Automotive dealers are facing a rapidly shifting payments landscape as new credit card rules, state sales tax regulations, and surcharging options reshape operational strategies, industry experts say. On today’s episode of Driving Solutions, Amberly Allen, founder and managing partner of Dealer Merchant Services (DMS), urges dealers to adopt compliant surcharge programs and modern payment technologies to safeguard revenue and avoid regulatory pitfalls.
As surcharging gains momentum, J.D. Power predicts that 35% of dealerships will implement programs within the next year. While surcharges are now legal in 47 states, several, including Massachusetts, Connecticut, and Maine, remain off-limits. For instance, New York, California, Oklahoma, and Colorado are enforcing specific limits and disclosure requirements.
Additionally, Allen advises against cash discounting for automotive transactions, as it applies to debit cards and may create compliance risks. Consequently, DMS provides programs approved by credit card brands that protect dealers from fines and class-action lawsuits.
State-specific sales tax regulations create additional complexities, as many states classify surcharges as taxable. Therefore, DMS provides technology solutions and expert guidance to help dealerships navigate compliance and protect cash flow.
"We are really looking to create a sophistication of the entire ecosystem of payments."
Moreover, Allen highlights the company’s recent acquisition of Priority Payments, which expands processing capacity, pricing leverage, and technology solutions, including Canadian operations. The partnership allows DMS to offer a full suite of payment solutions, covering credit card processing, payables, receivables, and staff training.
Further, modern credit card processing technology, like machines equipped with BIN range identifiers, ensures surcharges are applied correctly and protects dealers from violations. The introduction of Visa and MasterCard rules, such as the Commercial Enhanced Data Program (CEDP), requires partners capable of providing detailed data to secure optimal rates. Whereas, digital payment methods such as Venmo, Cash App, and cryptocurrencies are also increasingly in demand by consumers, requiring dealers to adapt their systems.
Notably, DMS has trained more than 25,000 dealership employees in surcharging and compliance, with support extending across finance, service desks, collision centers, and parts departments. Allen stresses that professional guidance, updated technology, and operational integration are essential to navigating the changing payment landscape effectively.
Don’t forget to tune into this year’s The Future of Automotive Commerce webinar on November 19, at 1:00 p.m. EST. To register, click here.
