Credit Card Surcharge Sign Wording and Template: How to Create Effective Notice for Your Surcharging Program

Credit card processing fees are expensive. There’s no way around it. In 2022, industry data shows that credit card companies earned a whopping $126.4 billion in processing fees. At upwards of 3.15% plus ten cents in interchange fees, these extra fees cost a pretty penny. And with merchants expected to pay as much as $502 million extra after price hikes in 2023 and 2024, these fees are shooting up faster than the transaction amounts spent on purchases.

While some businesses have accepted swipe fees as a way of life, small business owners may struggle with remaining profitable while also providing a range of payment options. With many consumers opting for non-cash payment methods like contactless payments, businesses often have no choice but to accept credit card payments to attract and retain customers.

Enter credit card surcharging programs, an increasingly-common method that allows merchants to not incur expensive transaction fees from credit card transactions, and to instead pass it on to the consumer. As more businesses opt for a surcharge program to manage their ballooning costs, it’s important to be aware of best practices around notifying your customers about this additional fee to not only follow all legal requirements, but also provide a seamless customer experience. In this article, we’ll cover everything you need to know about credit card surcharge signage to set you up for success.


  • Surcharging is a way for merchants to pass on swipe/credit card fees on to their customers (which can include fees like interchange fees and assessment fees).
  • It’s important to carefully communicate the reasoning behind surcharging, to help make sure your customers understand and can empathize with your decision-making process.
  • Best practices for effective surcharging communication include using clear and simple language, making it visually easy to read, and ensuring total compliance with regulations.
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What is Credit Card Surcharging?

While we’ve already spoken in-depth about credit card surcharging, here’s a quick TL;DR of that article. Basically, surcharging is a way for merchants to pass on swipe/credit card fees on to their customers (which can include fees like interchange fees and assessment fees). 

That means if a customer wants to make a credit card purchase, they’ll be charged an additional fee to cover the payment processing costs.

Although surcharging has been widely debated, it’s starting to become something of a mainstay, especially with rising processing fees. Since Visa and Mastercard jointly control the majority of the credit card market, the relative lack of competition makes it easy for these credit card giants to set the swipe fees as they fit, which is why surcharging can be one of the fee management options utilized to recoup costs.

Best Practices When Creating Your Surcharge Sign

When deciding on what kind of wording to use, keep in mind that you need to have two signs: both a point-of-entry disclosure and a POS disclosure. The latter is a sign that’s clearly displayed when a customer enters your store, and the other is a sign next to, or near where customers checkout. For both options, you need to adhere to the following best practices.

Use clear, simple language: It’s a surcharge law that you use straightforward language, so customers can quickly understand that you’re implementing card surcharging. For example, your sign can’t say: “We hereby institute a supplemental fee, henceforth referred to as a surcharge, quantified as a percentage denoted by X, applicable solely to transactions facilitated through credit cards, herein recognized as a mode of payment.” Keep it simple!

Apply general design principles: Keep it visually easy to read for your customers. Don’t put it too high or too low on your wall and use a readable font (like Times New Roman or Calibri). Consider using bolded or underlined font, different colors, or (royalty-free) visuals to highlight relevant info. The most important info on a surcharging sign is the percentage you charge, and also what other payment alternatives they can use to avoid the surcharge.

Compliance: Depending on your state or credit card network, there may be different requirements or regulations that you need to adhere to so that you ensure compliance. If you’re designing your own credit card surcharging sign, we recommend checking their website for information on any requirements, or using their own template to be safe.

Surcharge Sign Templates & Wording

Now let’s make it a little more concrete and look at the actual wording you could use. Believe it or not, an effective surcharge sign or template can be as simple as:

“We impose a surcharge X% on credit card purchases, which is not greater than our cost of acceptance.”

Credit Card Surcharge Sign Example

It’s that easy! You could also add the phrase “We don’t surcharge cash or debit card transactions,” or add which card brands you accept. If you prefer a longer template to work with—especially if you’re a smaller business and want to be more empathetic—here’s a suggestion:

“Dear customer, instead of raising our prices, we now include a X% surcharge fee—which you will see on your receipt—to cover the increased cost of credit card acceptance we must pay. Payments made with cash or debit card won’t be surcharged. Thank you for your understanding!”

For more templates straight from the source, we recommend visiting credit card brands’ sites like Visa to see more examples you can build on.

Pos Credit Card Surcharge Signage

Convenience Fee Wording

Let’s quickly look at the difference between convenience fees and surcharges. Basically, surcharges can only be added when a customer chooses a credit card, and cannot be greater than the cost of acceptance. 

A convenience fee (often a flat dollar amount) can be added when a customer chooses a “nonstandard” payment type, like if a credit card/phone payment is used to pay a bill instead of cash, check, or ACH. Generally speaking, you can’t apply both, and convenience fees are regulated by certain credit card brands, like Mastercard, so do your research there.

If you’re using convenience fees, your sign could read something like:

“For payments made using X, we will impose a convenience fee of $X. We do not apply this fee to transactions made with X payment methods.”

Implementing Your Surcharging Program

We’ve covered a lot of ground today, so here’s a quick recap of the steps you need to take to ensure a successful transitory period.

  • Make sure your merchant account provider can accept surcharging. If not, you may need to switch vendors. Plus, make sure they have good reviews and can help you get set up.
  • Inform your card network in writing. Send written notice at least 30 days in advance. Providers with surcharging experience can help you find out who to contact and how.
  • Inform your customers in advance. While not legally required, helping them understand that you’re not profiting from surcharges can make it an easier pill for your customers to swallow. Once it’s up and running, make sure you have point-of-entry and POS signage.
  • Train your staff to effectively communicate. Make sure staff members understand everything we’ve covered in this blog, so they can answer customer questions accurately and promptly.
  • Carefully follow all legal and ethical requirements. If you want to ensure total surcharge compliance, make sure your provider is a leading expert in the field so you can leave it up to them.

Wrapping Up

Words matter, which is why how you communicate about surcharging and convenience fees to your (potential) customers matter. Whether you’re looking at it from a legal or customer experience perspective, effective communication around surcharging to help lower your costs as a small business is crucial to set yourself up for success.

If you want to start implementing surcharging to save on processing costs, but don’t know how to ensure 100% compliance, let our team at CardX by Stax be your experts so you don’t have to be. With CardX, you can start accepting credit cards at 0% cost and achieve automated compliance in no time.

Contact us to get started with CardX by Stax today.

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FAQs about Credit Card Surcharge Sign

Q: How do I notify customers of credit card surcharge?

Businesses should clearly and conspicuously notify customers of any credit card surcharges both at the point of entry and at the point of sale. This means having signs or notices in visible locations that inform customers about the surcharge. Additionally, the exact amount of the surcharge should be disclosed before the transaction is completed, ideally on the receipt or during the checkout process on an eCommerce site.

Q: Is it legal to add a credit card surcharge?

Yes, it is legal to add a credit card surcharge in many jurisdictions, but there are specific regulations that vary by country and, in the United States, by state. Merchants must also comply with the guidelines set by credit card networks (Visa, MasterCard, etc.), which often require notification to the networks and clear disclosure to customers.

Q: What is an example of a credit card surcharge?

An example of a credit card surcharge is when a business adds a fee on transactions made with a credit card to cover the cost of processing that card. So, if a customer’s total purchase is $100 and the business applies a 2% credit card surcharge, the total amount charged to the customer’s credit card would be $102.

Q: What is a card surcharge notice to customers?

A card surcharge notice to customers is a clear, visible announcement that informs customers about the additional fee that will be applied to transactions made with a credit card. This notice should include the surcharge amount or percentage and indicate that the surcharge is meant to cover the cost of credit card processing.

Q: What states is it illegal to charge a credit card surcharge fee?

At the time of writing, credit card writing is legal in all US states and territories except Massachusetts, Connecticut, and Puerto Rico.

Q: What is the difference between a surcharge and a convenience fee?

A surcharge is an additional fee charged to customers who choose to pay with a credit card, intended to cover the cost of processing the credit card payment.  Meanwhile a convenience fee can be added when a customer chooses a “nonstandard” payment type, like choosing to pay a credit card over the phone instead of ACH or check.


10 Ways SMBs Can Maximize Profit

In the world of small and medium-sized businesses (SMBs), turning a profit—and maximizing it—is the difference between success and shutting the doors. 

That said, effectively running a company is more than just having enough money to keep the business running; it’s about growing the business to the next level. 

Let’s talk about how you can do that.


  • There are a variety of ways to maximize your profitability. You should start by ensuring your pricing strategy is up to snuff.
  • Next, you should audit your overhead costs to make sure you aren’t overspending anywhere.
  • Finally, you can look into improving your products and services. This can be focused on product improvements or even customer service improvements.
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1. Optimize Your Pricing Strategy

Pricing strategy refers to the approach that businesses use to set the prices of their products or services.

There are different types of pricing strategies that businesses can use, depending on factors like their goals, target market, and competition. The most common are:

  • Cost-based pricing strategy, where you calculate the cost of making or providing the product or service and then add a markup to cover expenses and make a profit
  • Value-based pricing strategy, where you set prices based on how much value customers perceive in the product or service
  • Penetration pricing, where you set low initial prices to attract customers and gain market share, or skimming pricing, where you start with high prices and gradually lower them as demand decreases

Pricing strategy is key for SMBs because it has a big impact on how much money you make. If you set your prices too low, you might not make enough profit to cover its costs. But if prices are set too high, customers might go somewhere else. Finding the right price is like finding a sweet spot that keeps customers happy while still making a good profit.

The first thing you need to do is determine what’s the bottom price you can charge to simply cover the costs of the product you offer. Then you should do market research to figure out what other businesses are charging and what customers are willing to pay. A few tips:

  • Identify your target audience. Gather information about their demographics, preferences, and behaviors. 
  • Combine different techniques like surveys, interviews, and observation to gather a comprehensive understanding of the market. Each method provides unique insights that can help inform your decisions.
  • Study your competitors to understand their strengths, weaknesses, and strategies. This can help you identify gaps in the market and find opportunities to differentiate your offerings.

One thing to consider is dynamic pricing, which means adjusting prices based on factors like demand, time of day, or even the customer’s location.

For example, a business might offer discounts during slow times to attract more customers or raise prices during peak hours when demand is high. By being flexible with pricing, businesses can meet customers where they are at the moment, meaning you don’t lose out on possible sales OR additional profit margins.

2. Reduce Operating Costs

One smart way for SMBs to save money is by finding ways to lower their overhead costs without making their products or services worse. 

Overhead costs are things like business like rent, utilities, and supplies. Once you’ve identified your overhead costs, you can try to find cheaper options without sacrificing quality to your own products or services. For example, maybe the business can negotiate a better deal on rent or switch to a more affordable supplier for supplies. 

Perform regular audits of overhead costs to ensure that your overhead is always optimal.

Do think outside the box when reducing overhead. Getting cheaper rent is obvious, but modern technology has given us more options to reduce costs. For instance, switching to energy-efficient appliances saves money on utility bills. (Plus it’s eco-friendly!)

3. Maximize Profit by Lowering Credit Card Processing Costs

Credit card processing fees can become very expensive for SMBs. These are the fees your business pays to process non-cash payments and they can add up fast.

There are ways for SMBs to try to get better rates on these fees. 

  • One way is by negotiating with the companies that process the payments. This means asking if there’s any way to get a lower rate or better deal.
  • When choosing a payment processing solution, look for ones that offer competitive rates and lower fees—or are offering advantageous promotions.
  • Encouraging customers to use other payment methods that cost less can also save you a lot of money. This can include cash, debit cards, or ACH transactions

Finally, there is one other method available to save money on processing fees: surcharging. Surcharging means adding a small fee to credit card transactions to cover the cost of processing. While not all businesses can surcharge due to legal restrictions or customer preferences, for some, it can be an effective way to offset processing costs and keep more money in their pockets.

4. Expand Market Reach

Exploring new markets and diversifying what your business offers is a key to growth.

The most important way for businesses to expand is by going online, which massively expands your potential customer base. Going online also opens up a whole new world of marketing, like digital advertising. 

Another way to expand your market reach is to form partnerships, as they can help you explore new markets.  By partnering with other businesses or organizations, you can reach new customers that you might not be able to on your own. 

