The Payments Experts Podcast
Expert payments attorneys discuss the electronic payments industry from a legal perspective.
The Payments Experts Podcast
Surcharging Fines Without Findings: Dual-Pricing Compliance Playbook: Signs, Receipts, You | PEP075
Fines Without Findings: Surcharging Rules, Real Penalties, and How to Stay Out of the Crosshairs
Join Christopher Dryden, Leo Arzumanyan, and Jeremy Stock of Global Legal Law Firm (https://www.globallegallawfirm.com/podcasts/) as they discuss how merchants are getting hit with four- and five-figure “surcharging violations”—and no one will say what actually went wrong. In this episode, our hosts pull back the curtain on the rulebook, the enforcement machine, and the practical fixes that keep ISOs, PayFacs, processors, and merchants compliant without tanking conversion. We share real cases, explain the caps, and show exactly where signage and receipt language fail in the wild—and how to fix them fast.
Why this matters
When letters arrive without clear findings or remediation steps, fines escalate, fear shuts down communication, and portfolios absorb risk they can’t see. Underwriting can’t screen for prior fines, “debit is not credit” keeps tripping teams, and state laws collide with brand rules at the POS. We translate that chaos into a clear playbook you can apply this week.
What we cover (and how to use it)
Fines without findings
How assessments jump from a few thousand dollars to much more with little guidance, why letters lack specific violations, and the operational drag that follows.
The three pricing models—done right
Surcharging (credit-only; capped by brand), cash discounting (posted price is the card price; discount for cash), dual pricing (two posted prices: cash vs. credit). Where teams mix concepts and invite complaints.
Debit ≠ credit
The most common failure mode. Why “flat fee on everything” is a lawsuit magnet, how to configure debit handling so frontline staff can’t override compliance.
Signage, receipts, and “conspicuous disclosure”
The exact choke points: entry, shelf/menus, checkout, and receipts. What must be stated, where it must appear, and why register-only signs get merchants fined.
State law vs. brand rules
How state statutes (e.g., display/advertising) can create liability even when brand caps are honored, and why the stricter rule governs in conflicts.
Risk flow and blind spots
Liability waterfalls from sponsor bank → acquirer/ISO → merchant, yet there’s no fines database. The underwriting gap this creates—and how to close it with attestations and audits.
Due process and escalation
Why fear of reprisal keeps merchants quiet, what a transparent channel should look like, and how to preserve evidence to challenge bad assessments.
The practical playbook (copy/paste to your runbook)
Standardize onboarding
Require a signed pricing/surcharging attestation covering signage, debit handling, caps, and receipt language. Lock these into your CRM and renewal cycles.
Compliance-in-a-box
Provide pre-approved templates for entry placards, menu/shelf tags, POS receipt footers, and e-commerce disclosures. Include brand-cap reminders where staff see them.
Configure the POS, not just the people
Hard-cap surcharge percentages at the terminal; block debit surcharges by BIN range; enforce item-level dual pricing where required. Turn on receipt disclosures by default.
Audit on a cadence
Quarterly website and on-site checks (or merchant-submitted photo audits). Verify that posted prices match the program (cash discount vs. dual vs. surcharge). Document everything.
Respond like a regulator will
When a notice lands, open a ticket, collect photos/receipts, map each allegation to the rule text, remediate within SLA, and keep a paper trail for appeal. Train support to route these instantly.
Who should watch/listen
ISOs/PayFacs tightening pricing programs across mixed merchant portfolios
**Matters discussed are all opinions
A payments podcast of Global Legal Law Firm
So even in the underwriting process, there's no way to determine whether a merchant applicant has been fined before.
SPEAKER_02:Was this something you reach out to Visa as well to get the video? It was in my email.
