Information from the Office of Attorney General regarding so-called swipe fees

  • Passing on Credit Card Swipe Fees to Consumers
    A recent settlement between merchants and Visa and MasterCard will permit merchants to pass swipe fees to consumers. While Pennsylvania is not one of the ten states that prohibit swipe fees, it is the Bureau of Consumer Protection's assessment that a merchant must disclose beforehand whether the consumer will be charged a swipe fee.

    In the Bureau's view there must be clear and conspicuous disclosure before a sale with any fees or surcharges attached. What constitutes sufficient disclosure will depend on individual facts and would include postings at the register and store front. 

    What is a Swipe Fee?

    A swipe fee is a fee collected between banks for card based transactions. The bank from which the card is issued deducts a swipe fee, also known as an interchange fee, from the amount it pays the bank handling card transactions for the merchant. The bank that acquired the deducted amount on behalf of the merchant then pays the merchant, minus the interchange fee and usually other, smaller charges. 

    What does this settlement mean for a consumer?

    Under the settlement, merchants are now permitted to pass swipe fee costs to the consumer where not prohibited by law. However, there are four disclosure requirements that govern whether a merchant can apply a surcharge to either the brand or product level. A merchant must:

    • Provide Visa and the merchant's bank that handles card transactions with no less than thirty days' advanced written notice that the merchant will impose surcharges. The merchant must also identify whether the surcharge will be imposed on the brand or product level.
    • Provide clear disclosure to the merchant's customers at the store's entry point or online in the first page that references credit card brands, that the merchant imposes a surcharge. This surcharge can be no greater than the merchant's discount rate for Visa Credit Card transactions.
    • Provide clear disclosure to the merchant's customers of the merchant's surcharging practice at the point of sale or interaction with the customer, which does not disparage the payment product being used. Information of the surcharging practice must include the amount of any surcharge the merchant imposes, a statement that the surcharge is being imposed by the merchant and a statement that the amount imposed is no more than the merchant's discount rate for Visa Credit Card transactions.
    • Provide clear disclosure of the surcharge amount on the receipt the merchant provides to customers.

    The Attorney General's Bureau of Consumer Protection is here to help. If you need more information call the toll-free hotline at 1-800-441-2555 or visit the website at www.attorneygeneral.gov.