visa) or the lower of your actual processing cost, must be clearly disclosed with signage and on the receipt, and can never be applied to debit or prepaid cards — even ones that route as "credit." Getting this wrong risks losing your surcharging privileges or your merchant account entirely.