Can Businesses Process Credit Cards for Free? 0% Processing Explained

It’s difficult to imagine retail and commerce without credit cards. According to the Forbes 2023 Advisor Survey, physical or virtual credit card payments make up 53% of all transactions. But while accepting credit cards is increasingly essential for businesses, it doesn’t come cheap.

In addition to transaction fees, merchants also have to think about the cost of onboarding a payment gateway, integrations, chargeback fees, PCI compliance fees—the list goes on. This is why being able to offset even some of these costs makes a massive difference to a merchant’s overall running costs.

Enter 0% credit card processing. 

When implemented correctly (and in compliance with local regulations), merchants can offset credit card costs through surcharging programs. 

In this blog, we’re going to dive into the world of zero-free credit card processing—and how CardX offers a premier solution.


  • Fees like interchange fees, assessment fees, and processor markups are cumulatively referred to as “swipe fees” and can make up anywhere between 1-3% of a transaction.
  • Strategies like credit card surcharging and cash discounting can help offset credit card processing costs, but require compliance with regulations.
  • CardX is a pioneering solution for credit card surcharging, helping businesses offset processing costs while remaining compliant.
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Understanding Traditional Credit Card Processing Fees

To understand the concept of 0% processing, it’s important to understand what fees are normally applied to credit card payments. Multiple types of transaction fees together make up the final payment processing costs paid by the business owner or consumer, depending on the strategy chosen by the merchant. These include:

Interchange Fees. These fees are charged by the card networks (e.g., Visa, Mastercard) as a percentage to the issuing bank account every time a credit card transaction is made, and then passed onto the merchant account. 

Interchange rates cover the cost of processing the payment, as well as managing things like fraud risk and chargebacks. The size of the fee will vary depending on the type of credit or debit card and the risk level. 

For example, the interchange fee for a card-not-present transaction is typically higher than for card-present or in-person payments. Some credit card processing companies may use interchange-plus pricing, meaning that the fee stays the same regardless of the card network.

Assessment Fees. This is a monthly fee charged by card networks to cover operational costs. These fees are usually the same, regardless of the size of your business and the number of transactions processed.

Markup Fees. The markup fee is charged by the payment processor to cover operational costs and make a profit. Unlike interchange and assessment fees, markup fees are negotiable based on the pricing model, the type of business, and whether they are processing a high volume of transactions (usually determined by a monthly transaction amount).

Cumulatively, these card fees are often referred to as “swipe fees” and can make up anywhere between 1-3% of a transaction’s total value. Not surprisingly, they can seriously impact the profit margins of small businesses and even make accepting payment methods from certain sources unrealistic. This is why it’s so important for businesses to understand how credit card payment processing works and where it’s possible to negotiate for more competitive rates.

Types of Free Credit Card Processing

It’s worth noting that the concept of “zero-cost,” “0% processing,” or “zero-fee” payment processing doesn’t literally mean that transactions are processed for free. The fees mentioned above still exist; it’s just a question of who pays it—either you or your customer. 

So, what does “free” credit card processing look like?

Credit card surcharging

Credit card surcharging is when a business adds a percentage fee to a transaction when a customer is paying via credit card. A surcharge may apply to transactions involving any credit card, or only to specific card networks like American Express. This fee is designed to cover the processing costs associated with credit card payments that the business would otherwise have to shoulder. This differs from a convenience fee, which applies to alternative methods like contactless payments.

While surcharging may be appealing for small business owners, you need to make sure that you’re using a compliant solution to implement it. Surcharging may also be restricted or monitored by some merchant account providers and card networks.

So, if you are considering implementing credit card surcharging, it’s important to assess the implications for your customers and your payment processing strategy.

Cash discounting

Cash discounting programs enable businesses to offset some or all of the additional fees involved with credit card processing services. Cash discounting involves offering a discount at the point of sale if a customer chooses a payment option that doesn’t incur extra fees. This includes methods such as cash, debit card transactions, or ACH transfers coordinated by the merchant services provider.

This discount should be equal to the processing fee that the business would otherwise incur from the credit card processor, and be clearly disclosed with signage at the checkout so customers don’t feel misled.

How to Process Credit Cards for Free

If you’ve decided to implement credit card surcharging as a way to achieve “zero-fee” credit card processing, there are some steps you need to take to ensure that your surcharging approach is compliant and properly communicated:

Check surcharge regulations in your area and review card network rules

First, you need to determine whether surcharges are legal in your jurisdiction, and if so, what the rules are surrounding their use. For example, credit card surcharges are allowed in New York, but must be included in the final product price and not added on by a POS system. Likewise, different card networks will have different requirements when it comes to surcharging. Visa does not allow surcharging to be applied to debit cards, for example.

Decide your surcharge amount

Next, decide what surcharge you want to apply. The amount needs to be reasonable and reflect the actual costs of processing credit cards. Some states will cap surcharges at specific rates, while most card networks will have a flat rate that merchants must comply with when surcharging. For example, Visa only allows surcharges up to a value of 3%.

Notify your card network and merchant services provider

Many card networks require you to notify them in writing in advance of adding surcharges to payments. It’s also important to inform your payment processor of your intention to implement surcharging to ensure they can support it. Not every merchant services provider will allow surcharges, so it’s important to know ahead of time whether you’ll need to switch to another provider.