For example, a local bakery might partner with a nearby coffee shop to sell their pastries, reaching customers who might not have known about them otherwise. 

5. Increase Sales Through Up-selling and Cross-selling

Training sales teams to up-sell and cross-sell effectively increases your average order value–and thus your overall profit. 

Up-selling is adding on a better or more expensive version of what the customer is already buying. (A popular example is how fast food companies upsell burgers into a full combo meal.) Cross-selling is adding other products that go well with what the customer is buying. (For instance, when you buy a phone, adding a case is a cross-sell.) 

The key is to teach your sales people to listen to what the customer wants and needs, and then suggest things that fit those specific desires. You can run roleplay scenarios to give them practice in a low stakes environment.

You don’t have to rely solely on your sales team to suggest upsells and cross-sells. A business can formalize some upsell or cross-sell opportunities by bundling appropriate products together into a single price point. This reduces the friction in a customer’s choice.

6. Streamline Inventory Management

Efficient inventory management helps businesses save money on holding costs and have more cash to use for other things. 

One way to manage inventory efficiently is by using something called a just-in-time (JIT) inventory system. With JIT, businesses only order or make stuff when they need it, so they don’t have to keep a lot of extra stuff in stock. This can help reduce holding costs and free up cash for other things. 

Most important to improving inventory efficiency is using inventory management software. This software keeps your inventory organized and tracked, as well as offering analysis to improve your buying strategy.

7. Enhance the Customer Experience

When businesses treat customers well, it makes them want to come back again and again, providing a steady base of revenue a business can grow on. Basically, improving your customer experience and service can unlock a huge amount of profit.

One way to improve customer service is by using technology to make things easier and more personalized for customers. 

For example, businesses can use a customer relationship management system (CRM). By using a CRM system, you can make sure you always know what customers like and can give them personalized recommendations or offers. 

The data stored in your CRM can then be used in your marketing campaigns (like your email marketing) to create a personalized approach to your marketing. For instance, you can send a thank-you email to a customer right after they make a purchase.

8. Invest in Employee Training and Retention

Investing in employees is not an obvious way to improve profit margin, but when businesses take care of their employees, they tend to be happy and motivated. 

Happy and motivated teams work harder, which leads to more efficiency and sales. Plus, when employees feel valued and supported, they’re more likely to stick around, which saves on hiring costs. Research suggests that replacing an employee can cost up to 200% of the employee’s annual compensation.

One way to invest in employees is by creating a positive work environment where everyone feels respected and appreciated. Businesses can do this by listening to employees’ ideas and concerns, recognizing their hard work, and providing opportunities for growth and advancement. 

You should also offer effective training programs. By teaching employees new skills, businesses can improve productivity and performance. Plus, when employees feel confident and capable, they’re more likely to take initiative and come up with new ideas to help the business succeed.

9. Leverage Data Analytics

Using data analytics gives businesses a way to understand what’s going on and make decisions based on facts instead of just guessing. For example, data analytics can help you figure out things like which products are selling the best, what customers like and don’t like, and what’s happening in the market. 

There are lots of tools businesses can use for data analytics, including: 

  • Spreadsheets or specialized software to track sales and see which products are selling well and which ones aren’t
  • Website analytics or customer surveys help businesses understand things like what customers are looking at, how long they’re staying, and what makes them buy. 
  • Industry reports or social media monitoring help businesses see what’s happening in the market and spot opportunities to take advantage of trends or changes. 

10. Focus on High-Profit Products and Services

Ultimately, you should also focus your efforts on high-profit products or services because these provide your business with the most bang for your effort.

Once you’ve identified the high-profit items, give them some extra love and attention. This could mean promoting them more to customers, like putting them at the front of the store or featuring them in ads. 

Businesses can also prioritize these items by focusing on making them even better or finding ways to sell more of them. For example, they could offer special deals or bundles that include the high-profit items, or they could train their salespeople to recommend them to customers. 


There are many ways for SMBs to maximize their profitability, from optimizing their overhead costs to improving product offerings. You should routinely find new creative ways to improve your bottom line, so don’t be afraid to try something totally new.

And if you’re looking for low-hanging fruit, a good place to start is payment processing. CardX by Stax enables you to maximize profitability through an automated and fully compliant surcharging program. That way, you can pass the cost of credit card transactions directly to customers, reducing the burden of payment processing fees and enhancing your overall profit margins

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FAQs about How to Maximize Profit

Q: Why is it important to maximize profit?

Maximizing profit ensures business sustainability, enables growth and expansion, and supports investment in innovation. It enhances competitiveness, attracts investors, and provides resources for facing economic challenges, securing the company’s long-term success and stability.

Q: What are the basic strategies to maximize profit?

The basic strategies include increasing revenue (through higher sales volume or prices), reducing costs (by optimizing operations and cutting unnecessary expenses), diversifying income streams, and improving product or service quality to attract and retain customers.

Q: What role does cost management play in maximizing profit?

Cost management is crucial as it directly impacts the bottom line. Efficient cost management involves controlling and reducing operational costs, negotiating with suppliers for better rates, leveraging technology for efficiency, and minimizing waste to ensure that the business operates as efficiently as possible.

Q: How important is customer satisfaction when maximizing profit?

Customer satisfaction is extremely important because satisfied customers are more likely to be repeat customers and recommend your business to others, leading to increased sales and reduced marketing costs. Investing in quality customer service and product excellence can drive customer loyalty and contribute significantly to profit maximization.

Q: How does your pricing strategy affect profitability?

Optimizing your pricing can help you maximize profit. Your prices should reflect the value the product or service provides to customers, cover costs, and remain competitive in the market. Dynamic pricing, cost-plus pricing, and value-based pricing are strategies that businesses can explore to optimize profits

How to Successfully Implement a Credit Card Surcharge Program In Your Business

Passing credit card fees onto customers has been hotly debated, but most of the country has agreed: Credit card surcharge should be available to merchants. Even if the consensus is out that it’s okay for merchants to not incur costly transaction fees if accepting credit card payments, it can be difficult to understand how to collect surcharge fees from your customers and retain your customer base.

If you’re not sure where to start, keep reading to find out the benefits of implementing surcharging, how to ensure legal compliance, and how you can use technology for smooth sailing in the surcharging landscape. 


  • Surcharging allows merchants to pass on credit card fees. Customers who want to use their credit card have to pay an additional fee covering the processing costs. It makes it easier for merchants to make the switch to accepting non-cash payment methods like credit cards or contactless payments, which are often seen as more convenient for customers, but can come at a steep price.
  • It’s important to consider any drawbacks or consequences as it relates to your customers before implementing (like detracting from customer satisfaction or loyalty), so if you’re working in an extremely price-sensitive market, carefully think of the different possible scenarios on how surcharging could play out.
  • If you opt to introduce surcharging, you have to pay attention to the legal limits of this scheme, as these can change from state to state. Note that surcharging cannot be used in any way to make a profit; it can only be used to cover the cost of your processing fee. 

As of the time of publication, this practice is allowed in all but two states; Connecticut and Massachusetts are still working to turn the tides. Everywhere else, surcharging is officially on the menu.

What is Credit Card Surcharging?

For anyone new to the term, surcharging is a payment processing option allowing merchants to pass on credit card fees. Customers who want to use their credit card have to pay an additional fee covering the processing costs.

You may have come across no-fee credit card processing. This is typically surcharging wrapped up in a packaged service—usually with an increased merchant fee.

Setting up a surcharging program can be a bit complicated, but once done, it runs automatically. Point of sale terminals are reprogrammed (or pre-programmed) to add the appropriate fee without manual input from merchants.

Surcharge rules do differ from state to state. There are federal laws and state laws that need to be followed to implement surcharging legally.

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Why Should Merchants Consider Implementing a Surcharging Program?

Credit card processing fees take a significant chunk out of your bottom line. Businesses of all sizes feel the brunt of it. But small businesses, in particular, can be crushed by these fees.

To be competitive, you have to accept card transactions. There’s no way around it. The only choice some merchants really have is adding surcharge fees instead of fully shouldering the processing costs.

Customers can choose to pay the fees or select an alternative form of payment. Cash payment incentives are a popular alternative.

What are the Benefits of Using a Surcharging Program for Merchants? 

There are several reasons why you should consider implementing surcharging, especially if you’re a small business owner. There’s no denying that it’s an ideal strategy to help maximize your revenue and improve your cash flow, as you’ll be able to save upwards of thousands of dollars via processing fees each year. If you’re running a business with thin margins, reducing your overhead and fees wherever possible can be absolutely critical.

Credit card surcharging makes it easier for merchants to make the switch to accepting non-cash payment methods like credit cards or contactless payments, which are often seen as more convenient for customers, but can come at a steep price. Since the costs are relatively miniscule as a one-time purchase for consumers, chances are high that they won’t see it as an inconvenience and shop elsewhere (as long as you’re upfront about the fees!) As long as you apply the rate consistently across card brands, surcharging can provide a wealth of benefits to an (e)Commerce merchant. 

Can Credit Card Surcharges Be Passed to Customers Using a Debit Card?

No. Surcharge fees cannot be added to debit card transactions or prepaid cards. This makes debit cards one of the alternative forms of payment your customers could select. Sure, it does mean you have to pay the debit card processing fees to your payment provider. However, debit card processing fees are capped, and the interchange rates are less than credit card processing rates.

What’s the Difference Between Convenience Fees and Credit Card Surcharge Fees?

As we now know, credit card surcharges are fees added to the customer’s bill to cover the credit card processing fees. They apply exclusively to credit card transactions.

Convenience fees are a different approach entirely. They relate to fees that can be added to the purchase customers pay through “alternative” methods.

Services businesses that typically accept payments in person may have some cases where clients want to pay over the phone. As this is a card-not-present transaction, it incurs extra fees. The same is true for retailers or cinemas that also transact primarily in person. When transactions are put through online, that business may be eligible to charge a convenience fee, as it is outside of the typical payment method.

Like surcharging, credit card companies and state laws determine which businesses, in which states, can apply convenience fees.

How Does Surcharging Compare to Other Fee Management Strategies?

Surcharging has both pros and cons, so if you’re on the fence about implementing it, here are the other main fee management strategies out there (besides flat-out raising prices!), along with our thoughts on how effective they might be. 

  • Cash discounts: If customers pay by cash, businesses don’t have to worry about credit card processing fees at all, which can help save businesses a significant amount of money in the long run. However, with non-cash payments constantly on the rise, most businesses will lose out on revenue if they only take cash. While you can offer a cash discount as an incentive, solely relying on this to reduce your fees is likely to backfire. 
  • Alternative payment methods: Payment methods like eChecks, digital wallets, and ACH often come with lower processing fees than credit cards. However, these aren’t popular payment methods for all small businesses, especially for brick-and-mortar locations.

Minimum purchase requirements: By setting a minimum amount to be purchased when using credit cards, smaller businesses can help to minimize the cost of processing fees on smaller transactions. This can be a great middle ground that allows you to accept credit cards without high expenses.

What are the Steps Involved in Starting and Running a Credit Card Surcharging Program?

Setting up a credit card surcharging program requires a reasonable amount of work. If you endeavor to do it all yourself, you have to follow these steps carefully. Also, be sure to check your local rules and follow them.

Plus, it’s important to consider any drawbacks or consequences as it relates to your customers before implementing (like detracting from customer satisfaction or loyalty), so if you’re working in an extremely price-sensitive market, carefully think of the different possible scenarios on how surcharging could play out.

If you’re working with a payment processing provider like Stax, they can take care of much of the following. Still, there are best practices that every merchant should consider to keep their customer relationships strong as they transition.

Step by step, here is all you need to do to set up your credit card surcharging program:

1. Explore your options with your merchant service provider

Not all merchant account providers have the capabilities or services for surcharging. This means you may have to switch vendors to set up your surcharging program.

Even if they offer a surcharging service, a review is wise to ensure you’re getting the best solution. If you have to swap, consider a provider like Stax that helps you with the setup and offers flexible solutions.

2. Notify the appropriate people

When you set up surcharging, most card networks need written notice at least 30 days before its introduction.

The easiest way to approach this is to call your merchant account provider and ask who you need to notify. Providers with strong surcharging solutions will have all the necessary information on hand to save you searching online.

