There’s a lot to think about if your firm is considering shifting credit card fees to clients - is this practice right for our firm? How should we communicate about it to clients? Is it permissible in our state? Do our local rules of professional conduct permit it?What method should our firm use? The good news is that it’s not that complicated. You’ll likely be good to go if you adhere to some simple best practices. Below we’ve compiled a list of best practices for two of the most common ways that merchants implement shifting credit card fees: cash discounting and surcharging. We’ll start with discounting:
Discounting Rules and Best Practices:
The discount must be displayed as an actual discount from the full price of the services
In the eyes of the card brands, a discount is not a service fee or other additional fee charged on all services and then removed for those paying by means other than cards. It’s a discount offered to customers who pay in cash or with a check. As a result law firms can best accomplish discounting by displaying two prices on an invoice: a credit/debit price and a cash/check price.
Clearly notify clients of the discount at the time of payment, in a fee agreement and with signage at the firm’s offices.
Discounting may be applied to both credit and debit cards.
Surcharging Rules and Best Practices:
Firms intending to surcharge must notify Visa and Mastercard 30 days in advance of beginning to surcharge.
Surcharging is limited to credit cards only; the practice is not allowed on all debit cards even if they have a Visa/Mastercard logo.
The amount of the surcharge must not exceed the amount it costs to process that card (Note: This rule makes it difficult to implement surcharging when firms are paying different amounts to process certain types of credit cards - also called "tiered pricing").
In no case, may the surcharge exceed 4%. This is true even if the merchant’s cost to process the card is greater than 4%.
Merchants must clearly notify clients of the surcharge at the time of payment. A best practice would be to include this information in a fee agreement and with signage at the firm’s offices.
Use a payments system that calculates the total amount of the payment after the surcharge is added; do not simply provide a surcharge percentage and require the client to do their own math.
Provide a receipt with the surcharge amount clearly identified.
Shifting credit card fees to clients can raise a number of questions for law firms. Figuring out how to actually do it shouldn't be one of them. If you have more questions about the practice be sure to check out our "What law firms need to know" guide about shifting fees but complying with a few simple best practices can get a firm a long way to doing it right.