Credit card surcharging is legal in New Mexico. Businesses can follow federal guidelines, as no state-specific regulations govern surcharge fees.
Here’s what you need to know about credit card surcharging in New Mexico:
- Searching is legal in New Mexico.
- There are no state laws that prohibit credit card surcharges.
- Businesses must follow federal laws and card network rules to remain compliant.
- State agencies can legally charge “convenience fees” in certain circumstances.
- Debit card surcharging is illegal (as it is in all 50 states).
While New Mexico’s surcharge laws may seem a bit more straightforward compared to most states, there are still lots of rules that businesses must follow to remain compliant. Surcharging is not necessarily a no-brainer decision that you can start doing haphazardly.
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 directly with your state.
Are Credit Card Surcharge Fees Legal in New Mexico?
Yes, credit card surcharges are legal in New Mexico.
New Mexico doesn’t have any state laws that prohibit merchants from adding surcharge fees to credit card transactions. This means that businesses operating in the state can follow federal guidelines, which allow surcharge fees up to 4% of the transaction amount.
This simple approach in New Mexico is different from many other state laws that have either ban surcharges altogether or regulate how surcharge fees can be applied.
Are Debit Card Surcharges Legal in New Mexico?
No, debit card surcharge fees are illegal in all 50 states—including New Mexico. This is a federal regulation that’s part of the Durbin Amendment to the Dodd-Frank Act.
The law prohibits merchants from surcharging debit cards or prepaid cards.
That said, this law also caps interchange fees on debit transactions to a much lower rate compared to its credit card counterparts. So if you’re on an interchange-plus pricing plan, your debit card transactions should be fairly inexpensive compared to credit cards (so there wouldn’t be a need to surcharge those transactions even if it were legal).
It’s worth noting that if you’re using a flat-rate processor, they’re making a killing on your debit card transactions. They’re only paying up to 0.05% + $0.21 per transaction (plus another $0.01 for fraud prevention). And your processor could be charging you upwards of 3% on the same transaction, meaning you’re paying upwards of 10x their actual cost. That’s why flat-rate processing eats into your profits.
New Mexico’s Law Governing State Agency Convenience Fees
While New Mexico doesn’t have any laws about credit card surcharge fees for general businesses, they do have specific legislation about convenience fees for government agencies.
According to Section 6-10.1.2 of the New Mexico General Statute, state agencies and local governments are legally allowed to charge a convenience fee to cover approximate costs imposed by financial institutions related to credit card processing or electronic transfers.
This statute clearly allows government offices to recover processing costs in the form of a convenience fee when citizens choose to pay taxes, fines, and other fees with credit cards.
Examples where you might encounter government convenience fees in New Mexico may include:
- Motor Vehicle Division
- Court fine payments
- Property tax payments
- Business license fees
This law that specifically allows convenience fees only applies to state and local government agencies, and it does not extend to private businesses. However, there are no other laws prohibiting private businesses from adding fees to credit card transactions.
New Mexico Attempted to Ban Surcharging in the Past (and Might Happen Again in the Future)
Back in 2013, House Bill 545 was introduced into the New Mexico Legislature. This was the state’s first attempt to prohibit surcharges on credit card transactions.
The bill went through the House Business & Industry Committee but ultimately was not enacted into law. It died in committee and never made it to a full floor vote.
We’ve seen this happen in other states where surcharging bans failed in the past, but new bills were eventually brought forward to ban or at least restrict surcharging again. So I definitely wouldn’t be shocked to see this happen again in New Mexico.
This is one of the many reasons why surcharging can be a risky business. Once you start to rely on those fees to help cover the cost of your processing fees, it could be detrimental to your business if new laws pass, preventing you from passing those costs to your customers.
Rather than relying on surcharge fees to stay profitable, you should be proactively taking steps to lower your credit card processing fees. Stop letting your processor price-gouge you, charging an effective rate surpassing 4% and making you burden your customers with extra fees.
If you cut those costs in half or even by a third, it’s a win-win for everyone.
How to Report Illegal Surcharging in New Mexico
For consumers, it’s still possible for New Mexico businesses to take advantage of you—even though surcharging is legal in the state.
If they aren’t properly disclosing the fees, itemizing them, or informing you about the surcharge prior to checkout, they could be violating other state laws. Plus, surcharge fees that exceed 4% of the transaction are against the law, as are any surcharge fees on debit cards.
You can report this directly to the New Mexico Department of Justice Consumer Protections Division. Here’s the page with instructions for filing a complaint online.
We also encourage you to drop a comment on this post, letting us know if you’ve encountered surcharges in New Mexico and how you feel about it. While we don’t offer any consumer services, we’ll pass this information along to local businesses in your state so they know how real customers feel about surcharging.
Final Thoughts
Just because you can surcharge credit card transactions in New Mexico, it doesn’t mean that you should. Imposing a surcharge program isn’t the easiest thing to set up and maintain for compliance, which is why surcharging doesn’t make sense for many businesses.
Beyond the state-specific laws, you also need to deal with federal regulations, including a new FTC rule on junk fees.
Legality and compliance aside, do you really want to pass operational costs to your customers in the form of an added fee?
If you’re worried about high credit card processing fees, you can find other ways to cut those costs without surcharging.
Contact our team at MCC for a free audit. We’ll review your statements to identify bogus fees and inflated rates, then negotiate new terms with your processor. So you can save money without switching providers or adding a surcharge fee to your transactions.