3. Plan your communication with customers

There is no legal requirement for you to tell customers ahead of time that you plan to introduce surcharging. But it is advised. Communicating this intention to customers before it’s in place shows respect. It is a window where customers can feel grateful they don’t have to pay fees just yet. It also gives them time to consider why you would introduce this. Basically, it helps to build empathy with your motives. 

By making it clear that you’re not profiting off of surcharging and perhaps offering other alternatives to surcharging (more on that in the FAQ below), you can have a smooth transition into implementing surcharging.

Once surcharging is in place, you’re legally obligated to post surcharging signage. These go at the entrance and the register and must be clearly visible. In this disclaimer, you need to highlight the rate charged and communicate that it is not more than the processing fees. You also can’t use complicated legalese to hide the fact that you’re implementing surcharging: it must be easy to read and understand. Online businesses must have this notification on the checkout page.

If you plan to set this up yourself, you need to call Visa or Mastercard to request this signage.

4. Program your terminal

Surcharging laws require fees to be listed as separate line items on the cardholder’s invoice and the network authorization request and settlement. This needs to be the dollar amount. Not just the percentage added to the transaction amount. For this, your point of sale terminal will need to be reprogrammed, or you may need a new one with this setup.

Your merchant account provider is again your best resource to learn about this. Here at Stax, we can reprogram existing terminals and also have pre-programmed options.

Any provider programming your terminal will know the rules for your region. Invoices will automatically list this extra line item. Your terminal will also be programmed to differentiate between credit and debit cards. Even if credit is selected, no debit cards will incur fees.

Surcharging State Law and Card Brands FAQs

If you opt to introduce surcharging, you have to pay attention to the legal limits of this scheme. These can change state by state.

What is a credit card surcharge program?

A credit card surcharge program allows merchants to add a small fee to a customer’s bill when they use a credit card for payment. This fee is meant to cover the cost of processing the credit card transaction, which merchants typically pay to credit card processors or banks. The surcharge program must comply with the credit card networks’ rules and applicable laws.

What is a credit card surcharge for?

The primary purpose of a credit card surcharge is to offset the merchant’s cost associated with processing credit card transactions. These costs can include interchange fees, assessment fees, and other charges that credit card companies impose on merchants for each credit card payment.

Who benefits from credit card surcharge?

Both merchants and, indirectly, consumers can benefit from a credit card surcharge. Merchants benefit directly by recouping the costs of processing credit card payments, potentially improving their profit margins. Consumers can benefit indirectly if merchants are able to lower prices or avoid increasing prices due to the offset of transaction costs.

Q: Can you pass on credit card fees to customers?

Yes, merchants can pass on credit card fees to customers through a surcharge, provided they comply with the rules set by credit card networks (such as Visa, MasterCard) and applicable laws. Merchants must clearly disclose the surcharge to customers before the transaction is completed.

Q: What is the maximum credit card surcharge?

The maximum credit card surcharge is typically capped at the cost of the transaction to the merchant or a percentage defined by credit card networks, usually around 3%. This cap is designed to prevent merchants from profiting from the surcharge and to keep fees reasonable for consumers.

Q: What states is it illegal to charge a credit card processing fee?

At the time of writing, surcharging is legal in all US states accept Massachusetts, Connecticut, and Puerto Rico 

Q: What is the difference between a surcharge and a processing fee?

A surcharge is a fee added specifically for the use of a credit card, intended to cover the cost of processing that credit card payment. A processing fee, on the other hand, can refer more broadly to any fee charged by a payment processor to handle transactions, not necessarily passed directly to consumers. Surcharges are usually disclosed and charged to consumers choosing to pay with a credit card, while processing fees are typically costs borne by the merchant for facilitating electronic payments.

What are the common surcharging rules?

Across all states, there is a limit on how much can be added as a surcharge on credit card purchases. Colorado is the outlier, with a 2% cap. The remaining states are capped at 3%. However, surcharging cannot be used in any way to make a profit; it can only be used to cover the cost of your processing fee. 

It can also not be used on debit card transactions. That means even if you have a client that completes a transaction using a signature debit card (meaning that it’s processed like a credit card transaction) you legally cannot implement credit card surcharging.

Visa and Mastercard offer two different surcharging options: brand-level surcharges or product-level surcharges. You cannot do both.

Brand-level surcharges would have all Visa and Mastercard branded credit cards charged at the same surcharge rate. It applies across the brand.

Product-level surcharges apply to specific types of Visa or Mastercard credit cards. For example, you may wish to apply product-level surcharging to Visa Signature or World Elite MasterCard.

In short, before you implement surcharge fees, it’s important to carefully review federal and state laws to ensure strict adherence with all regulatory requirements.

Still confused on how to best insure compliance with all requirements? Here’s a checklist to keep in mind when implementing surcharging: 

  • Notify major credit card institutions in writing when you intend to start surcharging.
  • Clearly disclose the fees before a transaction is made in simple language (advance notice is not legally required, but strongly recommended).
  • Surcharges must be listed on the receipt, and should be displayed both as a percentage and dollar amount. 
  • You cannot charge over 4%, nor can you make a profit off of surcharging–you must go with whatever amount is lower. 
  • You cannot implement surcharges for debit cards.

To best simplify compliance, use a legal payment processor like Stax’s CardX to ensure strict adherence to all credit card surcharge laws.

Planning to Implement Credit Card Surcharging?

With the forced shift to cashless payments in recent years, the case for surcharging has gained popularity. Switching to card transactions may have been convenient for customers, but small businesses really felt the sting.

That’s why surcharging—when implemented correctly and ethically—is a practice worth considering. By using PCI-compliant software and hardware, you can easily navigate the complex landscape of credit card surcharging with confidence. But how can you best use technology to streamline your payment processing solutions?

With CardX by Stax, we make it seamless with 100% compliance with state and federal laws. Plus, we offer automated credit card type detection to instantly ensure the correct rate for eligible transactions (no accidental surcharges for debit cards!), and 0% cost credit card surcharging, we make it easy to save on credit card processing in no time. And thanks to our powerful data and reporting dashboard updated in real-time, making informed decisions to sustainably grow your business has never been easier.

If you’re looking to save on credit card fees through surcharging, get in touch with Stax—we’ll help you get up and running with the right program for your business.

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Ultimate Guide to Surcharges: What is a Surcharge and How Does It Work

Every transaction has a cost. Without strategies in place, disbursements can chip away at your hard-earned bottom line. 

This is how surcharges have become a staple solution, and they’ve helped businesses stay afloat in the sea of overheads. That’s why understanding surcharging—including its definitions, types, calculating methods, and best practices—can help you incorporate surcharging into your operations. 

Let’s dive in.


  • Surcharges are additional fees consumers pay on top of the base price of goods or services. They can be variable or fixed, depending on company policy, industry standards, and local regulations.
  • Surcharges are diverse in form and purpose to serve businesses across sectors. Several types include credit card, fuel, service, payment processing, peak-time, environmental, regulatory, and minimum usage surcharges.
  • Cost recovery, industry standards, regulatory compliance, and consumer sensitivity are key factors to consider when calculating surcharges. Various calculation methods, such as percentage-based, flat fees, tiered pricing, and time-based surcharges, help optimize pricing.
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What are Surcharges?

Surcharges are additional fees consumers pay on top of the base price of goods or services. They can be variable or fixed, depending on company policy, industry standards, and local regulations.

Businesses initially collect surcharges to recover additional costs incurred during transactions. Over time, they’ve evolved into strategic means, addressing industry-specific challenges and adapting to economic shifts.

Types of Surcharges

Surcharge fees come in many forms, tailored to address specific needs within different sectors. Here are some examples of surcharges and how businesses employ them to maintain sustainable operations.

  • Credit card surcharge. This surcharge covers the cost of processing credit card payments via platforms like Visa, Mastercard, and American Express. Businesses apply it to offset e-payment processing costs for transactions where customers pay with credit cards rather than cash.
  • Fuel surcharge. Common in transportation and logistics, fuel surcharges adjust for fluctuations in fuel prices. Airlines, shipping companies, and freight carriers leverage this extra fee to cope with the unpredictable nature of fuel costs.
  • Service surcharge. This allows businesses to adapt to specific circumstances, enhancing their ability to provide specialized services. Examples include late-night service surcharges in taxis or special handling services in shipping.
  • Payment processing surcharge. Similar to credit card surcharges, this fee covers card processing expenses. The only distinction is that it encompasses credit and debit card transactions for a wider consumer base.
  • Peak time surcharge. Businesses apply this during high-demand periods, such as rush hour or holiday seasons. It helps them meet the increased demand with proportional resource allocation, preventing strain on operational capabilities.
  • Environmental surcharge. This surcharge covers costs associated with adopting and maintaining government-mandated sustainable practices. This could include upgrading equipment, implementing waste recycling systems, or introducing energy-efficient processes. 
  • Regulatory surcharge. Governments impose regulations to protect the public’s interests and promote fair corporate practices. Companies, particularly those in the healthcare, transportation, and food industries, levy surcharges to meet these compliance standards.
  • Minimum usage surcharge. When service usage falls below a certain threshold, it ensures businesses can cover fixed costs even with lower usage. This minimum usage fee can often be found on utility and telecommunications bills.

In the same way businesses tailor these charges to suit their needs, they also crunch the numbers on surcharges in their own way. Let’s discuss what factors affect these calculations and how various industries do it. 

How to Calculate Surcharges

Calculating surcharges varies across industries and depends on several influencing factors. Consider these factors to arrive at fair and transparent surcharge rates. 

  • Cost Recovery. Businesses often impose surcharges to recover costs associated with specific services or transactions. These processing fees or additional charges are transferred, in part, to the customers engaging in those activities. 
  • Industry Standards. By understanding industry norms, you align your surcharge practices with market expectations. Healthcare providers, for instance, may factor in compliance costs spent on cybersecurity measures, staff training, regular audits, and legal consultations to ensure adherence to health information privacy regulations. 
  • Regulatory Compliance. Be aware of restrictions and guidelines in your business jurisdictions to avoid legal repercussions. Some states allow surcharging but limit it to a certain dollar amount, while others outright forbid it. 
  • Consumer Sensitivity. Implement surcharges that consumers perceive as fair and reasonable. This factor will help you ​​strike a balance between profitability and customer satisfaction. 

Now that we know what factors to consider, let’s look at the diverse methods you can employ to calculate surcharges.

Surcharging calculation methods

Calculation methods determine the apt surcharge payments for different operations and circumstances. Know what works best for your business to optimize your pricing strategy without alienating customers. 

  • Percentage-Based. Some businesses opt for a percentage-based surcharge, where a fixed percentage of the customer’s bills is added. It promotes transparency and fairness, making it the most widely adopted method for credit card surcharges.
  • Flat Fee. The flat fee approach charges a fixed amount irrespective of the transaction value. It’s often used in prepaid services like mobile top-ups and gift card purchases.
  • Tiered Pricing. Businesses may employ tiered pricing structures based on transaction amounts. The higher the transaction amount, the lower the percentage surcharge. It’s ideal for encouraging larger purchases.
  • Time-Based. Some surcharges, such as peak-time surcharges, are time-dependent. Identify peak demand periods first before implementing a pricing strategy. Adjust it as per real-time demand patterns to maximize your resource allocation. Pro-Tip: Offer incentives for choosing off-peak times (i.e., reduced surcharges).

Implement a system for regular surcharge monitoring, and be open to tweaking your pricing strategy based on customer feedback and market trends. Flexibility goes a long way.

The Role of Surcharges in Pricing

Analyzing how similar businesses structure their surcharges offers valuable insights into effective pricing strategies. Cost allocation in pricing becomes more transparent—i.e., expenses tied to specific services are fairly distributed among consumers.

Only those who opt for the convenience or service incurring the surcharge are bound to pay. Thus, you won’t have to increase the original price for all customers. This targeted cost-sharing strategy can help foster positive consumer relationships.

In terms of competitive positioning, understanding how competitors implement surcharges becomes a strategic advantage. Benchmark against industry peers. What calculation methods do they employ? How do customers respond to their practices?

All these insights can help you streamline your pricing structures and surcharge policies to influence consumer purchasing decisions.

Legal and Ethical Considerations

When you opt to surcharge, you’re required to operate within the bounds of the law and maintain ethical practices. Keep these compliance considerations in mind.