SPEAKER_05:Yeah, because I went to people that carry risk and I asked the question, and they had very good responses of, you know, well, wouldn't you do this or wouldn't you do that? But it was basically still like an I don't know, and this is what they do for a living. So I would think that that would be important to know. Just I think that that would be important for Visa to know from a risk allocation to promote compliance. So that was one of the things that I had asked about was hey, is there a database that we can scrub against?
SPEAKER_01:Welcome to the Payments Experts Podcast, a podcast of global legal offer. We hope you enjoyed this episode. Guys, we've talked a lot about surcharging, fuel pricing, etc. It's a very hot topic still, maybe to our chagrin. You guys know a lot about it. You talk to our clients about it all the time. I want to present a kind of scenario here to kind of kick off this conversation. There's a merchant who reaches out to their processor and they tell them, hey, I've been fined$1,000 by Visa. They send their receipts, they send the pictures of their signage, all the information they've got, and they basically ask the processor, What have I done wrong? And the problem seems to be is nobody can give them a clear answer as to why. What's going on with this?
SPEAKER_05:So right now there's fines being dispensed, and we see to me some some clarity in the rules, a whole bunch of murkiness in the enforcement, and the fine is accompanied by evidence of wrongdoing with really no explanation necessarily as to how I am in violation. Some of it's self-explanatory, some of it's a judgment call. Um, because uh at times there are actual um they're doing what they're supposed to be doing with signage partly, right? So it it it there's some misunderstanding as to how they're supposed to be compliant.
SPEAKER_01:What do you mean by partly, Chris? Like what what part are they doing?
SPEAKER_05:So I'll give you an example, right? Like um a lot of times they think that they need to have compliant signage, and there are some models of compliant signage. We we're probably gonna get into that. But where you place the sign matters, right? Like it has to be basically uh before they even see the product or at the point of product, right? I mean, there has to be a notice that this is going on, and the question is is where? How prominently do I display it, right? I mean, I could be in violation, and it's not as though merchants are not receiving some sort of evidence that they're in wrongdoing. There's no ability to get clarity, there's no communication. Like if I get uh if I get fined for anything by a municipality, like where I live or whatever, I have some sort of effort of due process to understand here's the rule, here's the you know, the standard, here's the offending behavior, and then I still get a chance to disagree, right? Like that doesn't exist here. And so for some merchants, the fines are like, you know, you don't think, oh, a thousand dollars. Second fine's five thousand dollars, and that becomes more significant for small merchants.
SPEAKER_03:Yeah, and just to piggyback off of what Chris was saying, you know, we keep seeing this and we're seeing this more and more where clients are coming to us, you know, hey, our merchants got fined. You know, like Chris said$1,000,$5,000. I think it's$25,000 after that. And if you look at the actual letter that they get from Visa or whoever it may be, MasterCard, they don't really, like Chris said, lay out, you know, the exact nature of what you did wrong, other than just like, you know, you violated the surcharge rule. But but how? You don't you don't provide examples to the merchant of what they really did wrong. So you're getting into this area where merchants are getting fined by this card brand regime, but then when they're trying to really get a clear understanding of what they should do to rectify the supposed issues, they're not getting an answer.
