Can You Surcharge Clients Who Pay You With a Credit Card?
By Claude Ducloux, Attorney at Law, LawPay Director of Education, Ethics, and State Compliance
Most merchants accepting credit cards will pay some sort of processing fee to their credit card processor. These fees can vary from under 2 percent to more than 5 percent, depending on the processor and bank involved. So, merchants accepting credit card payments often charge an extra fee to the clients to make up for the processing fee they will pay to their credit card processor. This is sometimes called a “surcharge” or a “convenience fee” in many states.
Many state legislatures, however, have objected to such fees for a variety of reasons. Consumer protection advocates argue the fees are not reasonable or that they can be deceptive. Others argue the fees discriminate, surcharges often lack standardization, or that they simply inhibit interstate commerce.
At the time of this writing, eleven states—California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas—and Puerto Rico have laws that prohibit merchants from surcharging consumers on credit card transactions.
However, the laws in California, New York, Texas, and Florida have all been challenged in court. The California law was declared unconstitutional in Italian Colors Restaurant et al. v. Harris in 2015. In September 2016, the U.S. Supreme Court agreed to hear Expressions Hair Design v. Schneiderman, the case challenging the New York statute that prohibits merchants from imposing a surcharge for using a credit or debit card but does not prohibit cash discounts.
On January 4, 2019, the Florida Supreme Court issued a 92-page order modifying many distinct Disciplinary Rule provisions, including (on page 54) amended Bar Rule 4-1.5 (h) which now provides the following:
(h) Credit Plans. A lawyer or law firm may accept payment under a credit plan. ~~No higher fee shall be charged and no additional charge shall be imposed by reason of a lawyer’s or law firm’s participation in a credit plan.~~ Lawyers may charge clients the actual charge the credit plan imposes on the lawyer for the client’s transaction.
Regardless of whether you can, the ultimate business decision to surcharge is yours, which leads me to…
Claude’s Best Advice
My personal advice is: don’t charge a surcharge to your client.
After 41 years of practicing law (the last 27 in a four-lawyer general practice firm), nothing has positively impacted my fee collections more than a combination of smart billing practices and accepting credit cards. Offering hyperlinks to my credit card page within my billing email and on my bills without any markup results in immediate payment of a substantial number of monthly bills.
Charging any extra surcharge, convenience fee, or other extra cost also puts you at a disadvantage. A powerful incentive to using a credit card is to acquire the miles or points as a side benefit, not to pay extra dollars. Adding a surcharge is like throwing up an additional steeple-chase gate in front of a payment. Additionally, after working hard on a case and providing excellent service, tacking on an extra fee in the form of a surcharge can end an otherwise positive interaction on a sour note. Why let that be the last impression a client has of your work?
Think of processing fees as a normal cost of doing business in 2019. I am confident you’ll see that the better business practice is to avoid surcharges.
Ready to get started with LawPay? Call us at 866-376-0950 or visit lawpay.com/sign-up
This content is advertising.
