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  • Writer's pictureZel McGhee

Navigating Credit Card Fees for Small Business Owners in Texas

Zel McGhee, ASBC® - 5 April 2024

Image of a male small business owner, centered, holding a magnifying glass, signifying conducting research, his left hand rests on a pile of credit card images that surround him at waist level in a semicircle, images of dollar sign coins are scattered throughout the image, scales are visible above his left shoulder in the background, signifying the law, imagery of flags that represent the state of Texas are visible in the background, and there is a luminous glow around the mans body that signifies enlightment.
Credit Card Fees

What Texas Small Business Owners Need to Know


After receiving an inquiry from a small business owner regarding the legality of surcharge fees in credit card transactions, I felt compelled to delve deeper into this complex issue. While I must preface that I'm not a financial or legal expert, I provided my initial response with caution, emphasizing the importance of seeking professional advice tailored to their specific circumstances. Now, in this blog post, I aim to offer a more comprehensive examination of the matter. Join me as we navigate through the intricacies of surcharge fees in credit card transactions within the state of Texas, shedding light on the legal landscape and providing valuable insights for small business owners.


Small business owners in Texas often grapple with the intricacies of credit card transactions, particularly when it comes to understanding the legalities surrounding fees. In this blog post, we delve into the regulations outlined in the Texas Business & Commerce Code, shedding light on the complexities and providing clarity for merchants. Additionally, we explore recent legal developments and offer guidance on compliance to ensure small businesses thrive within the bounds of the law.


Understanding Texas Business & Commerce Code:


The Texas Business & Commerce Code plays a pivotal role in governing commercial transactions within the state. Specifically, Sections 604A.0021 and 604A.002 address the issue of credit card fees. These statutes prohibit sellers from imposing fees when customers opt to pay with credit or debit cards. However, exceptions exist for state and local government entities and private schools under certain circumstances.


Navigating Legal Uncertainties:


Despite the clarity provided by the Texas Business & Commerce Code, uncertainty looms due to ongoing legal battles. A federal lawsuit has cast doubt on the enforceability of Texas laws against credit card fees. This underscores the importance of staying informed about developments in this area of law.


Accessing Additional Resources:


To aid small business owners in navigating these complexities, we've compiled a list of valuable resources:


  1. Texas Business & Commerce Code: Access the relevant sections of the code for detailed insights into credit card fee regulations.

  2. Court Summaries: Gain a deeper understanding of legal precedents and recent rulings that impact credit card transactions in Texas.

  3. Hoover Slovacek, LLP Document: Delve into expert analysis and guidance from legal professionals to ensure compliance with applicable laws.


Practical Recommendations:


While this blog post serves as a valuable resource, it's essential for small business owners to seek personalized legal counsel. Consulting with attorneys well-versed in Texas commercial laws can provide tailored guidance and mitigate potential risks. By prioritizing compliance, businesses can safeguard their operations and foster trust with customers.


Exploring Dodd-Frank Regulations:


In addition to state laws, federal regulations such as the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act impact credit card transactions. This amendment prohibits surcharges on debit cards and outlines regulations on interchange fees imposed by card networks. Understanding these federal guidelines is crucial for comprehensive compliance.


Final Thoughts on Navigating Credit Card Fees


Navigating credit card fees in Texas requires a nuanced understanding of state laws, federal regulations, and ongoing legal developments. By leveraging the resources provided and seeking professional guidance, small business owners can navigate these complexities with confidence. Compliance not only ensures adherence to the law but also fosters trust and credibility within the business community. Stay informed, stay compliant, and pave the way for sustainable growth in the Texas marketplace.


I strongly recommend that small business owners seek legal counsel when it comes to applying credit card fees to ensure legal and payment card industry compliance. In the meantime, the following links will provide areas for further independent research:


·         Credit Card Surcharge FAQs

·         Visa Surcharging FAQ

·         Convenience Fee Definition

·         Surcharge Explanation

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