SPEAKER_05:Yeah, I mean that's the problem, is you know, there's not a clear avenue of who to contact. Like there is no real ability to contact the card brands, like directly for a merchant. Maybe counsel. So I I had an incident earlier, but you know, even then, there's an unwillingness to discuss even through counsel. The example that I recently had was we had a bunch of case studies that we kind of came across, and I was trying to be proactive related to compliance, and so we were like, well, let's just start to put some of these together. And I I've had interaction before with the chief compliance officer Visa, really briefly. He's a super nice guy, and I said, Oh, I'll just, you know, he he seems so proactive and like that's what he does, right? And maybe there's a dialogue that could take place. And so I emailed him and I laid some stuff out. Unfortunately, I forgot that we're in a lawsuit with Visa on behalf of one of our clients over the same subject matter. I don't work on that case, but still, I can't contact Visa about this subject matter with this lawsuit ongoing. So I I faux pod, that was on me. Um but the message coming back was just wanting to like almost robotically, the attorney just beat me up for this versus hey, okay, so I have other clients, they are having issues that are real, current. Who do I contact at Visa? Right? And I asked three times in an email and never got a response. And she wanted to beat the hell out of the point that I had done something wrong, potentially to with no damage, right? And even after I like her whole thing was tell me you're gonna be compliant, tell me you're gonna be compliant with my rules, but yet when I was trying to engage in a conversation of, hey, do I do I submit all this stuff to you? Do I is there a general uh you know, legal inquiry, even email that we can send these things to on behalf of our clients, right? Like, are are we now precluded from asking about any of this stuff because we're in a lawsuit? On behalf of our clients that want to comply with your rules. That's right. And they don't want to violate. That's the backward part of it is you know, I and I asked in my last email, I was like, look, you know, I'm asking a very simple question, and it's to gain compliance for people. And these are very real situations that are happening. I s I said, and you there just seems to be this unwillingness, like, you know, should I just reach out to the sponsor bank? But if the sponsor bank is is non-responsive, what's next? I file a lawsuit, I have to file a lawsuit to get some sort of dialogue going. I don't really understand the unwillingness of it all. And literally, the visa attorney was a robot. Like she just was programmed to say one thing and ignore everything else. And it was yeah, like even the the tenor of it was just re ridiculous, in my opinion. But that's fine. That's what how they want to operate. We're just gonna tell the stories of all the things that we find out so that maybe because our goal is compliance, these fines are significant, like they're they're a real problem for some merchants.
SPEAKER_03:Yeah, and you know, the first fine is a thousand dollars. You might not think that's a lot, but a lot of these merchants are mom and pop stores. They're just getting off the ground. A thousand dollars is a significant amount, let alone when you start getting into five thousand and and beyond. Yeah. And this is kind of what goes into what we, I guess, labeled as like the problem of fines without findings, right? Like they're getting hit with these fines, but they're not really getting told why and how to rectify that. And I think this lends into our next topic, which is you know, a discussion on the three, I guess you could say, various models, which is surcharging, dual pricing, and cash discounting.
SPEAKER_05:Well, I want to go back because the fine regime is where I'm kind of focused. All right, so we'll get that. But we had an interesting thing happen, and I mentioned it on another podcast. We had some guys come to us that had a legitimate issue, and we analyzed it, and they wanted to know hey, is it worth us to go back to Visa and tell them what happened, right? Because it really wasn't, I mean, technically it was a surcharge violation, but it was really not. I mean, it was a glitch in their POS system, right? So, and it and the way that it glitched made it look like a like an unlawful surcharge or or a non-compliant surcharge. It was probably more an unlawful surcharge than a non-compliant one, but but you know, we told him, look, you're not gonna get you know a receptive ear to this, like when you go back. So I don't know if it's worth it, but what interested in me was the fines were five thousand dollars. And I asked them, well, like, is this the second fine? And they were like, no, this is the first one with us. Well, it was the first one with them. So at the end of the day, the way all the contracts are structured, all of the liability flows down and ends up at the merchant, right? And if the merchant can't pay it, it ends up at the agent or the ISO. So if what happens when I'm actually soliciting a merchant to come aboard, and they've already had multiple violations somewhere in the rules that have caused fines that have a graduate, like an upward, you know, graduating type of the next fine's more, the next fines more. And I went to some underwriting people that I know, and I'm like, well, where do you where do you scrub for this? And what they told me, interestingly enough, was well, isn't this something that you're supposed to notify match? Like, because it's a it's technically a rules violation. And I'm like, really? Does that really like does that mandate really exist? I don't know. There's not a reason code, seemingly. Okay, so I I think that's a very good point. And so how do we scrub for this? Because ultimately, like, you know, you look at larger ISOs, they've got thousands of merchants, they're taking on the liability. Like, they need to know what kind of liability that they're actually shouldering. So even in the underwriting process, there's no way to determine whether a merchant applicant has been fined before.
