Nearly two years after Visa began cracking down on surcharges, payments processors and independent sales organizations say they have a better understanding and sense of clarity on the network’s rules. 

At that time, Visa imposed a credit card surcharge cap of 3%, down from the previous cap of 4%. Many in the industry found communication and details to be lacking, and Visa’s cryptic business notices left payments professionals searching for answers.

Merchants are innovating in the market to cover rising interchange fees Visa charges them whenever consumers swipe to pay with that network's cards. Regardless of retailers' and restaurants' approaches, they must follow the network’s rules to accept such payments.

Lately, James Shepherd, founder and CEO of CCSalesPro, said he’s heard far fewer “rumblings” about the card giant’s surcharge changes, including from his independent sales organization clients.

“The industry in general, and the ISO segment in particular, have settled into a bit of a truce,” Shepherd said.

For those not in compliance, Visa is going straight to the merchants — using mystery shoppers, warning notices and fines to ensure surcharges are in check. 

To be sure, not all merchant service vendors see Visa letting up. Micah Kinsler, president of Scottsdale, Arizona-based MiCamp Solutions, said he believes Visa is being as aggressive as ever in recent months in enforcing its surcharge rules. And that's despite the Justice Department’s lawsuit against the company earlier this year over its debit card practices, he notes.

Kinsler believes Visa has stepped up surcharge rule enforcement by imposing fines immediately, without warning, and increasing fines in a shorter period of time, like a few days, if a firm doesn't pay it quickly enough, he said in an interview this week. MiCamp is absorbing about one surcharge violation fine per month on behalf of its merchants, he said. Visa is also dinging merchants for an increased variety of infractions, Kinsler said.

"It’s just inconsistent," complained Kinsler, whose firm sued Visa last year over its fees and fines. The network isn't "acting like a good partner."

The state of fines and enforcement

Visa’s direct approach to merchants is a change from its past practices, when Visa would take more of a top-down approach, Shepherd said. Previously, the card giant would go through the sponsor bank, then the ISO, before ultimately reaching the merchant.

Large merchants tend to have dedicated teams ensuring they’re compliant with Visa’s surcharging rules, according to Michael Seaman, co-founder and CEO of Swipesum. The same isn’t always true for small, independent businesses, though. Seaman says he knows of a local restaurant that has continued to offer a 3.5% discount for cash. A card, whether it’s credit or debit, ends up being a 3.5% higher price, which violates Visa’s rules, but the merchant has been able to continue with that approach.

“A lot of small businesses don't pay attention to what's in the news that Visa says … so they might not even be aware,” Seaman said.

Seaman said he hasn’t seen many fines yet, but rather warnings Visa has sent to payments companies, alerting them to make surcharges compliant. Shepherd hasn’t seen a “huge jump” in fines. Eric Cohen, CEO of Merchant Advocate, has heard of some fines, even one instance in which Visa was “just giving a fine, no slap on the wrist [first].” 

Visa did not respond when asked about fines, or how it’s cracking down on merchants out of compliance with surcharging rules.

The question is whether the fines are large or frequent enough to make an impact. If a company is surcharging above the compliant rate, the fines may not be high enough to offset any earnings from the higher surcharges, Cohen said. That could incentivize the business to keep the higher surcharge and risk being fined. 

“I'm still seeing a lot of greed in our industry,” Cohen said. “It's not that I want the merchants to have pain on this, but the merchant should follow the rules.”

After a fine is issued, Visa would check to ensure the business is in fact surcharging in a compliant way, Shepherd said. If it’s not, the next fine would be even higher.

One way Visa is checking in and cracking down on merchants is by contracting mystery shoppers. These shoppers pose as consumers and spot instances where a merchant is surcharging above the 3% cap, or surcharging on debit cards, which goes against Visa’s rules. Then they convey that information to Visa, which will take action accordingly.

Customer experience rules all

Policing may not come solely from Visa and its mystery shoppers. Some states have recently passed laws mandating merchants keep their surcharges in check. 

“There does seem to be some appetite for regulation,” Shepherd said. That could carry forward with the incoming Trump administration, as well. In fact, incoming Vice President J.D. Vance is a sponsor of the proposed Credit Card Competition Act, which Shepherd described as a misguided piece of legislation. 

“We're all just waiting to see what happens on Capitol Hill,” Shepherd said.

Customers, in their own way, also serve as a policing and regulating force for surcharges. Consumers who aren’t pleased with a surcharge could take their business to another merchant that doesn’t charge extra for credit card transactions. 

Visa CEO Ryan McInerney has said he considers surcharges “not a great customer experience.” Merchants similarly seek to provide a positive experience to their customers, which is one reason they accept credit cards despite processing and interchange fees and often decide to bake surcharges into their pricing. 

Cohen knows one restaurant owner who decided, instead of surcharging on credit cards, to increase the price of fountain soda by 10 cents. The increase more than covered the restaurant’s credit card processing fees. At the same time, it showed customers that the business cared about them and wasn’t going to charge extra based on their payment of choice, Cohen said.

In the end, the existing surcharge cap may not have as much impact in the market because many merchants have already started to avoid it.

Merchants “shouldn't be worried about Visa’s crackdown,” Seaman said. He believes surcharging “is such a bad customer experience” in many industries that merchants have naturally started to move away from the practice.