Debit cards (well, domestic ones anyway) are actually pretty easy to tell from the POS point of view now that chip is a thing.

BTW Clover in my experience does in fact detect the use of a debit card and not apply any surcharges. Not sure about others as I don't use debit that often.

If I see a retailer call out that credit card only transactions are charged instead of "by card", I'm more likely to test credit, but I've done it at different points as a litmus test. Toast at least prior to this year did not distinguish.

Toast seems to have a beta as of early 2024 to detect non-compliant non-credit surcharges. BINs tend to be much more reliable as a way between debit and credit than they are for credit card tiers. Toast's change in posture to offer a beta product after Visa started knocking on doors of acquirers in 2023 surely can't be a coincidence.

(Other than local restaurants, merchants surcharging in my area is rare.)

Thank you for the informative analysis, phltraveler. I don't think that places would shut off smaller debit cards since it would frustrate too many customers. Also, like you indicated, the BIN isn't indicative of the card type necessarily. I have done product changes too where I've kept the same card number.

Is there any documented case of a merchant getting fined for this?

If not, I think it's just talk. Visa can yell louder and louder and make threats, but I don't think they are actually going to do anything tangible about it. It's not in their interest to damage their relationship with either merchants or acquirers.

Possibly but let's assume Visa Infinite cards pay some high 3%+ surcharge. If rewards aren't attractive enough to AT LEAST offset that surcharge, why would anyone ever get a Visa Infinite card again?

I think merchants in the US have more of a problem with credit cards in general and not the various levels of Visa cards that are out there (though I'm sure stuff like Visa Infinite doesn't help). IMO that's why merchants are probably going to go the simplest possible route if they do start surcharging more regularly, which per the settlement is going to be a flat 1% regardless of card type or how much it actually costs the merchant. Just enough to maybe get a significant number of people not in the miles/points game to reconsider using a CC instead of some other payment method but not enough to make rewards completely not worth it.

In any case, we'll see what happens over the long run.

I reported a couple merchants for inadequate notice for surcharging in 2023, and to be honest, I'm not looking to be a "karen" against small businesses. The concept of a credit card surcharge grates me but some examples of where I didn't say anything:

1. A local fried chicken shop that fully complied with surcharging regulations not only in the state of NY but cardholder networks - dual pricing. Menu said things like 4 piece chicken meal $10.00 cash, $10.30 credit - I can't begrudge this at all because it's intellectually honest.
2. A local bakery that started accepting credit for the first time with surcharge circa 2018-2019. I'm so used to bringing cash there that I really can't begrudge it. Before that they had an ATM and it was cash or check.
3. A local Mexican restaurant started surcharging 3% on credit, but it was disclosed at the door, on the menu, not applied to debit, disclosed before the check was presented, disclosed on the receipt for the check, and then shown as a nontaxable amount. (They later decided to stop surcharging likely because it's so offputting).

For merchants where I did: Visa was completely passive in 2021, but in 2023, took action. Examples of a couple of merchants who irked me:

1. The menu of one merchant (already high priced) said that the menu prices reflected a cash discount of 2.5% which would be removed if I paid with a card. Debit can't be surcharged, nor is presenting a discount as included but removed intellectually honest.
2. Another merchant only had the card surcharge appear on the receipt. Either that or the sign was not conspicuous in any way.

Both of the merchants that I felt were not forthcoming I complained to Visa in 2023 and both stopped surcharging within 4 weeks of the complaint.

Now is that proof that Visa fined anybody? No, it isn't. I can tell you I complained about merchants with substandard/absent pre-check disclosures on surcharging in 2021 and 2022 and Visa complaints did absolutely nothing. It could be anecdotal, but I take Visa's extremely strong posturing on the steps they will take as a sign that they're fed up. It may be compounded by New York law making effective surcharging as a dollar amount or percent illegal versus the network in my anecdotes.