  • State and federal laws. Surcharging laws vary by jurisdiction. Be sure to comply with state and federal regulations, considering the legality and restrictions on surcharge amounts.
  • Consumer protection laws. Review legal frameworks to protect consumers from unfair surcharging practices. It’s best to collaborate with legal experts to align your approach with the latest legal interpretations and best practices.
  • Ethical considerations. How fair and equitable are your surcharging practices? Put efforts into disclosing surcharge fees and communicating them to consumers.

With these in mind, you’re now ready to manage surcharges in your business operations. Learn more about implementation and communication practices in the next section.

Managing Surcharges as a Business

Transparent communication is the first step to implementing surcharges. Lay out surcharge details during checkout and maintain consistency across all customer touchpoints. On invoices, present it as a separate line item to provide a clear breakdown.

Everyone on your team should be in the loop. Educate your staff to inform consumers about surcharges, address inquiries, and provide responsive support. Keep your phone number readily available for any questions or concerns.

Seamless surcharge implementation demands your time and resources. If you find yourself short on either, consider tools like CardX by Stax, a platform that offers credit card surcharging solutions. It eliminates compliance headaches and automates processes without draining your budget.

Whether online, in-office, or in-person, CardX by Stax’s turnkey solution implements surcharging effortlessly. Find out how we’ve revolutionized businesses like yours.

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FAQs about Surcharges

Q: What are surcharges?

Surcharges are additional fees or charges added to the cost of a product or service. They are often imposed to cover specific costs or as a response to certain conditions, such as increased operational expenses, credit card processing fees, or special handling requirements.

Q: Are surcharges illegal?

That depends on the type of surcharge and the region where they’re being implemented.  In some regions, surcharges are legal and regulated, while in others they may be restricted or prohibited.

Q: What does surcharges mean in payment processing?

In payment processing, a surcharge is an extra fee charged to customers who choose to pay with a credit card. This fee is typically used to cover the cost incurred by the merchant for processing credit card transactions, which can include interchange fees, assessment fees, and other processing costs.

Q: Who needs to pay a surcharge?

Surcharges are typically paid by the customer who is purchasing goods or services. The surcharge is added to the regular price of the product or service, and the customer is informed of this additional fee either at the point of sale or through clearly stated policies.

Q: What states do not allow credit card surcharges?

In the United States, credit card surcharges are legal in all 50 states and territories except Massachusetts, Connecticut, and Puerto Rico. 


What Is a Credit Card Surcharge?

Credit cards remain a favored way of making payments among customers. Purchase volumes through credit cards jumped 51% between 2015 and 2021. However, the idea of applying a credit card surcharge to offset the processing cost of credit cards has always been a hotly debated topic.

Simply put, a surcharge amount is an extra fee that some merchants choose to levy on customers to cover the costs of processing credit card payments. The rate varies between 1.3 to 3.5% in most US states.

Before 2013 though, credit card brands like Visa and Mastercard didn’t allow surcharging because they didn’t want to discourage customers from using credit cards as a preferred mode of payment. However, after a 2013 lawsuit, card companies started allowing businesses to charge customers a fee for using credit cards. This is now known as a “merchant surcharge” or “checkout fee.”

In this article, we’ll explore what a credit card surcharge is and why it should matter to small business owners.


  • A credit card surcharge is an additional fee tacked on to the purchase amount when a customer pays via a credit card. It is added at the point of sale and depends on the total amount of a transaction and the cap set by credit card companies.
  • The simple benefit of credit card surcharges for merchants is that they no longer have to bear the full brunt of processing costs. With surcharging, they can transfer a significant portion of it to their customers.
  • Once you have ensured that surcharges are permissible by law in your state, you must meet card brand guidelines for compliance. It is also important to inform your customers—both in-store and online—about credit card surcharges on any purchases they might make. 

What Is a Credit Card Surcharge?

A credit card surcharge is an additional fee tacked on to the purchase amount when a customer pays via a credit card. It is added at the point of sale and depends on the total amount of a transaction and the cap set by credit card companies.

The state law, however, determines the final percentage. By using a credit card surcharge, the transaction cost shifts from merchants to customers. However, the cost gets added to the final dollar amount which may make the sale less lucrative.

Surcharge vs Convenience Fee

Even before 2013, businesses used to charge convenience fees to customers on credit card transactions in certain situations. This was meant for the “convenience” of paying by credit card over all other forms of payment. Note that a convenience fee is a flat rate rather than a percentage.

In contrast, a surcharge is a percentage-based credit card processing fee. This is true for all credit card transactions and is charged by all credit card companies. However, card companies as well as federal and state laws put limits on surcharges. These apply to all the four leading card brands—Discover, American Express, Visa, and Mastercard.

Surcharge vs Cash Discount

When customers pay with cash, some merchants may offer a price reduction which is called a cash discount.

A credit card surcharge on the other hand is the additional percentage that a customer pays for a product for making the payment through a credit card.

In case of a cash discount, the customer pays less than the original listed amount. While, in case of a surcharge, the customer pays more than the listed price. Any extra amount charged on a product, no matter what name a payment processor calls it, is a surcharge.

While this may seem like a pretty straightforward and minor difference, it is necessary to consider it for legality and compliance purposes. Getting it wrong could mean risking a fine or penalty.

Surcharge vs Interchange Fee

The interchange fee is the amount a merchant pays to the card-issuing bank whenever a customer makes a purchase using a credit or debit card. This is to cover the risk of fraud, bad debts, handling costs of the money, and the merchant’s bank account. Interchange rates depend on factors such as card type, business size, industry, and payment methods such as POS, card-not-present, mail-order-telephone-order, etc.

This is different from the surcharge that customers pay when they purchase via credit cards. This enables merchants to process credit card payments at no cost to themselves.

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Legal and Compliance Aspects

By now, you might have understood that surcharging is a matter of law and public policy. This means surcharge rules and regulations vary by state and country. The first thing you need to check—as a merchant—is whether your state or federal laws allow you to surcharge your customers. As such, surcharging has been a question of intense debate, and class action lawsuits have been piling up in many states on the matter.

Variations in laws by country and state

Here’s a quick snapshot of how surcharging laws currently vary in different states and countries.

  • There are several US states where anti-surcharge laws are on the books but these are either unenforceable at present or being challenged in courts. These states are Utah, Texas, and California.
  • Hawaii, Illinois, New Jersey, and Rhode Island, on the other hand, are considering or have pending laws to make surcharging illegal.
  • In sum, surcharging is currently legal in all US states and territories except Massachusetts, Connecticut, and Puerto Rico.
  • The only thing you need to remember is that you can surcharge credit card transactions only in the states where it is permitted by law at present.
  • Globally, surcharging laws vary from country to country. It is legal in several major economies such as Canada, UK, and Australia. On the other hand, the EU allows an interchange fee of 0.3% on credit cards but has banned surcharges.

Requirements for compliance

Once you have ensured that surcharges are permissible by law in your state, you must also meet the guidelines for compliance.

  1. You must notify your services provider and the credit card network about your intent to impose surcharges at least 30 days before.
  2. You are not allowed to profit from surcharges but only cover your baseline costs. Hence you must follow the caps strictly.
  3. Transparency in surcharging (along with its percentage) when making credit card purchases is a must.
  4. For Mastercard and Visa cards, you can either apply surcharges at brand level or product level but not both.

Implementation of Credit Card Surcharges

Once you have ensured that your state allows surcharging and that it is the right move for your business, follow these steps to get started:

  1. Provide notice to card companies about your intent to surcharge. Different card issuers have different processes, but you’ll most likely have to fill out a surcharging form 30 days before you begin to surcharge.
  2. Next, inform your acquiring bank about your intent, again, 30 days in advance.
  3. Decide whether to surcharge all cards or only some specific ones such as reward cards or prepaid cards. Also, decide on the percentage you wish to charge, below or equal to the cap.
  4. Notify customers that they will be surcharged using posts or signs. Also, disclose the percentage of surcharges. Online businesses must display the charges on the first page of their website.
  5. Re-program your payment gateway to record surcharges as per the requirements of card networks.
  6. Display the surcharge as a separate line item on your receipts.

Best practices for transparency

It is important to inform customers visiting in person about credit card surcharges on any purchases they might make. As a retailer, the recommended spots for full disclosure and transparency are the point(s) of entry at your store and the POS.

Mention the rates you intend to charge and that it doesn’t exceed your processing fees. Visa for one, offers a resource page that includes downloadable signage that merchants can use. While these may not be useful for other card brands, these could still act as useful templates for your signage.

Impact on Business

Surcharging, if allowed by specific rules in your state or country, is an important business decision. Make sure you have thought through it before you begin.


The simple benefit of credit card surcharges for merchants is that they no longer have to bear the full brunt of processing costs. With surcharging, they can transfer a significant portion of it to their customers.

  • Surcharge fees can be a significant support to merchants to cover their baseline costs. Although it is impossible to eliminate your entire transaction costs, the additional fee can still help you cover a substantial portion.
  • Surcharging may enable you to lower your product prices if your processing costs are included in your pricing. This will reduce the final dollar amount your customers have to pay and make your products more competitive.
  • In industries with thin profit margins, surcharging can be especially helpful to reduce processing costs significantly.


  • If the payment method most of your customers use is a credit card, surcharging might make your products more expensive, putting a large customer base at risk.
  • If you operate in a highly competitive marketplace, you could start bleeding customers to your rivals selling at lower prices.

While these disadvantages are valid, by using surcharging tactically, businesses can stand to benefit overall.

How surcharges can affect customer behavior

Surcharging has gained tremendous popularity as courts and government agencies across the US have removed the ban on it. But business-wise, whether surcharging will benefit you or not, is for you to decide.

If you have a well-established customer base and operate in a not-so-competitive market, surcharging won’t have much impact. After all, paying by credit card has benefits that often outweigh the disadvantage of an additional fee. But if you have lots of competition next door, surcharging could erode your customer base and affect the long-term standing of your business.

Success with surcharging

If you’ve decided that surcharging might be the way to go for your business, partnering with CardX can help you implement it quickly and conveniently. With CardX’s integrated online checkout solution, Lightbox, several companies have achieved remarkable success thanks to its seamless surcharging and payment acceptance.  

By integrating Click-to-Pay, CardX makes it extremely quick and easy for customers to check out as guest buyers which benefits merchants and cardholders alike. With a highly secure tokenization mechanism and features to reduce cart abandonment, this has been received very well by merchants and customers across the board.

Final Words

As is clear, surcharging lies in a gray zone and hence requires nuanced decision-making on your part. It is one payment processing decision that you need to properly think through. Surcharging can have long-term implications for the competitiveness of your products and services especially if your customers prefer credit card payments. However, if you are well informed about all aspects of surcharging, you could end up using it to your advantage.

Before leaping in, make sure you know all the legal aspects and surcharge rules, the step-by-step process, recommendations for transparency, and the pros and cons for your business. While you cannot profit from surcharging, using it selectively and tactically can reduce your transaction costs and improve your bottom line.

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Quick FAQs about Credit Card Surcharge

Q: What is a credit card surcharge?

A credit card surcharge, also known as a “checkout fee”, is charged to a customer for the use of a credit card. Surcharging provides the ability for merchants to process credit cards at zero percent cost to themselves. Instead, the credit card interchange fees are passed directly to the customer at the time of payment.

Q: How can credit card surcharges benefit businesses?

Credit card surcharges can help businesses to cover the credit card processing costs and pass it directly to the processing company. This allows a merchant to offer greater flexibility in collecting payments based on customer preferences without the need to take on the cost themselves.

Q: Are credit card surcharges legal?

In 2017, a Supreme Court ruling protected surcharges as a form of free speech from merchants. As of the time of publication, there are only 2 (Connecticut and Massachusetts) states and Puerto Rico with laws that prohibit merchants from charging surcharge fees. However, companies also need to account for the guidelines set by each card network.

Q: What should businesses consider before choosing to surcharge?

Businesses should consider the potential impact of credit card surcharges on the customer experience, what industry competitors might be doing, what information must be disclosed to customers and how, and the cost of credit cards and other forms of payment.

Q: How does surcharging work and what needs to be considered?

Many businesses opt to avoid using cost-saving surcharging strategies due to assumed complexity. This is from the very specific rules and expectations set by VISA, Mastercard, American Express, and Discover to ensure customers are protected from bad payment practices, in addition to individual state regulations.

Q: How can the credit card processor enable surcharging?

