It's not actually illegal in the US to pass the processing fee to the customer, it's just against the contract you have to sign to get a merchant account. I don't know if the EU has a law or regulation prohibiting such contracts, but it seems possible.
> It's not actually illegal in the US to pass the processing fee to the customer, it's just against the contract you have to sign to get a merchant account.
Depends on the state. It's no longer illegal federally, but many states, including the four largest states[0], still prohibit it. And if they pass the fees on, they have to pass it on for all credit cards, due to the specifics of a court settlement a few years back.
In addition, any merchant that accepts American Express is also prohibited from passing on fees for any credit card, because Amex prohibits passing on fees, and you can't pass fees for Visa/Mastercard and not Amex (see above).
So, very few merchants actually do.
[0] California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas
Are you saying it _was_ actually illegal federally at some point or that no one had successfully brought a suit against the credit card companies' conditions until recently?
I didn't know about the state laws. That sure sounds like regulatory capture. It's hard to think of a legitimate reason for the state to do that.
Correct me if I'm wrong; what you're saying is that merchant account providers have terms that dictate to merchants how they should price their products i.e. as a merchant you cannot pass the fee? (It seems incredibly stifling for the merchant to me but may be you can enlighten me on why it is in the interest of MAPs to have such a condition)
Do majority of MAPs in the US have this condition in their terms? And which MAPs don't have this condition?
> Correct me if I'm wrong; what you're saying is that merchant account providers have terms that dictate to merchants how they should price their products i.e. as a merchant you cannot pass the fee?
They are not allowed to charge customers more for paying via credit card that for paying via cash. This is the law in some states, and in addition many merchant contracts stipulate it as well.
Sometimes you'll see merchants offer a "cash discount", which is technically prohibited too, but small merchants can sometimes fly under the radar if it's not too blatant.
