Is a payment surcharge allowed where you sell?

Two things to check

Usually yes for cash on delivery, often no for consumer cards. Two things decide it, and neither is the plugin.

1. The law where your customers are. Consumer-protection rules on surcharging apply where the buyer is, and several markets cap or ban surcharges on particular payment methods.
2. Your payment provider’s terms. Whatever the law says, a provider may forbid surcharging its own method in its user agreement, and breaking that is a contract problem with the provider, not a legal one.

A cash-on-delivery fee is the least contentious case almost everywhere: it recovers a courier’s cash-handling charge, not a card fee, and consumer surcharge rules are mostly written about cards.

European Union

The second Payment Services Directive (PSD2) has banned card surcharges since January 2018. It covers consumer debit and credit cards under the Interchange Fee Regulation — most Visa and Mastercard consumer cards — plus SEPA credit transfers and direct debits. Several member states extended the ban further.

Outside it: commercial cards, some three-party schemes such as American Express, and non-card methods, unless national law says otherwise. Where a surcharge is allowed, it may not exceed what the payment actually costs you.

So in the EU: a card surcharge on a consumer card is out; a cash-on-delivery fee is ordinary practice; a discount for bank transfer is always allowed, since a discount is not a surcharge.

United Kingdom

The Consumer Rights (Payment Surcharges) Regulations 2012, as amended in January 2018, ban surcharges on consumer debit and credit cards and on several other consumer payment methods. Commercial cards and business customers are outside the ban, and any permitted surcharge may not exceed cost.

United States

No federal ban. Card-network rules allow credit-card surcharges up to a cap (the networks have set it at 3 % in recent years), require notice at the point of sale and forbid surcharging debit cards. A handful of states restrict or ban credit-card surcharges outright or require specific disclosure — Connecticut, Massachusetts, Maine and Puerto Rico have been on that list, and the list moves. A store selling into the US needs the current state list and the network’s notification requirement.

Australia

Surcharging is allowed but capped at the merchant’s cost of acceptance under the Reserve Bank’s standard, enforced by the ACCC since 2016–2017; excessive surcharges attract penalties. The RBA has been reviewing the framework, with a ban on debit and credit surcharges proposed — check the current position before relying on this paragraph.

Payment providers

PayPal prohibits surcharging PayPal payments in most markets in its user agreement. Nothing in the plugin blocks it — a fee set on PayPal charges like any other method — so what is at stake is your contract with PayPal, not whether it works. Check your own agreement first. The alternative their terms do allow is on the discounts page.

Other providers’ terms vary, and a provider’s terms can be stricter than the law. Read the merchant agreement for each gateway you charge on; the clause is usually headed “surcharges” or “no surcharging”.

What to do instead

Where a surcharge is out, two things are almost always in:

• A discount on the method that costs you least. A negative amount on bank transfer or on prepayment is a price reduction, not a surcharge. See the recipe.
• A cash-on-delivery fee, which recovers a courier’s charge and is not a card surcharge.

Whatever you charge, do three things. Say what the fee is for in its label. Show it before the customer commits — Pro’s display controls put the amount beside each method’s name. And keep it at or below what the payment actually costs you. The terms say the same thing in one sentence: checking what applies where you sell is on you, not on the plugin.