Not all payment processing platforms are built equally. While more payment processing providers are starting to offer merchants the ability to surcharge, how and to what extent can make a big difference in how easy it will be for merchants to start adding a surcharge to credit transactions.

Q: What benefits can software companies get from enabling credit card surcharges?

As the growth of adding payment features within Software platforms continues to grow, so do the opportunities that come with expanding payment options for their software users. Adding additional surcharge payment functions into their software is yet another way to add value for their sub-merchants.

Q: What services does Stax offer in relation to credit card surcharges?

Stax offers easy enablement, automated compliance, a data and reporting dashboard, transparency, 100% compliance and customer satisfaction, dedicated support, and top-level security in relation to credit card surcharges.


Understanding Payment Processing Compliance When Implementing Credit Card Surcharging

Are you struggling with resource constraints caused by soaring credit card processing costs? Is your business experiencing an increase in complaints from customers about hidden fees or unexpected charges?

No surprise there.

Swipe fees have doubled in a decade and increased by 20% since 2022. Credit card surcharging can help offset these expenses, but it can be tricky. Failure to comply with its policy frameworks can have severe consequences—legally and financially.

Learn how to achieve payment processing compliance when surcharging to improve your company’s financial stability and reputation. We’ll start with the basics, go into specific requirements, and finally to real-world case studies.


  • Credit card surcharging involves adding a fee to transactions with credit card payments, offsetting processing costs. It offers benefits, such as passing interchange fees to users, boosting profit margins, and encouraging alternative payment methods.
  • Surcharging involves understanding federal laws, state-specific restrictions, and international regulations. PCI DSS compliance, a global framework, mandates specific requirements and best practices for maintaining credit card data security.
  • Implementing surcharging involves analyzing pricing strategy impact, communicating policies effectively to customers, and reviewing technical considerations, including cybersecurity measures. A holistic approach ensures successful integration into business operations.

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Understanding Credit Card Surcharging

Surcharging is when you charge a fee on transactions where customers opt for credit card payments. It offsets the card processing costs, transferring the financial obligation to the latter.

To put it simply, it’s a matter of compromise. You offer flexible card payment options without incurring uncontrollably large fees. Consumers pay more for the convenience. 

Here are more reasons to implement surcharging and optimize your payment processing strategies.

  • Interchange fee management. Interchange fees are fees your bank (acquirer) pays to the cardholder’s bank (issuer) in a credit card transaction. With surcharging, you pass these high interchange fees directly to the end-users. It relieves you from directly handling payments and dealing with the tedious administrative hassle.
  • Boosting Profit Margins. Surcharging helps increase your net profit by keeping your goods and/or services competitive in pricing. You don’t have to absorb 100% of the expense and raise base prices to maintain a healthy bottom line. 
  • Encouraging Alternative Payment Methods. Surcharging incentivizes customers to use alternative, lower-cost payment methods. The more they use cash payment, the lower your overall processing expenses.

In the following sections, we’ll delve into the legal framework, compliance standards, and best practices to navigate the complexities of surcharging.

Legal and Regulatory Framework

Compliance ensures secure and transparent financial transactions, but nuances exist that businesses must grasp. 

Be sure to understand federal laws, state regulations, and international standards to sidestep potential legal issues.

Federal regulations

Transparency and disclosure are the two most important elements of surcharging regulations in the U.S. Businesses must ensure clear communication with customers regarding any surcharges. 

They must also follow regulations, such as the Electronic Fund Transfer Act, mandating fee disclosure for electronic transactions.

Follow these tips to stick to federal regulations:

  • Refer to federal regulations when drafting internal policies and procedures.
  • Subscribe to regulatory updates or newsletters from relevant federal authorities, such as the PCI Security Standards Council (​​more on this later)​​.
  • Conduct regular internal audits—preferably on an annual or biannual basis—to assess ongoing compliance with federal regulations.

State-specific laws and restrictions

Each state has an independent authority to regulate surcharging within its borders. In the United States, surcharging is legal in all states and territories except Massachusetts, Connecticut, and Puerto Rico. 

Here’s how you adhere to state-specific laws and restrictions:

  • Train regional or state-specific teams on the applicable surcharging laws in their areas.
  • Surcharging restrictions for multi-location businesses can get confusing. ​​In case of ambiguities, don’t hesitate to consult with state regulators.
  • Have your legal experts review any changes affecting specific operations in each state to avoid non-compliance.

International regulations

Cross-border transactions involving parties from different countries are subject to international regulations.

For instance, eCommerce platforms engaging with global customers must adhere to international standards. Utilizing global payment networks (Visa, Mastercard, etc.) for transactions also requires this compliance.

Below are some quick tips to ensure compliance with international laws:

  • ​​Collaborate with industry-trusted payment processors for seamless international multi-currency transactions without legal complications.
  • Keep accurate records of compliance procedures and transactions for each international market you operate in.
  • Implement geo-blocking measures, i.e., blocking or limiting payment transactions from regions or countries where surcharging is prohibited by local regulations.

Whether adhering to federal mandates, state laws, or international compliance, there’s a global framework that ensures secure financial transactions worldwide. Enter the PCI DSS compliance. Here’s everything to know about it in the next section.

Compliance with Payment Card Industry (PCI) Standards

The Payment Card Industry Data Security Standard (PCI DSS) ensures secure cardholder data processing, storage, and transmission. It’s a global framework established by major payment card networks, including Visa, Mastercard, American Express, Discover, and JCB International.

The PCI Security Standards Council (PCI SSC) has robust measures to protect cardholder information and prevent unauthorized access, fraud, and data breaches. It’s mandatory for all merchants and service providers that accept credit card payments. 

PCI DSS requirements

Businesses must complete a self-assessment questionnaire (SAQ) as part of the validation process. They’re classified into four levels based on the volume of credit card transactions they process. Each level has specific compliance requirements.

Level 1 Over 6 million annual card transactions
Level 2 One to 6 million annual card transactions
  • Annual PCI DSS Self-Assessment Questionnaire (SAQ)
  • Quarterly network scan by an ASV
  • Attestation of Compliance (AOC)

[Note: SAQ types depend on your payment gateway. Each SAQ has a respective AOC form]

Level 3 20 thousand to 1 million annual card transactions Same as Level 2
Level 4 Up to 20 thousand annual card transactions Same as Level 2

The latest ​​PCI DSS version 4.0 documentation and standards are available here. The Payment Card Industry Security Standards Council provides abundant resources, including the Prioritized Approach Guideline and topic-specific FAQs.

Best practices for maintaining PCI compliance

Staying PCI-compliant and ensuring maximum credit card data security demands ongoing effort. This section delves into 5 best practices to fortify your payment processing compliance.

  1. Security audits. Conduct regular post-payment audits to identify vulnerabilities. The assessments must also include a review of your information security systems, processes, and policies.
  2. End-to-end encryption. Implementing end-to-end encryption helps protect sensitive customer data throughout its lifecycle—i.e., from capturing to storing and transmitting. It’s particularly crucial for card information like cardholder names and account numbers.
  3. Firewall vigilance. Install a resilient firewall to monitor network traffic and detect any suspicious activity and vulnerability scan results. It’s the crucial barrier between your private and public networks, preventing unauthorized access and cyber threats.
  4. Process automation. Automate routine tasks to focus on more critical tasks like implementing cybersecurity measures. It ensures your PCI requirements are met consistently and without human error.
  5. Collaboration with ASVs. Collaborate with Approved Scanning Vendors for regular scans and compliance authentication. They’ll help maintain a secure network infrastructure by identifying and addressing vulnerabilities before they escalate.

Securing your systems and sensitive data against potential threats is a non-negotiable prerequisite before implementing surcharging in your operations.

How to Implement Surcharging in Business Operations

Now that you know the intricacies of payment processing compliance, you’re now ready to integrate surcharging into your day-to-day operations. Let’s break it down into three steps to get started.

1. Analyze the impact on pricing strategy

Understanding how surcharging aligns with your existing pricing strategy helps you anticipate how customers will perceive the additional fees. Assess potential implications on their behavior. How price-sensitive are they? Do they favor credit over debit cards? 

Some may be deterred by the surcharges, but others may prefer credit cards’ convenience. Your goal is to make informed decisions that balance profitability with customer satisfaction.

2. Communicate surcharges to customers

Know your customer’s preferred channels (e.g., email, social media, SMS), and tailor concise messages to those channels. Inform them about the surcharge policy, highlighting the consumer protection guidelines. In-store, place clear and prominent signage at strategic points, especially near checkout counters.

3. Review technical considerations

Evaluate your payment service providers, considering your merchant account’s functionality and card transaction volume. It’ll help you determine if they can accommodate your business growth, particularly a sudden spike in credit card transactions.

Implement robust cybersecurity measures, including antivirus software, to safeguard against potential threats. You may also assess physical access controls, such as smart locks, proximity readers, and biometric safes.

You’re all set! Let’s now proceed to the final compliance that requires your attention: the card networks you engage with.

Navigating Card Network Rules

Credit card brands and financial institutions enforce PCI DSS compliance. Doing business with them requires you to understand all their compliance standards. They have unique rules, validation criteria, and compliance expectations you must adhere to.

Here are network-specific regulations from these two major card companies: Visa and Mastercard.


Visa mandates PCI DSS compliance for all entities storing, processing, or transmitting Visa cardholder data. Compliance validation is a regular requirement, and entities must demonstrate adherence periodically

Issuers and acquirers are responsible for ensuring the compliance of their service providers and merchants. The higher the transaction volumes and risk exposure, the more stringent the validation requirements.


​​Mastercard co-founded and co-developed the PCI DSS. The Mastercard Site Data Protection (SDP) Program offers PCI DSS rules, guidelines, and compliance validation tools. It helps protect against security breaches and enhance consumer confidence.

Mastercard instructs merchants and service providers to use third-party payment applications or software when validating PCI compliance. Only after this phase can they be listed on the Mastercard Global Registry of Service Providers, a public record of entities that have met Mastercard’s highest security standards.

Non-compliance in both card networks can result in severe consequences, including fines, license suspension, or other legal actions. It can sometimes create system vulnerabilities and loopholes, too. Such case poses a heightened risk for fraudulent activities like money laundering and payment card fraud.

A Real-World Surcharging Case Study

U.S. businesses were grappling with one of the fastest-escalating operational costs: card fees. Unfair bans on surcharging meant limited options, pushing enterprises to uniformly raise prices. These events burdened cash and debit card users disproportionately.

Aligning with the Supreme Court’s stance, the U.S. Ninth Circuit Court of Appeals overturned California’s surcharge ban. It recognized surcharging as protected speech under the First Amendment.

This decision was a game-changer, inspiring thousands of businesses to implement surcharging. Those that met payment processing compliance benefited in the following areas:

  • Cost control. Businesses now have a method for managing credit card fees, guaranteeing equitable distribution rather than subsidizing credit card users.
  • Price transparency. Surcharging allowed businesses to disclose a single price, introducing transparency and allowing customers to compare payment alternatives.
  • Fair competition. The repeal of surcharge bans fostered price competition among credit card issuers. This competitive landscape allows favorable negotiating terms and conditions for credit card processing.
  • Inclusive access. Previously deterred by high fees, small businesses reluctant to accept cards now have the opportunity to enhance overall payment inclusivity.

Credit card surcharging offered relief to U.S. merchants and service providers. Seize the same opportunity to streamline your payment processes. Explore CardX by Stax for a smart surcharging solution today.

Surcharge with Zero Percent Cost Credit Card Processing

Surcharging offers financial stability and fair competition. But you must first deal with compliance requirements from federal regulations, international standards, and PCI DSS. Implementing surcharging involves strategic and proactive considerations.

You can save yourself the headache of complying with state laws or credit card network rules. Our automated turnkey solution helps business owners avoid credit card processing fees. ​​You sell 100%, you get 100%—we’ll handle the rest for you.

​​CardX is your go-to partner for smarter credit card surcharging. Optimize your payment processes today. Contact us to get started!

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FAQs about Payment Processing Compliance

Q: What is payment compliance?

Payment compliance refers to the adherence to laws, regulations, and standards governing payment processing. This includes ensuring secure handling of payment information, meeting regulatory requirements, and following industry guidelines to protect consumers and reduce fraud.

Q: What is PCI compliance for payment processing?

