We know that surcharges for using a card can add up to a big bill every year for businesses. It makes sense to pass some of that cost along to the customers that incur them, not the ones who pay in cash.
NCAs (non-cash adjustments) are gaining steam among merchants, and in most of the country, there’s no legal issue if you follow the rules.
Let’s talk about the benefits of NCAs, the rules of the road, and why COCARD is in your corner if you decide to start an NCA program.
Surcharges and NCA
Non-Cash Adjustments, also known as card surcharges, pass your card processing fees onto the customers who use a card. They are included as an additional line item on the receipt and tend to be between 2% and 4% of the transaction value. They can also be a fixed dollar amount, generally less than $1.
NCA’s are a way for merchants to pass on their transaction costs without raising prices across the board. Though a tiny adjustment for customers, those fees can really add up for merchants. NCA and cash discounting can save merchants thousands of dollars a year while adding pennies to each customer’s bill.
NCA’s are a powerful tool to help minimize your card processing costs, but the rules can be a bit complex to navigate, from state laws to payment processors’ individual policies. It’s important to know these rules before you get started.
Rules May Vary
We often find that storeowners would love to avoid card processing fees cutting into profits, but are hesitant to employ an NCA program. One thing we hear from reluctant merchants is that they’re not sure of how the rules work.
While cash discounts are completely allowed, it’s true that NCA’s are a little more complicated from a regulatory standpoint. Federal and state governments, as well as major card issuers like Visa and MasterCard, each have their own rules when it comes to surcharges. Let’s break down the basic rules:
The following states have laws that either prohibit or regulate credit card surcharges:
- New York
However, many of these states either do not enforce the laws currently on the books, due to recent court decisions or are in the process of repealing or softening these laws. You can find individual state laws regarding surcharges and NCA’s here.
Some states also require that you post signage informing customers of the surcharge. We recommend this policy for merchants everywhere, to build trust with customers and ensure compliance.
Visa and MasterCard, the Big Kahunas of card processing, require merchants to register their surcharge with the payment networks. They must give 30 days’ notice before starting a surcharge or NCA program, and must display a notice of the surcharge at the point of sale.
Additionally, Visa and MasterCard only allow surcharges and NCA’s for credit, not debit, purchases. Here are links to the surcharge policies for Visa and MasterCard.
Stay Compliant: Follow the Five
COCARD and our team of member-owners are always available to clarify any questions you may have. Generally, you can follow these five main rules will keep you in compliance:
- Notify your card association, a month in advance, before starting an NCA or surcharge.
- Limit surcharges to 4%, or your average cost per transaction (whichever is lower).
- Make sure your clients know about the program! Post signage at the entrance and point of sale.
- Include the NCA on the receipt as a separate line item.
- (Visa and MasterCard)- Apply surcharges to credit cards, not debit cards.
In almost every state, these five rules are enough to keep you in the clear. Getting in touch with your state’s regulatory body, or chatting with your COCARD representative, will have you on the road to a feeless future.
COCARD: Getting Creative for our Clients
At COCARD, our obsession is maximizing value and reducing costs for our members, merchants, and the people they serve. NCA’s and cash discounts are powerful ways to minimize recurring expenses and to only pass costs to the customers that incur them.
If you’re a member of COCARD, you have access to the best educational resources, the highest industry split rates, and the unique member-owner model to share in our success. If you work with us as a merchant, you can count on 24/7 support, an industry-leading technology suite, and the highest-value transaction management service.
Get in touch today to learn how COCARD strives for a better future, every day, for everyone in our network.