SPEAKER_02:Was this something you reach out to Visa as well to get the video? It was in my email.
SPEAKER_05:Yeah, because I went to people that carry risk and I asked the question, and they had very good responses of, you know, well, wouldn't you do this or wouldn't you do that? But it was basically still like an I don't know, and this is what they do for a living. So I would think that that would be important to know. Just I think that that would be important for Visa to know from a risk allegation to promote compliance. So that was one of the things that I had asked about was hey, is there a database that we can scrub against? How that has anything to do with the lawsuit or is geared towards getting it. But rather than argue about any of it, I just want to know where do we direct people? Yeah, right.
SPEAKER_03:That's what's so frustrating, right? Is that they're all about compliance and the rules set that they put out, but they're not making it easy for anyone to comply. And that's where you get to these problems that we keep seeing on a weekly basis.
SPEAKER_01:It it makes me think it's like almost like Chris, you're being too reasonable. Right. You know what I mean? You're almost approaching it with too much reason.
SPEAKER_05:Yeah, but why but but but here's the problem. So as we got shut down, I went back to the three or four clients and asked, can I share this with the member bank or with visas council? Because at least I could go to this visa council. Whether or not she would do anything with it, I have no idea, but at least I can try. Dude, nobody wants to pop their head out, right? Nobody wants to be identified as having an issue with the visa rules for fear of some sort of reprisal or just you know, a spotlight being shown on, oh, well, let's go look at their merchants, you know.
SPEAKER_03:And that puts you just in a horrible position where you don't know how to fully comply. And if you try to reach out, you might be on their radar and might suffer retribution in some sort of punitive punitive way. I don't know if that would actually happen.
SPEAKER_05:What I know is that is the perception of the people participating in this. That's not my perception necessarily, right? It's what I'm seeing people fear. Yeah. Right? Because I mean, if you think about it, like a match placement, right? MasterCard doesn't place you on match. MasterCard orders the member bank to place a merchant on match, right? That's who does it. Like if it's being used for non-compliance and like excessive chargeback, like true things that require a match placement, that's generally how it's happening. Like it's, you know, it's because there's one match caveat is that you cannot use it for uh leveraging a commercial debt with the person. Right. And it looks really bad for the ISO taking a merchant loss, matching a merchant when they're supposed to maybe manage the risk or the member bank or whoever's in the chain, right? Yeah, it's sure probably not the ISO if they're like a uh non-risk holding ISO. But you know, like that's I just like there's all these inherent inherent disconnections in how the rules are maybe um presented and then applied. Sure.
SPEAKER_03:And uh and look besides that, disconnections between how the rules are in the card brown rule set versus state state laws. And Chris, I actually want to ask you a question. Let's say I'm one of you know one of these merchants who's new to the game, doesn't really understand the regime, doesn't understand the various frameworks. How would you, you know, let's say I'm a merchant I come to you, how would you define to that merchant in the simplest way what a surcharge is, what a proper surcharge is? So certainly the definition of surcharge.
SPEAKER_05:Oh, how to compliantly surcharge? Compliantly surcharge. Compliant surcharge is letting people know that you actually surcharge. And what the definition is as well. Yeah. And and then it depends on what state we're in. Right. Right? Like because they got their own surcharge on of whether or not you can even surcharge. Connecticut's still a holdout. There's still a couple states that are holdouts, but it is a fee in addition to the regular price. So you have to do it in a systematic way to every customer for every card type, right? Visa's 3% cap, MasterCards 4% cap, but it is adding a charge onto the receipt with proper signage of letting everybody know that you do it, and assumedly uh registering.