PCI compliance stands for Payment Card Industry Data Security Standard (PCI DSS) compliance. It’s a set of security standards designed to ensure that all companies that accept, process, store, or transmit credit card information maintain a secure environment.

Q: What happens if a merchant is not PCI compliant?

If a merchant is not PCI compliant, they risk significant fines from credit card companies and banks. They also increase their vulnerability to data breaches and credit card fraud. In case of a security incident, non-compliant merchants may face legal consequences, loss of customer trust, and potential business closure.

Q: What regulations apply to payment processors?

Payment processors must comply with various regulations, including:

  • PCI DSS for data security.
  • Payment Services Directive (PSD2) in the European Union, focusing on open banking and secure customer authentication.
  • General Data Protection Regulation (GDPR) for data privacy in the EU.
  • Local financial regulations and anti-money laundering (AML) laws.

Q: How do merchants implement payment processing compliance when surcharging?

To comply while implementing surcharging:

  • Clearly inform customers about any surcharges before payment.
  • Ensure surcharges do not exceed the cost of processing payments.
  • Adhere to card network guidelines and local laws regarding surcharging.
  • Regularly review and update surcharge practices to maintain compliance.

Q: What happens if merchants don’t comply with surcharging laws?

Non-compliance with surcharging laws can result in penalties, including fines and legal action. Merchants may also face disputes from customers and chargebacks.

How Much Do Credit Card Companies Charge Merchants?

Credit card transactions have quickly become the lifeblood of eCommerce businesses and storefronts alike. According to Capital One, global credit card transactions in 2022 reached an estimated 678 billion—an average of 1.86 billion every single day.

Credit cards provide a high level of convenience for consumers, increase the speed of transactions, and provide a secure pathway for funds.

However, accepting credit cards does come with a flipside; the ongoing sting of credit card fees. The added costs that come with every transaction can seriously affect profitability and make it difficult to understand running costs, especially when certain fees appear to sneak in without notice.

By understanding how credit card companies charge merchants and how these fees are calculated, businesses can explore optimization strategies to manage and reduce some of these costs. As well as improving profit margins, these activities can also enhance the customer experience and give merchants a competitive advantage in the marketplace.


  • Understanding how credit card companies charge merchants is crucial for optimizing costs and enhancing customer experience.
  • Credit card fees, including interchange, assessment, and payment processor fees, impact businesses on a per-transaction or recurring basis.
  • Leveraging technology, monitoring chargebacks, and addressing individual business factors help to reduce credit card fees and improve overall profitability.
Learn More

How Much Do Credit Card Companies Charge Merchants?

Credit card companies typically charge merchants a fee for each transaction processed. This fee is a percentage of the transaction amount, often ranging from about 1.5% to 3.5%. 

The exact rate can vary based on several factors, including the type of card used (debit or credit), the card brand (Visa, MasterCard, etc.), the merchant’s business type, and the terms of the merchant’s agreement with their payment processor.

Basics of Credit Card Fees

Credit card fees refer to a range of charges that are imposed by credit card issuers on cardholders and merchants for completing credit card payments, either online or in person.

In addition to generating revenue for the card network, the purpose of credit card transaction fees is to cover operational costs and risk management. In some cases, fees may also go towards administering the value-added perks offered to cardholders, such as rewards programs and cash advances. Fee ranges will vary depending on the credit card network and financial institution in question, as well as the terms and conditions of the card agreement.

Businesses need to make sure they understand the credit card processing fees they’re responsible for paying and how this adds to the cost and compliance of accepting these cards regularly. Common types of fees that merchants should be aware of include:

However, this doesn’t mean that merchants have zero control over the size of the fees they pay. The merchant service providers that a business is using to handle credit card payments play a key role in determining the size and structure of credit card fees.

By facilitating credit card transactions, merchant service providers act as intermediaries between credit card companies and the issuing banks. This enables them to lower credit card fees for customers who meet certain criteria, such as transaction volume or secure payment history. This makes your choice of merchant service provider a key consideration when it comes to business overheads.

Breakdown of Common Credit Card Fees

Credit card fees can be broken down into a range of different levies that are applied separately, either on a per-transaction basis or as a recurring monthly fee. Viewing these costs individually makes it easier to understand what is contributing to your credit card processing costs and where you may be able to save money.

So, what types of fees should businesses expect to encounter when accepting credit and debit cards?

Interchange fees

An interchange fee is paid by the merchant’s acquiring bank to the issuing bank every time a credit card transaction is made. Most interchange fees are made up of two parts: A percentage of the total transaction amount, and a flat fee that is charged per transaction.

The purpose of an interchange fee is to compensate the card issuer for the risk and operational costs associated with providing the credit or debit card service to the customer.

Strictly speaking, merchants do not pay interchange fees directly to the card network. Rather, they negotiate with banks such as Chase or Citibank to receive a “merchant discount rate” that is passed onto them by their bank. The size of the full interchange fee is determined by the card brand i.e. Visa or Mastercard. Each network will calculate the fee differently, depending on the type of card, the industry, and the merchant’s payment processing volume. Usually, interchange fees will range between 0.3-2% of the total transaction value.

Assessment fees

An assessment fee is imposed by payment networks in exchange for processing credit card payments. These fees are paid by the merchant’s acquiring bank directly to the credit card network to help maintain payment infrastructure, support services, and enhance revenue.

Unlike interchange fees, merchants are not able to negotiate assessment fees with credit card networks. They are set by the network and passed on to merchants through their bank and the card brands they accept. Assessment fees are normally charged as a percentage of the total transaction amount and are smaller than interchange fees.

Payment processor fees

The payment processing company used by the merchant will charge a range of processing fees in exchange for facilitating transactions and providing equipment such as POS (point of sale) and card readers. Given that other fees such as interchange fees and assessment fees go directly to the card networks, these costs are how payment processors make revenue and maintain their infrastructure.

Payment processing fees can be broken down into a range of smaller fees, including:

Transaction fees. Also known as “swipe fees,” these fees are charged on every transaction processed by the credit card processing company e.g. Discover. This takes the form of a flat fee or a percentage of the transaction amount.

Account fees. These service fees are charged on a monthly or annual basis for account maintenance. If POS hardware is being offered as part of the merchant’s payment plan, it will also include the cost of hardware.

PCI compliance fees. This fee helps payment processors maintain compliance with the latest Payment Card Industry Data Security Standard (PCI DSS) requirements for secure online transactions.

Additional fees

As well as the credit card fees mentioned above, there are a range of other fees that contribute to credit card processing costs for business owners. These include per-transaction fees and fees that are charged on a recurring basis to maintain certain services:

Gateway fees. There will be a fee for using an online payment gateway to securely transmit payment data to the card network and the acquiring bank. This fee is either paid via the payment processor (if they offer their own payment gateway) or a separate service if the business subscribes to a separate gateway.

Statement fees. Many processors will charge an extra fee for generating monthly statements that provide information on transaction activity and the itemized fees charged during that period. Although this is an extra cost, it’s significantly easier than trying to keep track of fees on your own.

Chargeback fees. Whenever a customer disputes a transaction and funds need to be returned to the issuing bank, there is usually a cost per chargeback that is passed onto the merchant by the acquiring bank or merchant services provider. A chargeback fee can be anywhere from $15-$45 per chargeback that gets approved, so these fees can add up incredibly quickly.

Although many of these fees only add a few cents per transaction, they can have a significant cumulative impact on a merchant’s bottom line, especially for small businesses with lower transaction volumes.

Factors Affecting Credit Card Fees for Merchants

Given that businesses have little choice but to accept credit card and debit card transactions from customers, it’s important to understand how these fees are calculated. There’s a range of factors that influence the size and type of fees applied to businesses:

The type of card used

The card type being processed—as well as the type of transaction—has a big impact on the fees that a merchant needs to pay to facilitate the transaction.

Credit cards, for example, carry much higher interchange fees than debit cards because the risk profile of credit cards is much larger. For this reason, card brands do not allow merchants to add a surcharge to process debit card transactions.

Different types of credit cards will also involve different fees. Rewards credit cards such as American Express will typically carry higher average credit card processing fees. Rewards cards cost merchants more to process due to the complexity of the program and administering the perks on offer.

It’s also important to note that processing fees for both debit cards and credit cards will vary depending on whether the transaction is taking place in person or remotely over the phone or the Internet. The risk profile for card-not-present transactions is higher than for cards that are physically swiped, as it’s easier for fraudsters to offer false information and bypass the identification process. As a result, credit card processors will charge higher fees for these transactions.

Merchant’s industry and size

The size of a merchant’s processing volumes, as well as the industry they operate in, has a huge influence on credit card processing fees.

Put simply, large merchants that process a high volume of transactions carry a lot more negotiating power with the financial institutions that pass on interchange rates. This puts them in a strong position to secure lower interchange fees and reduce credit card fees overall.

This being said, any business that operates in an industry considered to be ‘high-risk’ will find it more difficult to lower fees. Certain industries including subscriptions, travel, and gambling, are considered by merchant account providers and banks to be at higher risk of encountering chargebacks and fraud. The merchant category code (MCC) assigned by the credit card issuer will identify

As a result, they may be charged higher processing fees to cover higher compliance costs and underwriting. Furthermore, many merchant service providers refuse to provide accounts for high-risk businesses, which gives these merchants less choice over providers in the first place.

Merchant’s processing history and risk profile

Both banks and major credit card networks will consider a merchant’s individual history and profile when assessing the size of credit card fees. A business with a good credit score and compliance with best practices for fraud prevention and monitoring will be considered more reliable and therefore may be eligible for better rates. On the flip side, frequent incidences of fraud or unstable processing volumes can result in higher fees.

For example, having to process chargebacks frequently on behalf of the merchant will result in one-off fees per chargeback, and may also lead to higher interchange fees if the financial institution deems it necessary. The combination of these fees can make it difficult for businesses to reduce operational costs and increase profitability.

How Merchants Can Lower Their Credit Card Fees

Although credit card fees may appear to be set in stone, certain factors that contribute to these costs are within the merchant’s control and contribute to significantly lower credit card processing costs:

Negotiate with payment processors

Payment processing fees can contribute significantly to the size of credit card fees, so working with your payment processor is a critical step to lower payment costs. If your business has steadily grown in processing volume, there’s a good chance that your processor will consider giving you a discount. Providing information such as your average transaction volume, size, and chargeback rate will help to showcase why your business deserves a more favorable rate.

Alternatively, you can get quotes from competing payment providers to give you more leverage during negotiations. In addition to processing fees, it’s important to consider the impact of any monthly fees or extra add-on services that other processors may include.

Choose the right pricing model

A lack of transparency over how processing costs are calculated can cause merchants to spend more than is necessary on processing credit card transactions. Flat-rate pricing and tiered pricing can cause confusion due to a lack of clarity about interchange rates. Moreover, the way that pricing is calculated can also end up penalizing businesses whose transaction volumes are either small or large.

Interchange-plus pricing is more cost-effective for businesses with changeable transaction volumes or types, and it provides more visibility into how prices are set. In this model, merchants pay the interchange fee set by card networks, in addition to a fixed markup levied by the processor. Others such as Stax Pay use interchange pricing with a monthly subscription fee for merchant services, making it easy to understand credit card processing costs.

Consider surcharging

Credit card surcharging can help you lower payment processing costs in several ways. For one, surcharging enables you offset processing fees. When a customer uses a credit card, the merchant incurs processing fees, typically a percentage of the transaction amount. By implementing a surcharge, the merchant (i.e. you) can pass this fee directly to the customer. This means the cost of the transaction is no longer absorbed by the merchant, but by the cardholder.

In some cases, surcharging can encourage customers to use alternative payment methods that incur lower fees for the merchant, such as cash, debit cards, or ACH. This can result in an overall reduction in the average cost of processing payments.

If you’re considering surcharging, you need to ensure that your program complies with all relevant state laws and regulations. This is where CardX by Stax comes in. Considered as a leader in seamless surcharging compliance, CardX lets you accept credit cards at 0% cost. 

Our platform automatically updates to adhere to the latest regulatory changes, ensuring that your business remains compliant 100% of the time.

Using payment optimization strategies

Payment optimization helps merchants to streamline their operations and reduce payment processing costs. For example, efficient transaction routing identifies the most effective route between the available issuing and acquiring banks. As well as reducing processing timeframes, it also reduces transaction fees by finding the pathway that offers the best rate.

