Merchants and consumers in Arkansas both have lots of questions about the state’s credit card surcharge laws. Since surcharging laws are different in all 50 states, many people have heard conflicting information and aren’t sure what’s legal locally.
We created this guide as a quick reference for any business in Arkansas that accepts credit cards. Consumers can use it as well to understand if merchants are following the rules.
Disclaimer: This information is for reference only. It is not legal advice, and you should consult with an attorney before implementing a surcharge. Rules are constantly changing, and you should verify the accuracy of surcharge laws directly with your state.
Is it Legal to Surcharge Credit Card Transactions in Arkansas?
Yes, credit card surcharging is legal in the state of Arkansas.
Arkansas does not have strict surcharging laws, and the only major point of emphasis from the state’s Attorney General is that surcharge fees must be disclosed prior to the sale.
The state does not explicitly have a cap on surcharge fees. But under federal law, the maximum allowable surcharge is 4% on credit card transactions. Arkansas AG advises merchants to follow card brand rules here as well—referencing that Visa only allows surcharges up to 3%.
That said, non-compliance with card brand rules is not the same as breaking the law. So while you can get fined by Visa and face other penalties, you’re technically not breaking any state or federal laws.
What About Debit Cards?
No, debit card surcharging is illegal in Arkansas. This is a federal law that applies to every business in all 50 states.
Surcharge Fee vs. Convenience Fee vs. Service Fee: Differences Explained
Arkansas has different definitions for surcharge fees, convenience fees, and service fees. These three terms are often used interchangeably, but they’re not the same thing (and mislabeling one of these fees could potentially get you in trouble).
- Surcharge Fee — This only applies to credit card transactions and is used to offset payment processing fees. Surcharge fees are calculated as a percentage of the transaction amount.
- Convenience Fee — Convenience fees are used to offset costs associated with alternative payment methods that are considered non-standard for a business. They can be avoided if the customer pays using another method.
- Service Fee — A type of convenience fee for merchants with certain MCC codes, like government and education, that allows them to add an extra fee to cover costs associated with processing a payment.
All three of these fees are legal in Arkansas.
If you go out to a restaurant and your meal is $50, the restaurant can legally charge you a 3% surcharge for using your credit card—bringing your total to $51.50.
Convenience fees are a bit different, and can’t just be broadly added at any business. For example, a doctor’s office likely collects co-pays and other payments in person. But if a patient wishes to pay for something over the phone, the office could consider this a non-standard payment method and legally charge a convenience fee. While a restaurant likely couldn’t say that accepting a credit card in person is non-standard.
How to Report Illegal Surcharging in Arkansas
If you suspect a business in Arkansas is illegally surcharging credit card transactions, you can file a complaint online here.
Drop a comment and let us know how you feel about paying a surcharge fee for using your credit card in Arkansas. While we don’t offer any consumer-specific services, this information will be passed directly to our clients and help them decide whether or not to pass fees to their customers.
Final Thoughts — Should Merchants and Arkansas Surcharge Credit Card Transactions?
Just because credit card surcharging is legal in Arkansas, it doesn’t mean you should automatically add a surcharge program to your business. Sure, there are plenty of scenarios where surcharging makes sense. But not every business falls into one of these scenarios.
In fact, there are actually more reasons why merchants should NOT charge a surcharge fee.
So I encourage you to weigh the pros and cons here before making a decision. If you decide to move forward, consult with a local attorney to ensure you’re following all state and federal laws. You can’t always rely on your processor alone for this (and we’ve actually caught processors sending outdated surcharge information to merchants).
If your credit card processing costs are high, you can explore other alternatives. Reach out to our team here at MCC for assistance. We can audit your statements to find cost savings opportunities and negotiate a better rate directly with your current processor—so you can save money without switching or surcharging.