Want The Cheapest Credit Card Processing Surcharging May Be The Answer

Running a business comes with numerous costs, and credit card processing fees are among the most significant. These fees can eat into profits, especially for small businesses operating on tight budgets.  

Unfortunately, these fees are unavoidable. There is no such thing as a “free” payment processor, but there is a solution that can help to alleviate the financial burden: surcharging.

In this article, we will explore surcharging as a way to achieve the cheapest credit card processing and how it can be implemented in the business.


  • Credit card processing fees eat into the profits of small businesses. Unfortunately, they’re unavoidable, and most companies can’t afford to refuse credit card payments.
  • Surcharging offers a way to pass credit card processing costs to the customer, letting businesses keep their earnings.
  • Adopting surcharging can be financially beneficial. That said, it’s important to evaluate surcharging providers to implement an option that best fits the business.

Understanding Credit Card Processing Fees and Pricing

Before diving into surcharging, it’s crucial to grasp the concept of credit card processing fees. These fees include interchange fees, assessment fees, and processing fees.

Interchange fees

Interchange fees are a significant component of credit card processing fees and are charged by the card networks (Visa, Mastercard, American Express, Discover). Interchange rates are a percentage of the transaction value paid by the merchant’s acquiring bank to the cardholder’s issuing bank. The purpose of interchange fees is to compensate the issuing banks for the risks and costs associated with processing and managing credit card transactions. Interchange fees vary based on factors such as the type of credit card used (personal or business credit card), alternative cards (debit cards, rewards cards, etc.), the industry of the merchant, and the specific details of the transaction (e.g., card-present vs. card-not-present).

Assessment fees

Assessment fees are charges imposed by the card networks (Visa, Mastercard, American Express, Discover) to support their operations, including marketing, network maintenance, and the development of new technologies. These fees are typically calculated as a percentage of the transaction amount and are collected by the card networks from the acquiring banks or payment processors.

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Payment processing fees

Processing fees are charged by the payment processors or acquiring banks that handle the transaction on behalf of the merchant. These fees cover the costs associated with securely transmitting payment data, verifying the transaction, and settling funds into the merchant’s account. Processing fees can be based on various models, such as flat-rate pricing per transaction, a percentage of the transaction amount, tiered pricing, or a combination. The specific processing rates can vary depending on factors such as the merchant’s industry, transaction volume, processing method (e.g., in-person vs. online transactions), and agreements with the payment processor or acquiring bank.

  • Interchange fees = card networks (Visa, Mastercard, etc.)
  • Assessment fees = card networks (Visa, Mastercard, etc.)
  • Processing fees = payment processors

All of these fees are necessary to process payments, but they can also cause a lot of stress and confusion for small business owners and startups. Understanding them is key to securing the best alternative processing option, a way to reduce or offset these fees and improve the business’s financial health.

Additional Fees

The credit card processing fees listed above are standard with all transactions, but other fees can come with credit card processing.

Transaction fees

Businesses need to understand that transaction fees are another component of credit card processing fees. These fees are charged for each credit card transaction and can directly impact a business’s overall cost of accepting credit card payments. Here are some common types of transaction fees:

  • Flat transaction fee: This fee is a fixed amount charged for each transaction, regardless of the transaction amount. For example, a merchant may be charged $0.30 per transaction, regardless of whether the transaction amount is $10 or $100.
  • Percentage transaction fee: Some processors charge a percentage-based fee on each transaction. For instance, a merchant may pay 2% of the transaction amount as a fee. This means that for a $100 transaction, the fee would be $2.
  • Blended transaction fee: A blended fee structure combines flat and percentage fees. For example, a processor may charge $0.20 per transaction plus 2% of the transaction amount. This means that for a $100 transaction, the fee would be $2.20.

Chargeback fees

Chargeback fees are charges imposed by payment processors when a customer disputes a credit card transaction and initiates a chargeback.

Monthly fees

Monthly fees are recurring charges imposed by payment processors to cover the operational costs of maintaining a merchant account. Businesses with a payment provider that charges a monthly subscription fee will have these costs included. If providers do interchange-plus pricing, these fees may come on top. Monthly fees are typically:

Merchant account fee:

A fixed charge levied by the payment processor to cover the ongoing management and administration of the merchant account.

Statement fee:

A monthly charge for providing businesses with detailed statements summarizing their credit card transactions.

Gateway fee:

A fee for businesses operating online or utilizing payment gateways for card-not-present transactions.

Add-on fees

Most payment processors have specific services or features beyond the standard credit card processing capabilities. Some providers have structured plan-based pricing models; others offer these services or features as add-ons. These allow businesses to enhance their payment processing experience or access value-added services. Add-on fees include recurring billing fees, advanced reporting, analytics, fraud prevention tools, multi-currency support, or customized integrations.

Additional Fees

Check for the following fees before signing with a credit card processing company.

