Credit card surcharging is legal in North Dakota. The state doesn’t have any unique restrictions on surcharges, which means merchants can default to federal regulations.
On the surface, this makes it pretty straightforward for businesses to implement a surcharge program in North Dakota. But there’s still more that you should know before moving forward with something that could drastically change your business.
So whether you’re a business owner in North Dakota or a consumer who’s trying to understand why you’re being charged extra to use your credit card, this guide will clarify things for you.
Disclaimer: This information is provided for reference purposes only and does not constitute legal advice. For specific legal guidance, consult with an attorney.
Surcharging is Legal in North Dakota
North Dakota does not have any state-specific statutes that would prohibit businesses from adding a surcharge to credit card transactions. This means North Dakota aligns with the majority of states that allow surcharging.
The lack of state legislation means businesses in ND can implement surcharge programs by following federal guidelines and card network rules.
There’s no special registration process, no unique disclosure requirements (beyond what’s federally mandated), and no state-specific caps on surcharge percentages.
That said, just because there’s no state law governing surcharges in North Dakota, it doesn’t mean you can implement surcharge programs however you want. There are still plenty of rules you need to follow, and violating them can result in serious penalties.
Surcharge Fees Are Only Legal on Credit Cards (Not Debit Cards)
This is a key distinction that trips up a lot of businesses. You’re only allowed to surcharge credit card transactions in North Dakota.
It’s illegal to surcharge debit cards nationwide, which is a federal mandate that’s part of the Durbin Amendment.
This federal law applies even when the customer uses their debit card and selects “credit” at the point of sale. The card type is the only thing that matters here, not how it’s processed.
So if your POS isn’t set up to differentiate between credit and debit cards, you risk illegally surcharging debit card transactions. Your staff will also need to be properly trained here to ensure debit cards aren’t hit with surcharge fees.
Federal Law Caps Surcharge Fees at 4% of the Transaction Amount
Businesses in North Dakota cannot add surcharge fees that exceed 4% on credit card transactions.
This is the absolute maximum allowable surcharge fee under federal law (which applies in North Dakota).
But here’s where things get a bit tricky. Card networks impose their own rules that effectively lower this cap for most businesses.
Card Networks Cap Surcharges at 3%
Visa reduced its surcharge cap to 3% in April 2023, down from its previous 4% limit. And since most businesses accept Visa cards, this 3% limit becomes your practical ceiling.
Mastercard still allows surcharging up to 4%. But there’s a catch. If you accept multiple card brands, you generally need to apply the same surcharge percentage across all credit card types.
So if Visa limits you to 3%, you’re effectively capped at 3% for all other cards.
The other important distinction to make here is that exceeding this 3% limit isn’t technically breaking any laws (as long as you’re under 4%). Meaning you can’t face any legal penalties, criminal or civil charges against you, or jail time.
But you can still get hit with hefty fines from the card networks and potentially lose your right to accept certain cards.
You Must Notify the Card Networks 30 Days in Advance
If you decide to start surcharging credit card transactions in North Dakota, your business needs to notify the card networks at least 30 days in advance.
This isn’t optional. It’s a requirement from the card networks that you agree to when you accept their cards.
Your payment processor should be able to handle this notification process for you. But it’s your responsibility to make sure this actually happens.
Missing this step could result in non-compliance penalties, even if everything else about your surcharge program is done correctly.
Clear Disclosure is Required
Transparency is crucial when it comes to surcharging. North Dakota merchants must clearly inform customers about surcharge fees before they complete the transaction.
This is a federal regulation and also part of the FTC’s junk fee crackdown on bait-and-switch pricing.
For brick-and-mortar businesses in North Dakota, this means posting notices at your store’s entrance and point of sale. The signage should clearly state that a surcharge fee will be added to credit card transactions with the percentage specified.
For online businesses, the surcharge fee must be disclosed on your website checkout page. You can’t surprise someone with an extra fee after they’ve already entered their payment information.
You’re also required to itemize surcharge fees as a separate line on all receipts. Customers need to see exactly how much they paid in surcharge fees, which needs to be separate from the base charges, taxes, and other fees.
Government Agencies in North Dakota Can Legally Impose Surcharges
It’s worth noting that various state and local government entities in North Dakota will impose surcharge fees on payments made via credit card.
State agencies, county offices, and other government bodies commonly collect these fees, especially for online payments.
This demonstrates that the practice is widely accepted in the state of North Dakota. But it still doesn’t change the compliance requirements for private businesses. You still need to follow all applicable federal guidelines and card network rules.
How to Report Illegal Surcharging in North Dakota
For consumers, illegal surcharging can come in many different forms (even in a state like North Dakota where surcharging is legal). Examples include:
- Surcharge fees that exceed 4% of the transaction.
- Surcharging debit cards.
- Failing to disclose surcharge fees upfront.
- Not listing surcharges as separate line items on receipts.
- Using deceptive practices to hide fees.
If you encounter any of these situations at a business in North Dakota, you can file a complaint online with the Attorney General’s Consumer Protection Division.
And while we don’t offer any consumer services here at MCC, we’re still interested in hearing about your surcharging experiences (good or bad). So drop a comment below and let us know what you think about surcharging practices in North Dakota. We’ll share your feedback with businesses we work with.
Just Because It’s Legal Doesn’t Mean You Should Do It
This often gets lost in discussions about the legality of surcharging. Just because you can surcharge your customers, it doesn’t mean that you should.
Surcharging has become one of the fastest ways to frustrate your customers. People hate feeling nickel-and-dimed, especially when they’re already paying for whatever you’re selling.
Even when legally imposed and properly imposed, surcharging creates friction during the purchase process and could result in lost business.
Sure, recouping 3% of your processing costs sounds like a good idea — especially since it’s legal. But think about the real cost here if your best customers decide to take their money elsewhere?
North Dakota merchants need to seriously weigh the pros and cons of surcharging before going live with a surcharge program.
Better Alternatives for North Dakota Businesses
The good news is that surcharging isn’t the only way you can reduce credit card processing costs in North Dakota. There are other strategies that can save you money without passing fees to your customers.
Try these alternatives first:
- Negotiate better rates with your processor — Many businesses don’t realize they’re overpaying for credit card processing. A thorough review of your statements can identify hidden fees, inflated rates, and opportunities to negotiate better terms.
- Consider cash discount programs — Unlike surcharging, cash discount programs offer a discount to customers who pay with cash instead of adding a fee for card payments.
- Optimize your processing setup — Taking certain steps like collecting and submitting extra data on B2B transactions or updating your software to avoid fallbacks can result in lower rates at the interchange level.
- Raise your prices — Customers don’t like being hit with extra fees. But if you simply bake your processing costs into your base prices, you can earn more revenue without the surcharge.
- Work with a professional — Our team here at MCC can audit your statements for free, identify savings opportunities, and negotiate with your current provider on your behalf to help you save money without switching processors.
This is just barely scratching the surface, but it should give you a good indication that other options exist for your business. Read our full guide on surcharging alternatives for a deeper explanation.
Final Thoughts
Is credit card surcharging legal in North Dakota? Yes.
But does that mean you should do it? Probably not.
When you look at the big picture, surcharging isn’t ideal for most merchants. Despite being legal, there’s still a lot of rules you need to follow and it can end up costing you customers over a few dollars.
Look for other ways to combat the rising costs of credit card acceptance. If you have any questions, just reach out to our team here at Merchant Cost Consulting for assistance.