Colorado No Longer Prohibits Passing on Merchant Credit Card Fees to Customers

Did you know that in the last year Colorado eliminated its ban on credit card surcharges? Is your business prepared to take advantage of these changes?

On July 1, 2022, the ban on adding a surcharge for credit card transactions was eliminated in Colorado. Sellers may now add the processing fees they have to pay for credit card transactions. Sellers can charge up to two percent of the transaction in surcharge fees. A surcharge is considered any additional fee added to the transaction amount, so be sure that if you include more than the credit card transaction fee, that is does not exceed two percent.

Be careful when implementing this change. A buyer must be informed of the surcharge before the purchase. For transactions at a physical location, this can be done through signage, or if the transaction is online, it must be displayed in a way that is visible for the buyer. The disclosure must read:

“To cover the cost of processing a credit or charge card transaction, and pursuant to section 5-2-212, Colorado Revised Statutes, a seller or lessor may impose a processing surcharge in an amount not to exceed 2% of the total payment made for goods or services purchased or leased by use of a credit or charge card. A seller or lessor shall not impose a processing surcharge on payments made by use of cash, a check, or a debit card or redemption of a gift card.”

A seller also needs to be sure to include a line item for the surcharge on the customer’s receipt. This change provides a great opportunity for sellers to help pay for the transaction fees they face, but beware that failing to follow the proper guidelines can result in harsh penalties, including criminal prosecution. Talk to a skilled Galvanize Law attorney to help you implement these changes in your business.