In The State Of Alabama, What Is The Highest Credit Card Processors Are Allowed To Charge?

Payment processors charge a minimal fee for every card transaction they process. The charges typically average 1.5% to 2.9% for in-store transactions, while keyed-in payments might cost upward of 3.5% to process. However, several factors affect these rates. Processors often consider risk factors, the industry of operation, goods or services offered, and card type. 

Alabama has unique guidelines about consumer fees. While companies can impose extra credit card charges, the amount should not exceed the state-mandated limits — which vary per industry. Alabama also has laws on late payments. The Consumer Credit Act states that penalties cannot exceed $10 or 5% of the loaned amount.

Surcharging and Discounting Rates To Offset Payment Processing Fees in Alabama

A 1% to 4% fee for every card transaction you make could translate to thousands of lost profits. Luckily, there are two legal, state-approved ways to compensate for these penalties:

Surcharging

Surcharging involves charging surcharge or convenience fees to customers who opt to pay with their credit cards. Merchants must explicitly detail the fees upon checkout.

Discounting

While Alabama allows businesses to add surcharge fees, surcharging is illegal in Kansas, Colorado, Maine, Connecticut, and Massachusetts. In this case, you would have to opt for discounting. Instead of charging cardholders more, this process charges cash buyers less.

Consult a payment processor if you find yourself on the fence about what guidelines apply to your state and clarify these things before equipping your business with a point-of-sale system. Additionally, ensure that you meet all the requirements and operate within the state-mandated laws. That way, you can purely focus on expanding your business.

Do you need a more in-depth primer on credit card processing fees? Processing Card can help! Use our comprehensive guide on payment processing rates as a reference.