For American Express (AmEx) Direct merchants, surcharging across multiple card brands presents a complicated compliance dilemma. Where AmEx rules require equal surcharging across all card types––including debit and prepaid cards––Visa and Mastercard brand rules prohibit surcharges on non-credit card products. To make matters more complex, each network requires compliance for all other card brands, placing B2B merchants with a significant credit card volume from AmEx in a tricky situation. Limited Acceptance provides a suitable path forward for businesses with certain needs, enabling merchants to continue accepting credit card payments and surcharging compliantly for all card brands.
The Challenge for American Express Direct Merchants
In 2023, American Express (AmEx) executives said about 45% of the company’s total billed business (Card Member spending) comes from commercial payments, with 70% commercial billings attributed to payments between businesses. Since then, the company’s role in the B2B payment space has grown, creating a complex compliance dilemma for AmEx Direct Merchants who wish to surcharge and accept AmEx cards.
The hitch? While AmEx requires surcharging merchants to surcharge all cards equally, Visa and Mastercard rules prohibit surcharges on non-credit card products. Each network also requires compliance with all other card brand rules, creating a difficult bind for B2B merchants looking to optimize credit card acceptance without squeezing their payment options.
Fortunately, Limited Acceptance presents a viable path forward. Available through Visa and Mastercard, Limited Acceptance programs enable effective and compliant surcharging for AmEx Direct merchants––so businesses can recover the costs of credit card acceptance with minimal risk. To surcharge compliantly as a Limited Acceptance merchant, businesses should understand the rules and acceptance procedures for every network and learn how the program aligns with their goals.
Understanding Conflicting Card Rules: Options for B2B Merchants
Because Visa and Mastercard account for most card transactions, merchants accepting AmEx Direct face a difficult decision when it comes to surcharging. Under each company’s “honor all cards” rule, any merchant who chooses to accept a company’s card must accept all cards tied to the network. For example, merchants who accept an AmEx credit card must also accept AmEx debit and prepaid cards.
While merchants could simply stop accepting AmEx cards altogether, this is not a feasible solution for many businesses––especially those receiving a significant credit card volume from AmEx. Merchants who prohibit surcharges on non-credit card types face a similar conundrum: By complying with Visa and Mastercard rules, they inadvertently violate the AmEx “honor all cards” rule. Alternatively, if they surcharge all debit in compliance with AmEx, they risk non-compliance with Visa and Mastercard.
This is where Limited Acceptance comes in. Through this program, businesses can accept and surcharge all major card companies without sacrificing compliance. Before enrolling, merchants should consider their volume from each card brand and type to determine whether surcharging with Limited Acceptance aligns with their goals.
The Power of Limited Acceptance
With Limited Acceptance from Visa and Mastercard, participating businesses can selectively accept certain card types and reject others. To start surcharging as a Limited Acceptance merchant, businesses must register with each network and provide reporting upon request. While Visa and Mastercard each have distinct rules for Limited Acceptance, both networks’ guidelines enable AmEx Direct merchants to avoid surcharges on non-credit products, comply with the company’s surcharge rules, and honor each brands’ surcharge rules by imposing the same fee percentage all cards—AmEx debit and prepaid cards included.
To determine whether Limited Acceptance is the right decision, merchants should consider how factors such as cost savings, customers’ preferred payment methods, competitors’ card acceptance, and how surcharging rules will come into play. Companies with significant Visa debit volume, for example, may not benefit from Limited Acceptance. And although these programs may remove the compliance hurdle, maintaining a credit-only payment flow could present new challenges.
Surcharging as a Limited Acceptance Merchant
Although Limited Acceptance programs represent a powerful tool, credit card acceptance fees can quickly impose a considerable expense. With surcharging, B2B merchants pass credit card transaction fees onto the consumer, offsetting the cost of credit card acceptance and protecting their bottom line––all while Limited Acceptance reconciles the card brand conflict.
To implement surcharging successfully, compliance and transparency are crucial. When surcharging, merchants charge a percentage across all credit card transactions, clearly disclosing the surcharged amount as a line item on a receipt, while granting cardholders the flexibility to select an alternative payment method or cancel the transaction at any point. To streamline the process, merchants can also provide a list of accepted payment types within their surcharge disclosures, ensuring all customers are up-to-date and on the same page.
How InterPayments Can Help with Limited Acceptance
Surcharging as a Limited Acceptance merchant is a complex process, but InterPayments can help businesses handle the transition with ease.
As a Managed Surcharge Provider, InterPayments partners with teams across the business to understand if Limited Acceptance is a viable path forward. Combined with a deep understanding of the B2B payments landscape, our surcharging experts deliver a Limited Acceptance surcharging program built to fit the unique needs of your business. They work on your behalf by implementing payment flows to automate compliance at the technological level in accordance with all Limited Acceptance and surcharge requirements, while ensuring your customers are aware of accepted payment methods with additional disclosures.
Ultimately, our experts provide the resources and support you need to surcharge successfully—because surcharging much bigger than a line item on a receipt, it’s a transformative tool for your business. From notifying your Acquirer in accordance with Visa requirements to automating compliance at the technological level, we support you through every step of the 30-day card brand surcharge registration process. With InterPayments, every transaction is guaranteed to comply with all applicable laws and regulations, backed by indemnification.