Whether you’re thinking about surcharging your customers in South Carolina or you’re a consumer in South Carolina who doesn’t want to get ripped off, you need to read this guide.
I’ll explain everything you need to know about South Carolina’s surcharge laws, including what’s legal, what’s not, changes over time, compliance requirements, and more.
There’s a lot more to it than you might think.
Disclaimer: This information is for reference only. It’s not legal advice, and you should consult with an attorney to verify local laws before implementing a surcharge.
Can South Carolina Businesses Legally Surcharge Credit Card Transactions?
Yes, it’s legal for businesses in South Carolina to add surcharge fees when customers pay with a credit card.
South Carolina previously banned surcharging under an old 1976 law. But that changed in 2012 when the state amended Title 39, Section 39.1-100, legalized surcharging statewide and allowed cash discounting.
So merchants in South Carolina can choose to add a fee when customers pay via credit card (surcharge) or take a percentage off the advertised price when customers pay with cash (cash discount).
The policy just needs to be standard, as you can’t pick and choose if and when you want to implement one, the other, or neither, or both.
What About Debit Cards?
Debit card surcharging is illegal nationwide, including in South Carolina.
This is a federal law that’s part of the Durbin Amendment to the Dodd-Frank Act.
In addition to debit cards, it applies to pre-paid cards, government-issued SNAP benefit cards, and even debit cards that are routed through the system as a “credit” transaction.
How South Carolina’s Surcharge Laws Have Changed Over Time
For decades, surcharging was illegal in South Carolina.
There was an old 1976 statute that clearly prohibited merchants from adding surcharge fees on credit card transactions. But as part of the broader national trends following the 2013 federal court settlement between merchants and card networks, South Carolina lawmakers decided to allow businesses more flexibility in how they handle payment processing costs.
But there was some legislative pushback.
Despite allowing credit card surcharges in 2013, House Bill 3477 was introduced during the 2013-2014 season and sought to ban surcharging altogether.
The bill ultimately failed to pass, and surcharging has been legal in South Carolina ever since. Though that’s not to say we won’t see more restrictions in the future (as the new trend nationwide involves states tightening their surcharge laws to align with more consumer-friendly practices).
South Carolina Merchants Must Comply With Federal Regulations and Card Network Rules
Beyond South Carolina’s state-specific surcharge laws, businesses also need to consider federal laws and card network requirements before they consider implementing a surcharge fee program.
This means:
- Surcharges can’t exceed 4% of the transaction amount (federal law).
- Surcharges can’t be charged on debit cards or prepaid cards (also federal).
- Notifying the card networks at least 30 days in advance.
- Clearly informing your customers about any applicable surcharge fees before they complete the transaction.
- And understanding that card network rules effectively cap surcharges at 3%.
It’s worth noting that while you won’t face any legal penalties from the state of South Carolina for violating card network rules (you’re not breaking any laws), the networks themselves can still penalize you.
The fines can be hefty (anywhere from $5,000 to $25,000 or more for repeat offenders), and you could even lose your ability to accept certain card brands.
Court Fees and Government Services
It’s also worth pointing out that the various government offices and courts throughout South Carolina impose surcharge fees when people pay fines, fees, or court costs using a credit card.
This is done legally, based on South Carolina Code Section 14-1-215, which states that clerks of the court, registers of deeds, and municipal court judges can accept credit card payments and impose a separate processing fee to offset administrative fees associated with processing them.
It shows that even state governments recognize the burdens of rising credit card processing costs (though these government surcharges have slightly different rules compared to what’s applied to private businesses).
But there are other ways for government entities to lower payment processing costs.
Surcharging Compliance Requirements For South Carolina Businesses
If you decide to move forward with a surcharge program in South Carolina (which we honestly don’t recommend), you need to make sure you do so compliantly.
Here’s a quick-reference checklist to keep in mind.
Before You Start Surcharging:
- Notify your processor and the card networks (Visa, Mastercard, etc.) at least 30 days before your surcharge program goes into effect.
- Update your POS system to properly track, display, and apply surcharges (and collect taxes where applicable).
- Consult with an attorney, as processors often give outdated or incorrect information about surcharging.
At Your Business:
- Post clear notices at your entrance and point of sale disclosing the surcharge.
- Ensure surcharges appear as separate line items on all receipts.
- Add surcharge disclosures to your website’s checkout process.
Ongoing:
- Don’t exceed the 3% cap (due to Visa’s rules), and apply surcharges consistently across all card brands.
- Never surcharge debit cards or prepaid card transactions.
- Make sure the surcharge doesn’t exceed your actual cost of acceptance (surcharge fees can’t be used as a profit center).
How to Report Illegal Surcharging in South Carolina
South Carolina’s approach is actually fairly straightforward compared to the surcharge laws in other states. That said, some businesses still illegally apply surcharge fees to their customers.
Examples of illegal surcharging practices in South Carolina include:
- Surcharges that exceed 4% of the transaction amount.
- Surcharge fees on debit cards or pre-paid cards.
- Failing to disclose surcharge fees.
If you encounter anything like this, you can report violations directly to South Carolina’s Department of Consumer Affairs.
And while we don’t offer any consumer services here at MCC, we’d still like to hear about your experience with any surcharges you’ve encountered throughout the state. So drop a comment and let us know if you’re seeing surcharges, how much they are, and how you feel about them.
Final Thoughts
While surcharging is legal in South Carolina, businesses should still carefully weigh the pros and cons before hitting their customers with extra fees.
Yes, recouping 3% of your processing cost sounds good in theory. But is it worth potentially losing customers over?
What most businesses don’t realize is that there are other ways to reduce your credit card processing costs without burdening your customers with additional fees. And you don’t have to switch processors either.
Contact our team here at MCC for assistance. We’ll audit your statements for free to identify hidden fees and savings opportunities before negotiating better rates directly with your current provider.
Find out how much money you can save today (without surcharging).