It’s also important to choose a payment gateway that offers advanced security features like tokenization and fraud detection. In addition to helping lower fees through better security protocols, this also lowers the risk of fraudulent activities such as chargebacks that substantially increase payment processing costs.

Leverage technology and software solutions to reduce fees

Recent innovations in payment technology have provided businesses with more ways to reduce their payment processing costs. A seamless integration between the POS and payment processor helps to make transactions more efficient, reducing the likelihood of errors that result in higher fees. The growing popularity of mobile and contactless payments also offers some relief, as these transactions are often eligible for lower interchange rates.

For subscription-based businesses, recurring billing and card updater systems reduce the need for personnel to manually process payments or update outdated financial information, which in turn reduces declined transactions.

Monitor chargebacks

Chargebacks don’t only affect the customer experience, but can also prove incredibly costly for merchants. In addition to paying a fee per chargeback, accumulating too many chargebacks can result in financial institutions levying additional fees as a penalty.

Tools such as Address Verification System (AVS) and CVV checks help to prevent fraudulent chargebacks by ensuring that the cardholder’s provided details are authentic. However, ensuring that your eCommerce website or shipping practices aren’t resulting in unnecessary chargebacks is also important. If parcels are going astray or customers are struggling to contact customer support, chargebacks are more likely to accumulate as customers try to resolve their situation. Make sure that all of the information provided on your website is accurate and that customers can contact your business through a range of channels, such as live chat, phone, and email.

Bringing It All Together

Understanding credit card fees is an important first step to businesses being able to tackle their payment processing costs and improve their bottom line.

While businesses can’t avoid credit card fees entirely, there is a range of mitigation strategies available to reduce their impact. Negotiating with payment processors, embracing technology innovations, and monitoring chargebacks are all effective ways to keep processing costs down so that you can invest productively in other areas of your business.

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FAQs about How Much Do Credit Card Companies Charge Merchants

Q: How much do credit card companies charge merchants?

The exact rate can vary based on several factors, including the type of card used (debit or credit), the card brand (Visa, MasterCard, etc.), the merchant’s business type, and the terms of the merchant’s agreement with their payment processor.

Q: What is the average merchant processing fee?

The average merchant processing fee, which includes fees from the credit card company, the payment processor, and other associated costs, typically ranges from about 1.5% to 3.5% of each transaction. However, additional fees like transaction fees, monthly fees, and equipment rental fees may also apply, affecting the overall cost to the merchant.

Q: Is it legal to pass credit card fees to customers?

The legality of passing credit card fees to customers varies by country and region. In th US, credit card surcharging is legal in all 50 states and territories except Massachusetts, Connecticut, and Puerto Rico.

Q: Why are credit card processing fees so high?

Several factors come into play when it comes to credit card fees. These include the costs of maintaining secure and efficient payment networks, the risk of fraud and chargebacks that credit card companies assume, and various operational and administrative expenses. And let’s not forget: these fees are also a source of revenue for credit card companies and banks.

Q: How can merchants lower credit card fees?

Merchants can lower credit card fees by negotiating better terms with their payment processors, choosing a pricing model that suits their transaction patterns (like flat rate, interchange plus, or subscription), reducing chargebacks or fraud, and finally by implementing a surcharging program. 


Are Debit Card Surcharges Legal? What Businesses Need to Know

In the complicated world of payment processing, understanding the nuances of debit card and credit card payments, along with associated processing fees, is essential for businesses. After all, there are many more payment options available than ever before, and each comes with differing costs and technology needs.

This article explores the legal landscape surrounding surcharges, shedding light on the intricacies of state and federal laws and strategies for small businesses to manage processing costs.


  • Card brands such as Visa and MasterCard along with state and federal laws prohibit debit card surcharging.
  • Businesses can encourage cash transactions or use credit card surcharging as an additional fee to offset payment processing costs.
  • Choosing a cost-effective payment processor and implementing credit card surcharging are two top ways to minimize payment processing costs.

Learn More

Are Debit Card Surcharges Legal?

Let’s start with the elephant in the room: are debit card surcharges legal? The short answer is no, it’s not legal to surcharge debit card transactions. But let’s delve deeper into why this is the case. 

Major card issuers, including Visa and Mastercard, expressly forbid surcharging debit card transactions. The legality of surcharges is further influenced by state laws. For example, Texas law specifically bans debit card surcharging altogether and Connecticut bans surcharging for both debit and credit card transactions.

On a federal level, the Durbin Amendment, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act was introduced in 2010 and limits transaction fees. Part of this act limits the transaction fees for merchants imposed by card issuers, but it also goes further to limit transaction fees in general for debit and credit card transactions.

How much do debit card transactions cost?

As part of the Durbin Amendment, the interchange fee for debit card transactions cannot exceed $0.21 plus 0.05% of the transaction fee, plus a $0.01 fraud prevention fee (when eligible). On average, debit card processing fees amount to about $0.34 per transaction according to the Federal Reserve.

What About Credit Card Surcharging?

Credit card processing fees, both those charged by card networks and by payment processors impact your bottom line. Choosing the right payment processor that will charge a fair rate will help ensure your business is not paying more than it should for transaction processing. To further navigate these costs, businesses can also explore the option of implementing credit card surcharging to offset costs.

Provided businesses adhere to surcharging rules and regulations, credit card purchases can be subject to surcharging as a sustainable way to minimize payment processing costs. CardX by Stax is a trusted leader in helping your business seamlessly and easily implement credit card surcharging, ensuring you stay compliant and save on transaction fees. However, there are a few important things to know before diving into credit card surcharging.

Offsetting Costs: Strategies for Small Businesses

Because debit card surcharging is illegal for the most part, you may be wondering, “How can I offset costs in another way?” There are a couple of tried and tested ways for merchants to offset the cost of transaction processing fees outside of implementing surcharging. 

Encourage cash payments

To encourage cash payments and stay within the bounds of legality, businesses can offer cash discounts for this payment method as an alternative to surcharging. It is important to note that if there is a difference between the card and cash price, it is essential to clearly communicate through proper signage at the point of sale.

Set a minimum dollar amount for card transactions

Another method to offset transaction fees is to set a minimum dollar amount for credit and debit card transactions, encouraging customers to spend more and also covering the cost of payment processing fees. Best practices include ensuring the limit is reasonable for your price point and clearly listed at checkout.

Work with the right payment partners

Dealing with debit card and credit card processing fees (along with state-specific regulations for surcharging) may seem daunting—especially if you don’t have the right partner in place. However, for many, surcharging credit card transactions may be the ideal solution. 

Small businesses can navigate the complex world of surcharging and processing fees in two significant ways: by selecting cost-effective payment processors and services to compliantly implement surcharging. 

Since you’re reading this, you’re in the right place for solutions that can do both. CardX by Stax helps businesses optimize costs and ensure compliance with surcharge laws. And paired with Stax’s subscription-based pricing model, you can easily navigate the world of surcharging while reducing overall payment processing costs at the same time.

Final words

By staying informed about the rules set by major card brands and exploring legal alternatives such as credit card surcharging and cash discounts, you can effectively manage your costs while providing various forms of payment to their customers. 

Ready to learn how CardX by Stax can help your business seamlessly and compliantly implement credit card surcharging? Get in touch!

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FAQs about debit card surcharges

Q: Are debit card surcharges legal?

No, surcharging for debit card transactions is prohibited under the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This applies to all types of debit cards, including prepaid cards.

Q: How much are debit card processing fees?

The average interchange fee for debit card transactions is about 2.2%. However, interchange fees can vary depending on the type of card, the card network, and the merchant’s category.

Q: How can merchants lower debit card processing fees?

While you can’t technically lower the fees set by card networks and banks (i.e., interchange and assessment fees), there are steps you can take to offset the costs of accepting debit cards. A common method is to implement cash discounts, where shoppers pay a lower price when they pay by cash. 

And if you do decide to accept credit cards, you can set a minimum amount in order to offset the higher processing costs associated with these transactions.

Q: Why isn’t debit card surcharging legal?

The Durbin Amendment was enacted in 2010 to protect consumers from hidden fees. The amendment capped the interchange fees that merchants can charge for debit card transactions. As a result, merchants are not allowed to pass on these fees to consumers in the form of surcharges.

Q. What is a debit card?

A debit card is a payment card that allows cardholders to make transactions by drawing on funds they have deposited at a bank. It is directly linked to the cardholder’s bank account, and when a purchase is made, the money is immediately transferred from that account to the merchant’s account.


Credit Card Surcharge Sign Examples and Templates for Merchants

Did you know that in 2021, merchants ended up paying a whopping $105 billion in credit card processing fees? Even though they’re one of the most popular payment options today, accepting credit cards at your business can turn out to be a significant expense.

Fortunately, credit card surcharging is a good way to offset some—if not all—of the cost of accepting credit card payments. All you need to do is charge an additional fee (or surcharge) on top of the final bill amount for customers paying by credit card.

However, you must keep in mind several federal and state laws as well as credit card network guidelines (e.g. Visa, Mastercard, American Express, Discover, etc.) before you can start surcharging.

One such guideline that credit card companies and certain US states impose is that you must inform customers that you practice credit card surcharging. Whether accepting payments online or in person, banners, posters, and other appropriate types of signage should inform customers that an extra fee, such as a surcharge, will be added (as a separate line item) to the final dollar amount of their credit card purchases.


  • Credit card processing fees can add up quickly and eat into a business’s bottom line. Fortunately, in states where surcharging is legal, you can recoup these processing costs by transferring them to the cardholder.
  • Customers need to be informed of surcharging, which necessitates the need for plenty of credit card surcharge signs at your store—whether brick-and-mortar or online. Signs should be clear and visible, so customers don’t have to go looking for them, and large enough so that customers can’t miss them.
  • Card companies set the guidelines around credit card surcharge signs, and disregarding them can lead to your business’s merchant account being terminated. So make sure to follow all rules related to the placement, content, design, and compliance of your signage.

Understanding Credit Card Surcharges

Card networks not only help businesses process credit card payments but they also regulate the industry by establishing surcharging rules and maintaining compliance. In exchange for their services, card companies charge certain fees (interchange fees and assessment fees) on each credit card transaction they process.

Merchant service providers help businesses connect with these credit card networks and offer the necessary hardware and software to process credit card payments. In exchange, businesses pay a host of different fees (e.g. markup, monthly fees, compliance fees, equipment lease fees, per-transaction fees, statement fees, etc.) to their payment processing company.

All of these credit card processing fees can add up quickly and eat into a business’s bottom line. Fortunately, in states where surcharging is legal, you can recoup these processing costs by transferring them to the cardholder.

Surcharging rules

Surcharge laws and guidelines can vary from state to state. As of 2023, the states and territories that prohibit or limit surcharging are Connecticut, Massachusetts, and Puerto Rico. Plus, there are federal laws governing surcharges.

However, in general, surcharge laws state that businesses cannot profit from surcharge fees—they can only use it to offset some or all of the fees they pay to credit card networks and processors. Visa caps the surcharge rate at 3% (Mastercard caps it at 4%) and it can be as low as 2% in certain states (e.g. Colorado).

Also, customers need to be informed that you will be applying a surcharge on their transaction amount. The rules state that your signs should be clear and visible, so customers don’t have to look for them. Credit card surcharge signage should be plenty and large enough so that customers can’t miss them. 

If a customer feels they weren’t adequately informed about surcharging on their payment method, they can file a complaint with the state attorney general’s office. An investigation will ensue and if the cardholder’s complaint is found to be valid, the business can be prosecuted.

Card companies set the guidelines around credit card surcharge signs and flouting them can lead to your business’s merchant account being terminated. 

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Design Principles for Surcharge Signs

When it comes to credit card surcharge signs, there are certain design principles or best practices that you must keep in mind. Take a look below.

1. Clarity and visibility

A credit card surcharge sign can be of two types: point-of-sale notification and point-of-entry notification. Essentially, you should have a credit card surcharge sign at each of your points of sale (POS) at your brick-and-mortar store.

Signs must also be placed at the main entrances (point-of-entry) of your store, and for added measure, place signage at strategic locations in your store where customers are most likely to come across them.

The idea is that, with all of this, customers will be aware of your credit card surcharge program as they enter your store premises and before purchasing at the cashier’s terminal. The rate of surcharge should also be present on your signs, especially those at points of sale.

