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Credit Card Fees

We periodically hear from members inquiring about the ins-and-outs of adding a fee on credit card payments.

While credit card transactions help avoid delays or neglect of payment for the work perform, the downside is you have to pay the credit card company a merchant fee of one to three percent—a fee which you have to absorb or refuse to accept credit card payment to avoid paying the fee. To get around dilemma, some members add a surcharge when the client wanted to use a credit card to pay an invoice.

Recently, when a printer applied a surcharge to an invoice, his client responded that the California Civil Code Section 1748.1 prohibited the printer from doing so.

Section 1748.1 provides, in part, as follows: “No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means.”

Civil Code Section 1747.02(d) defines a “cardholder as a “natural person to whom a credit care is issued for consumer purposes, or a natural person who has agreed with the card issuer to pay consumer credit obligations arising from the issuance of a credit card to another natural person.”

A business is not a natural person. Thus in business to business transactions a surcharge can be added. However, in individual to individual or business to individual transaction a convenience fee cannot be charged.

For business purposes, you may want to add a statement on the quote sheet stating that, if the (business) client pays by credit card, you may impose a surcharge as permitted by law.

Recommendation: If you want to add a convenience credit card fee you can only do so for business transaction, not business to individual transactions.

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