The Durbin Amendment of the Dodd Frank Act enables merchants to charge a service fee to consumers. This service fee can be split or waived at the merchants discretion. The fee is applied to all customers and can be waived, thus making this a service fee/discount program, NOT a surcharge. All merchants are eligible for this program and simply need to sign up and abide by the rules to remain compliant to state and federal regulation. The service fee program enables merchants to use the service fee charged to consumers to cover their card processing expenses.
Durbin Amendment – Dodd-Frank Act
“(2) Limitation on restrictions on offering discounts for use of a form of payment. — “(A) In general. — A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condi- tion, penalty, or otherwise, inhibit the ability of any person to provide a discount or in-kind incentive for payment by the use of cash, checks, debit cards, or credit cards to the extent that — “(i) in the case of a discount or in-kind incentive for payment by the use of debit cards, the discount or in-kind incentive does not differentiate on the basis of the issuer or the payment card network; “(ii) in the case of a discount or in-kind incentive for payment by the use of credit cards, the discount or in-kind incentive does not differentiate on the basis of the issuer or the payment card network; and “(hi) to the extent required by Federal law and applicable State law, such discount or in-kind incentive is offered to all prospective buyers and disclosed clearly and conspicuously. “(B) Lawful discounts. — For purposes of this para- graph, the network may not penalize any person for the providing of a discount that is in compliance with Federal law and applicable State law.
Businesses are permitted to provide discount or incentive for payment of a specific type so long as:
discount or incentive is offered to all prospective consumers
utilize hardware and POS systems that are service fee authorized and compliant
the service fee is disclosed clearly and conspicuously, both through signage and on all generated receipts
post clear and conspicuous notices to make consumers aware of the service fee
the service fee is the same for all consumers and card types