For online stores, the home page should have a credit card surcharge sign. Checkout pages should also have clear banners, alerts, text, sections, etc. that inform customers about surcharging.

2. Font, color, and placement

All disclosure signage must be unobstructed. Make sure that the fonts you use on each credit card surcharge sign—whether for online transactions or in-person ones—are big and easily legible so that customers can read them from a distance.

Contrasting colors can help highlight sections of the signs that are important such as the rate of surcharge. Different colors can also make your signs more attractive and can make a big chunk of text quicker to read.

However, it’s best to avoid fancy lettering and too many colors that can make your signs difficult to read. 

3. Compliance

Individual states may have different requirements when it comes to disclosure signage. Credit card networks also have different surcharging rules for signs so it’s best that you do your research before getting your signs printed or adding banners to your website. 

Examples of Effective Surcharge Signs and Templates for Merchants

A credit card sign can be as simple as a poster that says, “We impose a surcharge of __% on credit cards that is not greater than our cost of acceptance.”


Or you could use any of the following templates:

“We impose a surcharge of __% on the transaction amount on credit card products, which is not greater than our cost of acceptance. We do not surcharge cash or debit cards.”


“A service charge of __% will be applied to all credit card purchases. For your convenience, customers may avoid this extra fee by paying with cash or debit. We accept ___________, ____________, ___________, and ____________ .”

“A __% credit card fee will be applied to all credit card transactions. Cash and debit card transactions are not subject to a surcharge.”


“Dear customers, 

if paying with a credit card, a __% convenience fee will be added to your check. If you pay with cash or debit, you won’t get charged.”


“To our valued customers,

Instead of raising our prices, your receipt now includes a __% service fee to cover the rising cost of credit card acceptance that we pay when cards are used. If you pay cash or with a debit card, you won’t get surcharged.

Thank you for your continued patronage”


The good news is that credit card networks provide tips and templates of signage for their credit card products. Here are some templates from Visa that you may also use for credit cards of other networks.

Credit Card Surcharge Sign2 Credit Card Surcharge Sign1

This credit card surcharge sign is an example from Visa. Not only is it simple and easy to read but also clearly states the surcharge rate and the card brand being surcharged. What’s more, the sign clearly states that debit cards and prepaid cards are not surcharged. 

Mastercard guidelines for surcharging can be found here. Businesses need not fret as their payment processor can help them set up appropriate signage too.

Final Words

Credit card surcharging is an excellent way for merchants, especially small businesses, to prevent profits from being lost in credit card fees. Customers also appreciate transparency even if they have to pay a bit more. So it’s best not to ruin this opportunity by having non-compliant signage. 

If you’re looking for an automated credit card surcharging solution that helps you save money while ensuring compliance with state laws, federal laws, and card company rules, look no further than Card X. To learn more about how we can help, contact us today.

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FAQs about credit card surcharge sign

Q: What is a credit card surcharge sign?

A credit card surcharge sign is a notification displayed by businesses to inform customers that an additional fee may be charged for transactions made with a credit card. This surcharge is intended to cover the costs that the merchant incurs for processing credit card payments.

Q. Why do businesses need to display a credit card surcharge sign

Businesses display credit card surcharge signs to maintain transparency with customers about potential extra charges. It’s a way to communicate any additional costs upfront, helping customers make informed decisions about their payment method. Additionally, in many jurisdictions, it’s a legal requirement to notify customers of any surcharges.

Q: What happens if a merchant doesn’t have a credit card surcharge sign?

If a merchant doesn’t display a credit card surcharge sign and imposes a surcharge, they may be violating consumer protection laws and regulations regarding transparency and fair trading. This can lead to customer complaints, fines, and legal action, depending on local laws and regulations.

Q: What are the guidelines for displaying credit card surcharge signs?

Credit card surcharge signs must be clearly visible and easy for customers to read. They must also be located in a place where customers are likely to see them before they make a purchase. The signs must disclose the amount of the surcharge, as well as the fact that the surcharge is not a government fee.

Q: How can businesses create credit card surcharge signs?

Businesses can create their own credit card surcharge signs, or they can purchase pre-made signs from a variety of retailers. There are also a number of online templates available that businesses can use to create their own signs.

What is a Surcharge Fee? How it Helps Consumers and Businesses

In an era defined by digital transactions and cashless payments, the process of paying for goods and services is more convenient, and increasingly reliant on credit card transactions. However, as the popularity of credit cards and digital wallet payments continues to surge, the costs associated with accepting them also do. 

Businesses—especially small and medium businesses— continually seek ways to offset these expenses and improve profit margins, leading to the rise of credit card surcharging. 


  • Credit card surcharges are the practice of adding an additional charge at checkout when a customer pays with a credit card. This additional fee is intended to cover the costs associated with processing credit card payments.
  • Businesses that choose to add surcharges can either charge a fixed flat fee or a percentage of the transaction amount with a cap on the total.
  • Credit card surcharging is subject to regulations and compliance requirements that vary by region and country. These regulations are in place to protect both businesses and consumers from unfair and unethical surcharging practices.

Learn More

What is Credit Card Surcharging?

In recent decades, credit card use experienced an unprecedented surge in popularity. Now ubiquitous, credit cards provide consumers with a quick and secure payment method, often with rewards and other perks. The rapid growth in credit card transactions led to an associated increase in the costs originating from the various card brands and incurred by businesses that accept them.

Credit card surcharge fees refer to the practice of adding an additional charge at checkout when a customer pays with a credit card. This additional fee is intended to cover the costs of processing credit card payments, thus shifting a portion of the financial burden from the business to the consumer. The concept of surcharging is gaining traction as businesses seek ways to maintain profitability in an increasingly cashless world.

Credit card processing fees, including interchange fees, assessment fees, and network fees, are a significant expense for merchants. The rise in these fees can be attributed to the substantial investment required for the development and maintenance of secure payment processing infrastructure, protection against fraud, and the convenience offered to consumers. 

While these costs are unavoidable, businesses are seeking ways to minimize their impact on their bottom line. Service providers such as CardX by Stax help companies offset some of these fees in a compliant and seamless way.

What is a Credit Card Surcharge Fee?

A credit card surcharge fee is an additional fee that a merchant adds to a customer’s bill when they pay with a credit card. Surcharges are typically a percentage of the total purchase price and can range from 1% to 4%.

Merchants choose to surcharge credit card transactions to offset the cost of processing credit card payments. Credit card processing fees can be expensive, especially for small businesses. By surcharging credit card transactions, merchants can recoup some of these costs and keep their prices competitive.

How Credit Card Surcharging Works

Compared to the many complexities of payment processing, credit card surcharging is a straightforward process. When a customer chooses to pay for their purchase with a credit card at the point of sale, the merchant adds a surcharge to the transaction. Businesses that choose to add surcharges can either charge a fixed flat fee or a percentage of the transaction amount with a cap o n the total.

Typical percentage rates or flat fees

Percentage Rate: Businesses might add surcharges equivalent to a percentage of the transaction amount, typically in the range of 1% to 4%.

Flat Fee: Alternatively, a fixed surcharge amount, often a small set dollar amount, is applied to each credit card transaction.

Benefits for Businesses

Credit card surcharging offers several advantages to businesses, including:

  • Offsetting credit card processing fees by passing on some of the cost to the consumer can be particularly advantageous for smaller businesses with tighter margins.
  • Encouraging alternative payment methods—surcharging incentivizes customers to use alternative payment methods that don’t incur surcharges, including ACH, debit cards, or mobile payment apps, saving the business and consumers money.
  • Improved profit margins on transactions—as businesses regain control over their credit card processing expenses, they can improve their overall profitability, contributing to their long-term financial sustainability.

Benefits of Credit Card Surcharging for Consumers

While credit card surcharging may initially seem like a disadvantage for consumers, it also offers some benefits, including:

Awareness of the true cost of credit card payments

Surcharging makes consumers more aware of the costs associated with using credit cards for their purchases. This is particularly helpful for smaller businesses where transparency can help them make informed decisions regarding payment methods.

Potential incentives for using alternative payment methods

Credit card surcharges can nudge consumers towards alternative payment options like cash, debit cards, or digital wallets, which don’t carry these extra charges. This shift not only helps consumers save on costs but can also prompt businesses to offer special perks or discounts for using these alternative methods. It’s a win-win: consumers get to keep a bit more in their pockets, and businesses encourage more diverse payment methods.

Encouraging competition among payment providers 

The introduction of credit card surcharges can shake up the payment market, fostering a healthy competition among providers. As businesses and consumers search for more budget-friendly options, payment services are pushed to improve their offerings. 

Think lower fees, better security, and top-notch customer support. For the consumer, this means more choices, potentially lower costs, and a smoother payment experience. This competitive spirit not only benefits your wallet but also drives innovation in the payment sector, making transactions faster and more secure for everyone.

Regulations and Compliance

If your business is considering adding surcharges, it’s important to do so compliantly. Credit card surcharging is subject to regulations and compliance requirements that vary by region within the U.S. These regulations are in place to protect both businesses and consumers from unfair and unethical surcharging practices. Businesses must be aware of and adhere to these rules to avoid legal complications and maintain their reputation.

Credit card surcharging is legal in most of the US, with the exception of Connecticut, Massachusetts and Puerto Rico.

Another piece of the compliance question is to ensure surcharge payments are not used to make a profit over credit card processing fees and they cannot exceed 4%. One exception is in Colorado where the cap is 2% or the cost of the merchant processing fee. 

Further, card brands such as Visa and Mastercard require businesses to post signage to indicate surcharging is in place at the point of sale. So, along with the state and federal laws for credit card surcharging, there are a few additional rules to follow from the card issuer.

Finally, surcharging fees are not legal for debit cards with a PIN or debit card transactions processed with a signature.

Final Words

The evolving payment landscape, including credit card surcharging, represents a balancing act between the rising costs associated with credit card transactions and the needs of both businesses and consumers. Businesses seek to maintain profitability, and consumers look for transparency and convenient, fair payment options. Especially for SMBs, credit card surcharging can be a practical solution to this dilemma, offering advantages for both sides when executed correctly.

Businesses must stay informed about the rules and regulations governing credit card surcharging in their region to ensure they not only remain in compliance but also offer a fair and transparent payment experience to their customers. 

Ultimately, credit card surcharging, when implemented ethically and legally, can encourage informed decisions for both businesses and consumers, leading to a more balanced and sustainable payment ecosystem. 

CardX by Stax plays a crucial role in helping your business navigate implementing surcharge fees and complying with federal and state laws, providing businesses with a valuable tool to manage their credit card surcharging processes.

Ready to learn more and get started with credit card surcharging? Get in touch now!

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FAQs about Surcharge Fees

What are credit card surcharge fees?

Credit card surcharge fees are additional charges imposed by merchants on transactions where customers pay using a credit card. These fees are intended to cover the costs associated with processing credit card payments, which include fees paid to credit card companies and payment processors.

How much are credit card surcharge fees?

Surcharge fees are typically a percentage of the transaction value, often ranging from 1% to 4%. The exact amount depends on the merchant’s agreement with their payment processor and is usually influenced by the type of credit card used (e.g., Visa, MasterCard) and the merchant’s industry. There may also be caps or regulations on these fees depending on local laws.

Why do merchants charge credit card surcharge fees?

Merchants charge surcharge fees to offset the costs they incur for processing credit card payments. Each time a customer pays with a credit card, the merchant pays fees to the credit card company and the payment processor, which can cut into their profit margins. By adding a surcharge, merchants can recoup these costs.

Is it legal to charge surcharge fees?

As of November 2023, credit card surcharging in all US states and territories except Connecticut, Massachusetts, and Puerto Rico.

What are the pros and cons of credit card surcharge fees?

The main pro of surcharging is it helps merchants cover processing costs, which can be especially beneficial for small businesses with thin margins. It also leads to more transparent pricing and encourages the use of alternative, less expensive payment methods like cash or debit cards. 

As for the disadvantages? Surcharging may discourage customers from making purchases, especially for higher-value transactions. It also requires careful management to comply with legal and credit card network regulations. The good news is that if you’re using a solution like CardX by Stax, managing a surcharging program is a breeze. CardX equips you with the tools you need to stay compliant with all surcharging laws, so you can confidently apply surcharges.