SPEAKER_03:Even though that's a that's a gray area, too. And just to bring my own little anecdote that I told Chris about recently, as you just mentioned, the cap is 3% for Visa, 4% for MasterCard. Beyond the cap, you have to do all sorts of disclosures. You have to make it essentially, you have to make it clear to the consumer when they enter your business what they're gonna be paying for at checkout. I was at a out to dinner with some friends, uh, I believe it was a week ago. You know, go in, there's no signage about surcharging any of that. So I'm not assuming that I'm gonna get surcharged at the end of my, you know, when I get the receipt. You know, we dine, we get the check. There's a 5% surcharge on top of the already expensive dinner that we had. So that not only violates Visa's cap, but MasterCards as well. So I, you know, I when I when I and California's junk. So it violates. Yeah, yeah. We could go on on, it violates all sorts of rules. So, you know, I reach out to the to the waiter. Uh, you know, the waiter doesn't know, he gets the manager, and the manager also didn't know. So I kind of explained to him, hey, look, like you know, I'm an attorney in this space. I told them about the podcast that we do on a weekly basis, and I explained to them, look, like you're violating you know the restaurant, not you as a manager, you is violating these rules. Can you please remove the surcharge from the bill? No problem. They removed it. But that I think just goes to show like a lot of businesses out there are still operating in violation of numerous rules.
SPEAKER_05:Yeah, I mean, I think I think for surcharge, it I I would agree with you. I think it's easier to comply. It's a problem with customers, right? Like it's the way that you're presenting it. Hey, if you use a card, you're gonna pay more versus hey, if you use cash, you're gonna pay less. And let's make a distinction if you use a credit card for surcharge. Yeah, because you're not allowed to search. So that's another that's another thing that I had a question about because I don't really know the answer. And I have a feeling that somewhere this could come out of the word work, would work at some point. So I had to pay a uh either it was the credit card price or it was the card price, right? So I said, Well, I have a debit card when I was at the cash register, and they said, Oh, well, we just run it as credit. But even when you run a debit card, it doesn't run at the same rate as credit because the card's present. So when you flip it, it's not really a credit card, right? It has the Visa MasterCard logo on it, but it's truly a debit card taking money from your bank account having nothing to do with credit. Okay, that inherently it processes at a lower rate than the credit card rate. Like when you're looking at what people are setting as the credit card price, right? So when that happens, what about that spread? Is that an illegal surcharge? I don't know. Like, and I don't know how they would, I don't even know if anybody's ever asked that question. Maybe somebody has, maybe somebody hasn't. I don't know. But the the fact is, is that there are a lot of things that take place in reality, right? That haven't maybe an unintended consequence or I don't know.
SPEAKER_03:Yeah, and these things that are taking place are not being reflected. Right.
SPEAKER_01:Hi, Jeremy Stock here, director of operations at Global Legal Law Firm. I also produce the podcast, the Payments Experts Podcast. As you can see from this episode today, we love talking about these things. We take these things very seriously, and these are very real-world, actual scenarios that people are facing every day in these payment schemes. And it's a hard, tough world out there. We only see so much of it. If you yourself, if you're an agent, an ISO, um maybe somewhere in the payments world where you're aware of stories where people are being affected by these rules and the difficulty of application, let us know. Reach out. You can find us at PEP, it's pep at attorneygl.com. Also, of course, global legalaw.com. Let us know your stories. We'd love to hear from you. We'd love to feature you on a podcast. If you're interested in being a guest on the podcast, please reach out. Again, that's PEP, which is short for payments experts podcast at attorneygl.com. That's our email to reach us here at the podcast. We hope to see you on the next one. Bye-bye. Thank you for listening to this episode of the Payments Experts Podcast, a podcast of Global Legal Law Firm. Visit us online today at global legalaw firm.com.
SPEAKER_00:I am not recording on either of my documents.
SPEAKER_03:Oh my god, darian. I was getting into my flow space.
SPEAKER_00:Hey, we had a warm up ride. You're welcome.
SPEAKER_05:You can never be disappointed when I say I can't do a podcast again. Ever. You can never be disappointed like you were yesterday. Never.