Setup fees

Also known as an application or onboarding fee, setup fees are one-time charges imposed by payment processors to cover the cost of setting up a merchant account and integrating the necessary payment processing infrastructure.

Early termination fees

Early termination fees or cancellation fees are charges imposed by payment processors when businesses terminate a long-term contract before the agreed-upon term. These fees serve as a form of compensation to the payment processor for the loss of anticipated revenue and may vary in amount depending on the remaining term of the contract.

Compliance fees

PCI compliance fees or PCI-DSS (Payment Card Industry Data Security Standard) fees are charges from payment processors to cover the cost of ensuring regulatory compliance and maintaining payment card data security. As PCI compliance is required for all credit card payment processors, seeing this as an extra fee should be considered a red flag.

What is Surcharging?

Surcharging is a practice where merchants add a small percentage based fee to the total cost of a transaction when customers choose to pay with a credit card. By passing the processing fees to the customer, merchants can reduce their overall expenses associated with credit card payments. This fee is designed to offset the credit card processing fees incurred by the business. It allows merchants to recoup some of the costs of processing credit card payments.

Why Surcharging is the Best Credit Card Payment Solution for Small Businesses

Surcharging can be an effective strategy for achieving the cheapest credit card processing. Businesses can lower their overall expenses by passing on a portion of the processing fees to the customer. This can result in significant cost savings over time, especially for businesses with high transaction volumes.

Rachael at California Granite & Flooring is a powerful, real-world example. Using CardX, Rachel could use surcharging to pass on the high costs of credit card processing so that her business wouldn’t be severely impacted by the payment processing costs.

“Before we learned about CardX, we were reluctant to accept cards due to the high cost. With CardX, customers simply use a credit card and I get the full sale amount deposited to my account the next day. CardX really takes all the complexity out of accepting cards. Everything has worked so well that we’re starting to use the solution at a second location this month.”

— Rachael at California Granite & Flooring

In Rachael’s business today, a customer would enter the store and see at the checkout that California Granite & Flooring has a surcharging program to offset credit card processing fees. When they go to purchase, Rachael confirms that there is a 3% surcharge added to credit card transactions. They acknowledge the fee and proceed with their purchase. 

The customer is aware of the surcharge, and Rachael’s transparency helps them to understand the reason for the fee. Rachael can then benefit from the reduced costs to the business and is able to reinvest her profits into her business.

Pros and Cons of Surcharging

Implementing a surcharging program comes with its own set of advantages and disadvantages. On the positive side, surcharging can help businesses reduce credit card processing fees, improve profit margins, and increase overall financial stability. Additionally, surcharging can create a sense of transparency, as customers are made aware of the costs associated with using credit cards for transactions.

However, it’s essential to consider potential drawbacks as well. Some customers may react negatively to surcharging, perceiving it as a markup or inconvenience. 

That said, if you communicate openly with your customers and explain the reasoning behind your surcharging program, you may find that many are understanding and appreciative of the transparency. Implementing alternative payment options alongside surcharging can also help mitigate potential customer dissatisfaction, providing options for those who prefer to avoid the surcharge.

Pros Cons
Reduce credit card processing fees Must abide by state and federal laws and regulations
Improve profit margins Customers may have negative reactions. (Note: this can be mitigated with proper communication.)
Increase overall financial stability
Educate customers about the costs of using credit cards

Implementing a Surcharging Program

For businesses considering surcharging, follow these steps to ensure a smooth implementation process.

Check the laws

Firstly, businesses need to determine whether surcharging is legally permissible in their jurisdiction. Regulations regarding surcharging vary by country and even by state or province. 

Pro tip: if you’re using a solution like CardX, compliance with your local surcharging laws is a breeze. Our solution automatically ensures that your surcharging practices are compliant with applicable laws and regulations. This includes adjusting the surcharge rate to comply with caps that may exist in certain jurisdictions, and ensuring that surcharges are properly disclosed to customers prior to the completion of the transaction.

Find the right credit card processor

Once legality is confirmed, businesses must choose a merchant services provider that supports surcharging and ensures compliance with all necessary guidelines. CardX is specifically designed for this. Passing on the credit card fee, CardX makes surcharging seamless for merchants and customers.

Communicate to customers

Communicating the surcharge to customers is key to maintaining positive customer relationships. Clearly explaining the purpose of the surcharge and its benefits to the business can help customers understand the reasoning behind it.

Offer alternatives to credit card payments

Offering alternative payment options without surcharges is necessary to accommodate customers who prefer not to pay the additional fee. It highlights that surcharging is about making transactions fair, not making extra money from customers.