I will say that I think the networks, per this settlement, are trying to be passive aggressive. Visa goes on active audit of merchants? Class action that you're setting policies to fine merchants. Set policies and wait for cardholder complaints as settling a dispute? Well hey we're an intermediary between cardholders and merchants... just trying to make sure everyone follows the rules...

I noticed this, too. For the merchants where I've complained about surcharges, Visa has followed up in recent months. Prior to last year, I only had evidence of the payment networks following up with a merchant on an issue unrelated to surcharges. (A restaurant had started requiring ID for card transactions due to still swiping cards after the liability shift but stopped doing so within weeks after my complaint.)

I doubt anyone was fined. My guess is that Visa reported it to their acquirer, which sent them a strongly worded letter reminding them to follow the surcharging rules. They probably didn't want to bother deciphering the rules, so just gave up on it.

As for the timing, I think Visa is noticing that surcharges are becoming more common. A few years ago, surcharging was rare enough that they didn't really care. But now, in some parts of the country, surcharges at independent restaurants are the rule rather than the exception. So obviously, Visa is concerned that if this trend continues, it will reduce transaction volume, and wants to get ahead of it. Intimidating merchants costs less than lowering interchange fees.

Yes, the pervasiveness of surcharging certainly is a factor. A Jan 2024 Paymentsdive article mentions a December 2023 memo from acquirer Priority Technology holdings to their merchants mentions "increased enforcement" for non-compliant surcharging. In June of 2023, the CEO of Visa bashed surcharges as "not a great customer experience". An earlier article from April 2023 indicated that Visa upped their fine to a potential $5,000 for the first surcharging transaction with a potential $1 million fine for repeated violations.

Of course this could be more barking than bite, with the merchant getting a nastygram and warned of the potential for jaw dropping fines being a massive incentive to either make surcharging compliant or drop it entirely.

In my area of New York (state, not five boroughs), surcharging seems most popular at independent restaurants or other eateries (example of the bakery in my earlier post). In New York, it's easier to point out that explicit surcharging is actually illegal beyond just violating network rules to merchants...

In terms of why large brands aren't surcharging, I think it creates a logistical nightmare for customer experience. Beyond the optics which would probably go viral of Walmart/Safeway/Home Depot/etc. passing on their cost of doing business to the consumer, you have states where surcharges are capped at different levels (2% in Colorado for example), you have multiple states where explicit surcharging is illegal (Expressions Hair Design v. Schneidermann remand had surcharges illegal in NY for years, but codifying the remand in written law to be even more black and white wasn't effective until Feb 2024) or where it's limited (Colorado, NJ, others), etc. and you're setting up for a recipe of inconsistent experience if you're a retailer that operates in multiple states or nationwide.

This settlement (if implemented) heavily favors the banks and shifts the burden to retailers to implement system upgrades to accurately calculate the surcharge for premium cards. I doubt merchants will want to have negotiation prompts at in-person point of sale since it's a huge waste of time for the merchant, and rude to the next customer waiting in line.

Do you want to be THAT GUY/GAL making the waiter run back and forth to try different cards and slowing down service for everyone else??!?!?

Online merchants could implement this easier since they could display the different surcharges for your cards on file (or any newly added cards) and you could decide how to proceed -- and nobody else's time is wasted.

But for most merchants nothing will change, they'll continue to mark up the prices for everyone to subsidize the rewards for the more fortunate customers. (The poor pay more).

They can just make the "accept the fee" a green box and "use an alternate payment method" a red box and 95% of people will just click through. Sure it's a dark pattern, but it keeps the line moving so it keeps the torch and pitchfork folks at bay.

Based on the number of people I've seen filling in a tip line at places with gratuities already included, I highly doubt this attention to detail will be a thing at scale. I have complete confidence in the laziness of the average human.

