What is Debit Card Tips Surcharge

When the customer use debit card to make a purchase, the amount of the pending transaction might be different than the actual sales amount. This is because a debit card does not allow cardholder to borrow money from the card issuer up to a certain limit to purchase items, so the credit card company will protect the merchant's right by pre-authorized 20% on top of the sales amount to make sure merchant is able to collect tips when they settle the final sale. The transaction will shows as "pending" on the cardholder's bank account, and the final salesa mount will be post in 1-2 business day after the merchant enter the actual tips amount and submit the batch.

Note: Different banks have different policies and the tips surcharge amount can vary, normally 20%.

Example

A customer use debit card to make a payment of $100 with $15 tips, on the customer's bank account will shows a $120 pending transaction. In 1-2 business day after the merchant settled the batch, customer's end will shows the final payment as $115.

Can the Merchant remove Debit Card Tips Surcharge

No, tips surcharge is a build-in system set up by credit processor, if the customer does not want to pre-authorize surcharge, the customer can use credit card or cash to pay the payment.

Why is Debit Card Tips Surcharge does not applies in some places

Debit card tips surcharge only applies to business types that will collect tips, like restaurant and massage, etc.

Updated on: 22/08/2023