Communicating Clearly

Effective communication is crucial to maintaining transparency and positive customer relationships. Here are some key considerations, including legal requirements and best practices:

  1. Clear Signage: Display clear and visible signage near the cash register or payment area, explaining the surcharge policy. The signs should clearly state the surcharge amount or percentage, the reason for the surcharge (covering credit card processing fees), and any alternative payment methods without surcharges.
  2. Point-of-Sale Disclosure: When processing a transaction, ensure the POS system clearly breaks down the transaction amount, including the base price and the surcharge amount. Processing companies that facilitate surcharging will have this programmed into the card reader.
  3. Online Presence: If operating online, clearly disclose the surcharge policy on the website. Include the details about the surcharge, reasons for its implementation, and any applicable restrictions or exemptions.
  4. Educate Customers: Provide educational materials, customer support, or FAQs online or in-store that address common questions or misconceptions about surcharging.

Cheapest Credit Card Processing Companies

One of the best ways to get the cheapest credit card processing rates is to opt for a processor that supports surcharging. To that end, here are our top picks. 

1. CardX by Stax 

Stax provides businesses with surcharging capabilities as part of their comprehensive payment platform. With CardX by Stax, businesses can introduce surcharging in line with local laws. The platform works online, in offices, and in-store.CardX is the industry leader in surcharging compliance and the only surcharging first solution available.

2. Payment Depot

Payment Depot offers businesses a surcharging service as part of their payment processing solution. With transparent pricing and compatibility with most credit card readers, Payment Depot is a popular choice for high-volume businesses.

3. Helcim

Helcim’s surcharging solution is integrated into their platform, providing comprehensive reporting tools to track revenue and analyze surcharging’s impact on the business.

4. Square

Square enables businesses to implement surcharging with their payment processing solution. They offer a clear breakdown of base prices and surcharge amounts on receipts, ensuring transparency for customers. Square’s surcharging feature integrates with its contactless hardware and software offerings.

5. PayPal

PayPal provides businesses with the option to implement surcharging as part of their credit card processing services. PayPal’s surcharging capability extends to its online payments, invoicing, and mobile payment solutions.

6. Stripe

Stripe offers businesses the flexibility to implement surcharging through their payment platform. Their surcharging feature supports customization to align with business requirements.

7. Clover

Clover’s point-of-sale (POS) system includes surcharging as a feature. With Clover, businesses can customize settings, define surcharge percentages, and display surcharge amounts clearly on receipts.

Alternatives to Surcharging Providers

While surcharging is the cheapest method for offsetting credit card processing fees, it can be worth exploring other alternatives if you don’t think it’s right for your business.

1. Cash discounts

Incentivizing customers to pay with cash by providing a discount on the purchase price for cash payments.

2. Minimum purchase requirements

Implementing a minimum spend threshold to encourage larger purchases so that the transaction fees become a smaller percentage of the total amount.

3. Negotiating with payment processors

This option requires businesses to have substantial transaction volume and leverage to negotiate better prices.

Different Approaches for Different Types of Businesses

Different businesses will have different options available.

Small retail businesses:

Small in-person businesses have all in-person payment options to choose from, like surcharging, cash discounts, or ACH bank account transfers and minimum purchase requirements. These are the ideal payment methods for small retail businesses.

eCommerce businesses:

eCommerce businesses are limited to payment services offered through the virtual terminal, such as surcharging.


Nonprofits often have better pricing available to them from the payment processors, and they can also add surcharging to their options.

High-volume businesses:

High-volume businesses may be able to negotiate a better pricing structure with their transaction volume as leverage. They can also add on all of the other options. As businesses grow, they need to ensure that they have a payment processor that it makes sense to scale with, or look at changing processing companies. 

Low-volume merchants:

Low-volume merchants are often considered high-risk merchants and will face higher fees and find that surcharging, cash discounts and minimum purchase requirements are their best options to recoup their month-to-month credit card processing costs.


Credit card processing fees can significantly impact businesses’ profitability, making it essential to find cost-effective solutions. Surcharging offers an effective strategy to minimize these costs by offsetting the fees.

While surcharging has its pros and cons, numerous businesses have successfully implemented surcharging programs and witnessed significant savings. It’s just important to do it right. Consider customer reactions, choose the right approach, and explore alternative solutions to determine if a surcharging program is best.

For businesses seeking to lower credit card processing costs, surcharging presents such an avenue, and CardX by Stax simplifies this process, offering fairer solutions to customers and businesses.

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FAQs about Cheapest Credit Card Processing

Q: How can businesses get the cheapest credit card processing rates?

One of the ways businesses can get the cheapest credit card processing rates is by implementing surcharging. Surcharging allows businesses to pass on a portion of the processing fees to the customer, reducing the overall expenses associated with credit card payments.

Q: How can surcharging help lower payment processing costs?

Surcharging helps lower payment processing costs by allowing businesses to recoup some of the costs associated with processing credit card payments. By adding a small fee to the total cost of a transaction when customers choose to pay with a credit card, merchants can offset the credit card processing fees incurred by the business.

Q: What are the cheapest credit card processors that support surcharging?

Not all processors are created equal. If you’re looking for a cost-effective merchant provider with surcharging capabilities, we recommend CardX by Stax. CardX provides a user-friendly and legally compliant surcharging solution, enabling you to transparently pass on credit card processing fees to your customers.