5 Card Brand Rules That Could Cost Store Owners $25,000+ (And How to Stay Compliant)

Every independent retailer accepting credit cards needs to know these compliance rules to avoid devastating penalties

If you accept credit cards in your store, you're probably focused on sales, inventory, and customer service. But there's a hidden danger lurking in your payment processing that could cost you thousands of dollars in penalties: card brand compliance violations.

Recent data shows a dramatic increase in non-compliance violations among small retailers, with Visa now imposing a $1,000 penalty for first-time violations and subsequent violations starting at $25,000. Even worse, continued non-compliance can result in termination of your merchant agreement—meaning you'd lose the ability to accept credit cards entirely.

Don't let compliance confusion kill your business. Here are the 5 most commonly violated card brand rules and exactly how to follow them.

Why Card Brand Compliance Matters More Than Ever

Card brands like Visa, Mastercard, Discover, and American Express have strict rules about how merchants can process payments. These aren't suggestions—they're contractual obligations included in your merchant agreement.

The harsh reality:

• First violation: $1,000 penalty (effective since April 2023)
• Subsequent violations: Up to $25,000+ depending on violation type
• Continued non-compliance: Complete merchant agreement termination

When you receive a violation notice, you have just 7 calendar days to acknowledge and respond. Missing this deadline can escalate penalties dramatically.

Rule #1: Minimum and Maximum Transaction Limits

What retailers get wrong: Setting minimums on debit cards or maximums on any cards

Minimum Transaction Limits - The Rules:

✅ ALLOWED: Set minimums on credit cards only (up to $10 maximum) 

❌ FORBIDDEN: Setting minimums on debit or prepaid cards 

✅ REQUIRED: Post signage at store entrance AND point of purchase

Maximum Transaction Limits - The Rules:

❌ FORBIDDEN: No maximums allowed on any credit or debit cards 

✅ EXCEPTIONS: Only US federal agencies and specific educational institutions (colleges, trade schools) can set maximums

Common mistake: Many retailers don't realize that "debit card" refers to the card type (checking/savings account attached), not the processing method. Even if a debit card is run as "credit," it's still a debit card and cannot have minimum limits.

Rule #2: Cash Discounting - How to Do It Right

What retailers get wrong: Posting cash prices then charging more for cards

Cash discounting can help offset processing fees, but it must be implemented correctly:

Cash Discounting Rules:

✅ REQUIRED: List price must be the FULL price before any discounts 

✅ ALLOWED: Apply discount at checkout for cash payments 

❌ FORBIDDEN: Posting cash price then adding fees for cards 

✅ REQUIRED: Post signage at entrance AND point of purchase disclosing discount intent and amount

Example of compliant cash discounting:

• Shelf price: $10.00
• Cash discount: $0.50
• Customer pays: $10.00 (card) or $9.50 (cash)

Rule #3: Surcharging - Navigate the Complex Rules

What retailers get wrong: Implementing surcharges without proper registration or disclosure

Surcharging allows you to pass processing costs to customers, but the rules are strict:

Surcharging Requirements:

✅ REQUIRED: Register with card brands BEFORE implementing 

✅ ALLOWED: Only on credit cards (NOT debit or prepaid) 

✅ CAPPED: Maximum 3% (lowest common denominator across all card brands) 

✅ DISCLOSURE: Required at entrance, point of purchase, AND on receipt 

✅ CUSTOMER CHOICE: Must allow customers to cancel after disclosure

State Restrictions:

❌ PROHIBITED in: Massachusetts, Connecticut, Maine, and Oklahoma

Important: Your POS system must be capable of sending surcharge indicators to Visa. Check with your provider before implementing.

What Proper Surcharge Disclosure Looks Like:

"This merchant assesses a 3% surcharge on credit card transactions. This surcharge is not greater than our cost of acceptance. Surcharge is not applicable to debit transactions."

Rule #4: Convenience Fees - When and How They're Allowed

What retailers get wrong: Charging convenience fees in face-to-face transactions

Convenience fees are highly restricted and often misunderstood:

Convenience Fee Rules:

✅ ALLOWED: Only in non-face-to-face environments (online, phone) 

❌ FORBIDDEN: Never in face-to-face retail environments 

✅ REQUIREMENT: Must offer true convenience (alternative payment channel) 

✅ AMOUNT: Must be fixed dollar amount (no percentages) 

✅ DISCLOSURE: Required before charging 

✅ CUSTOMER CHOICE: Must allow cancellation without penalty 

❌ FORBIDDEN: Cannot charge on recurring transactions

Key insight: If customers can pay with the same card type at your physical location, you cannot charge convenience fees for online/phone payments.

Rule #5: Service Fees - Limited to Specific Merchants

What retailers get wrong: Thinking all businesses can charge service fees

Service fees are only available to select government and education merchants:

Service Fee Eligibility:

✅ GOVERNMENT: Court costs, fines, tax payments, government services 

✅ EDUCATION: Elementary/secondary schools, colleges, universities, trade schools 

❌ RETAIL: Not available for general retail businesses

Important: Service fees require Visa registration and special coding in your processing system.

Red Flags: You Cannot Combine These Fees

Critical rule: You cannot charge surcharges, convenience fees, or service fees in combination. Choose one method and follow its specific rules.

How to Stay Compliant: Your Action Plan

1. Audit Your Current Practices

• Review your current minimum/maximum policies
• Check your signage for proper disclosure
• Verify your POS system capabilities

2. Update Your Signage

• Ensure all required disclosures are posted at entrance and checkout
• Include exact amounts or percentages
• Clearly state which card types are affected

3. Train Your Staff

• Ensure employees understand which fees apply to which card types
• Train on proper customer communication about fees
• Establish procedures for handling customer questions

4. Work with Your Payment Processor

• Verify your POS system can handle your chosen fee structure
• Ensure proper indicators are being sent to card brands
• Register for surcharging if applicable

5. Stay Updated

• Card brand rules change regularly
• Subscribe to updates from your payment processor
• Conduct annual compliance reviews

The Bottom Line: Compliance is Non-Negotiable

Card brand compliance isn't optional—it's a contractual requirement that can make or break your business. With penalties starting at $1,000 and escalating to $25,000+, the cost of non-compliance far exceeds the effort required to follow the rules.

Don't wait for a violation notice to act. Review your current practices against these rules today, and ensure your payment processing supports your business instead of threatening it.

Having trouble navigating payment compliance? At The Thriving Retailer, we help independent store owners implement payment processing systems that work seamlessly with their business operations. When you upgrade your POS through us, you get FREE POS training to maximize your system's capabilities.

Need help ensuring compliance? Complex payment processing rules require expert guidance. Schedule a consultation with Rachael Vento to get personalized compliance strategies that protect your business from costly violations.

Ready to upgrade your POS and get expert compliance guidance? Contact us today to discover how the right systems combined with professional consultation can protect your profits and your peace of mind.