All of this is .... whatever .. break it out as a fee, bundle it in with the base product cost, in the end the price is the price. On an individual transaction basis I strongly believe it wouldn't be enough money for the average consumer to worry about. If in aggregate it starts to amount to meaningful dollars then maybe investigate more efficient payment methods. I imagine most of the people reading this collection of sub-forums already do that today when they look to maximize their cash back / point earnings in various categories, so now potentially optimizing for reduced costs might be a thing. Some people will adapt and feel better about savings if that materializes, but the vast majority will let inertia take the wheel and swipe away using whatever card they fancy most.

Visa and Mastercard actually have pretty strict requirements on the "point of sale" disclosures, for example, under Visa rules at the point of sale there's supposed to be a sign with font the equivalent of 16 point Arial or bigger with specific language (including that it's not greater than the cost of acceptance and that Visa debit is not surcharged). A dark pattern on a point of sale touchscreen is not going to achieve this without pissing off customers. Let's say you get compliant sign via the display instead and the dark pattern tricks someone into hitting "accept the surcharge" and then sees they got charged more on the receipt when they meant to decline the surcharge and use alternate payment. Do you think that customer is going to return?

Tipping fatigue is real to the point where the incessant tipping prompts are causing people to tip less in general.

I think you underestimate fatigue of people when presented with a variety of options.

You get a prompt at the point of sale or on your sit down restaurant receipt saying 3% for card payment surcharge. Changing to your mastercard or amex in the same wallet isn't going to change anything. You can pay cash if you have it, you can charge if you want, you can decide whether or not that's going to be a breaking point to return to that merchant. Different surcharges by brand? Discover and Amex have most favored nation clauses where they have to be surcharged equally or less to other products.

Now you get into the nitty gritty. Let's say that you want to charge those people using more expensive Visa Signature and Infinite cards more, because they cost more to process. Amex is going to say that you're charging less for all other card products including debit and prepaid. So if you're charging, say, 3% for Visa Signature and Infinite, 2.5% for Visa Rewards, and 2% for all other Visa products - then Amex is going to argue that hey, you should be charging 2% surcharge max on Amex.

Except if "all others" is charging a 2% surcharge on debit, then you broke Visa/MC merchant rules. If you exclude Visa debit and surcharge Amex, Amex considers you to have broken their rules because you're not surcharging all other products (including debit) therefore Amex shouldn't be surcharged at all regardless of product.

Alright, let's assume that a merchant decides it's worth dropping Amex over not being able to surcharge in accordance with network rules. A grand assumption but sure. Now you have to make signage disclosing the various Mastercard and Visa tiers that complies with network rules and start making a 16 point font ugly sign about how you're presenting the surcharge at the point of sale. Then your customers start asking idk what kind of mastercard I have, what's an Apple Card on the percentage? (Apple card is a world elite mastercard with higher interchange, but Apple/GS have a style waiver from Mastercard that allows them to present a very plain mastercard logo).

Product level surcharging was permitted before this proposed settlement. It's an absolute nightmare to implement both from a network compliance and not pissing off your customers perspective.

Brand level surcharging was also permitted before this settlement, but unless merchants are willing to drop Amex, they're in a catch 22 where they can't surcharge at all without breaking Visa/MC rules or Amex rules.

So a lot of retailers and retailer groups aren't too enthusiastic about the settlement.

For context, $30 billion in savings isn't that much and some retailers want it capped more than just 5 years.

Read in Bloomberg Law: https://apple.news/ASWxzcffKQ729qfyHmDD5Lg

Article also notes that retailers could try to ban high-swipe-fee cards like Visa Infinite (as opposed to maybe having different surcharges for different types of cards?) but in practice, won't do it because large chains won't ban such cards.

So they don't want to go out on a limb and risk consumer backlash.

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Does anyone know how the decision process works for how much each type of credit card charges?

There must be some reason why Chase isn't charging the network as much for a Freedom charge as for a Ritz Carlton charge, but since this is largely blind to merchants, I don't really see why Chase wouldn't charge the max.

Does Visa have requirements for specific interchange rates? Like the card has to offer extended warranties or certain travel protections to merit a higher rate?