Compliant Surcharging: Credit? Yes. Debit? Not so fast.

One of our most popular features at Confido Legal is our compliant surcharging, enabling firms to shift credit card processing fees to their clients. When we talk with firms, many are surprised to learn that it's against some state laws and the card brand rules for businesses, including law firms, to surcharge on debit cards. A smaller group is not just surprised but a bit concerned because they've been shifting card fees on debit cards unknowingly.

In this blog post, we break down the reasons why surcharging on debit card transactions is impermissible and the implications of these restrictions for law firms.

1. State Laws:
   One reason surcharging on debit card transactions is not allowed is state law. While there is currently no federal law that prohibits surcharging on debit cards, some states, like Colorado, have enacted laws to prevent businesses from surcharging on debit cards.  
   
   
2. Prohibited by Card Brands:
   Visa, Mastercard and the other credit card brands set rules for how small businesses, like law firms, can accept their cards. The card brand rules all prohibit surcharging on debit cards. 
   
   

So, why should lawyers care? 

First, violations of these rules can mean more than a few percentage points here or there. Card brands can levy significant fines against businesses that don't follow their rules and improperly surcharge debit cards. Banks can also levy additional fines. The card brands and/or the banks that support your processor may elect to increase your costs to process or not to allow you to process at all.

Beyond that, your credibility could be significantly compromised. Lawyers establish trust and credibility with their clients in a number of ways. While this may sound ridiculously obvious, one main way they establish this credibility is by knowing and obeying the law themselves. Clients are right to question the credibility of lawyers that wantonly disregard the law.

Law firms should ensure they comply with state law and the card brand rules by confirming with their processor that they don't surcharge on debit cards.

At Confido Legal, we are dedicated to helping law firms navigate the complexities of payment processing and industry regulations. Our surcharging technology was built to comply with the many federal, state, and even ethics rules that govern the practice. If you're interested in learning more, you can book a demo or grab time to talk to us below.