Credit Card Surcharging: Here’s What You Need to Know

As a restaurateur, you’re charged fees so you can offer customers the option to pay by credit card. Rising credit card “interchange” and other fees have long been a major source of concern to Restaurants Canada members. Credit card merchant fees in Canada are still amongst the highest in the world. These fees are taking a huge bite out of our members’ hard earned revenue, and in some cases the card issuer is making as much profit on a meal as the restaurant operator.

Since October 6, 2022, you have the option of adding a surcharge to a credit card transaction (except in Quebec due to its consumer protection laws), in effect passing on the charge to the customer. This comes as a result of a class action lawsuit settlement with Visa and MasterCard and brings with it potential benefits and drawbacks to operators who may want to implement surcharging. Here are some facts you need to consider in order to make an informed decision on whether it’s worth making this change to your operations:

• According to Visa and MasterCard, you can surcharge a maximum of 2.4% per purchase. The surcharge is not applied to Visa Debit or Debit MasterCard cards.
• If you choose to surcharge, you must disclose this to the customer at the point of interaction (POI) and on the cardholder’s receipt.
• In order to add a surcharge on MasterCard payments, you are required to notify both MasterCard and their “acquirer,” (the bank or financial institution that processes the credit card payments) at least 30 days in advance. To do this, fill out this online disclosure form and also notify your acquirer separately. For Visa credit cards, you must only provide a written notice to your acquirer at least 30 days prior. Please note that most acquirers may not yet be ready to allow surcharging.
• Although credit card surcharges are not new, they are unfamiliar to Canadian diners and generally come as a surprise. Some customers empathize with restauranteurs still suffering from the effects of the pandemic, but for the most part, customers may not be happy to see the surcharges on their bills.

In spite of this legal development, Restaurants Canada will continue to advocate for the regulation of credit card interchange fees. We would like to see the federal government cap the fees and prohibit credit card issuers from adding new fees to recoup lost revenue.

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Additional resources:

MasterCard: What merchant surcharge rules mean to you in Canada

Financial Consumer Agency of Canada: Merchant surcharges, service and convenience fees, and discounts