Disclose your surcharge policy to customers

Merchants will fall foul of surcharge regulations if they do not properly disclose credit card surcharges to customers ahead of a purchase. You must communicate the surcharge to customers either verbally or using in-store signage. For online payments, surcharging must be disclosed somewhere on the eCommerce website, preferably on the checkout page. This may require you to train your employees to inform customers and explain the pricing structure.

Stay up-to-date with regulation changes

Although becoming better accepted by legislators, credit card surcharging is still regarded as a sensitive practice that is being closely monitored. Be prepared for regulations at the local or state levels or from credit card networks to change at short notice, and have a plan for how to adapt your surcharging program.

CardX: Pioneering 0% Processing to Help Merchants Process Credit Cards for Free

After reading the steps above, implementing credit card surcharging at your business may feel a bit overwhelming. 

The good news? All these steps are easily doable with CardX by Stax’s surcharging solution.

CardX is a merchant services provider that enables businesses to offset the cost of credit card processing via credit card surcharging. CardX by Stax has spent years working with lawmakers on the best way to implement and manage surcharging. This expertise has led to the company being selected as Mastercard’s official surcharge partner.

Our technology suite makes it possible to legally surcharge credit card transactions in full compliance with both card network rules and state and local regulations within 48 U.S. states. CardX’s volume-based pricing structure is easy to understand and can scale with your business, ensuring that you always have access to a reliable surcharging solution.

How CardX Works

Use online, in offices, and in-store. No matter whether you are a low-risk or high-risk merchant, CardX has a solution for managing credit card surcharging. The EMV-enabled card reader and virtual terminal options make it easy to process payments for online stores and in-person, while the card vault functionality enables seamless recurring billing and invoicing.

Automated compliance checks with every transaction. Thanks to CardX’s automated compliance technology, there’s no need to worry about staying compliant with surcharging regulations. This includes differentiating automatically between credit and debit card transactions, the surcharge amount being passed onto customers, and how surcharges are disclosed.

Providing consumers with choice and transparency. All customers will receive full disclosure on applicable surcharges before purchase, as well as the opportunity to pay using a no-fee method such as a debit card. This keeps the cost of acceptance down for both merchants and shoppers while remaining fully compliant.

Benefits of Using CardX for 0% Processing

Cost savings for businesses 

CardX enables businesses to pass on the cost of credit card processing to their customers or pay a low flat fee for processing debit cards that are not liable for surcharges. Plus, the lack of a long-term contract and no termination fee saves valuable overhead costs that can be reinvested back into your business.

Enhanced transparency for consumers 

CardX’s intuitive interface ensures that shoppers always know exactly what fees they’re paying, and which payment methods allow them to avoid surcharges at the point of sale.

Assurance of compliance with surcharging regulations 

CardX’s turnkey solution means that businesses don’t have to waste time figuring out how and when to apply surcharges. Simply apply for a merchant account and share how you want to accept payments to get started!

Final words

The business has become a lot more competitive, and turning a profit can feel like an uphill battle. That’s why 0% processing can be so appealing for merchants who want to maximize their bottom line. 

Surcharging is certainly a viable option here—as long as you partner with a provider that enables you to implement 0% processing in a way that’s easy, convenient, and compliant. 

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FAQs about 0% Processing and how to process credit cards for free

Q: What is 0% processing and does it really let merchants process credit cards for free?

0% processing refers to programs or solutions that allow merchants to pass on credit card fees to customers, essentially enabling businesses to process credit card payments for “free.”

Note: Sometimes referred to as “zero-cost” or “zero-fee” payment processing, 0% processing doesn’t mean that transactions are processed entirely for free. Instead, the usual processing fees still exist, but the responsibility of who pays them shifts—either it’s the business or the customer. It allows businesses to offset the cost of credit card processing through strategies like credit card surcharging or cash discounting.

Q: How does 0% processing work?

0% processing typically works through surcharging. Businesses add a fee to a transaction when a customer pays via a credit card, which is designed to cover the processing costs that the business would otherwise bear.

Q: What are the benefits of 0% processing?

The main benefit of 0% processing (i.e., surcharging) is that you’ll be able to lower costs. Passing on credit card processing fees to your customers means you’ll be able to maximize your revenues and profits, which then frees up resources that you can reinvest in your business.

Beyond that, other benefits include enhanced transparency, as customers are made aware of the costs associated with using credit cards. It also enables you to have more predictability with costs, since you pay a fixed monthly fee, regardless of how many credit card transactions you process.

Q: How do you process credit cards for free?

The most straightforward way to process credit cards for free is through surcharging. And to do that, you need to a) be aware of surcharging regulations; b) set the right surcharge amount; c) notify the card network and merchant services provider; d) disclose your policy to consumers.

There are a number of steps involved, and so the easiest way to implement surcharging is by using a solution like CardX, which enables you to accept credit cards at 0% cost while achieving automated compliance.

Q: What other fees are involved in credit card processing?

While you can offset certain fees through surcharging, credit card processing will never be 100% free for the merchant. For starters, surcharges are capped at 3%, so you would need to absorb any processing costs beyond that limit.

In addition, not all fees can be passed on to customers. Things like PCI compliance fees, chargeback fees, and equipment costs are still paid for by the merchant. There’s also the costs charged by your surcharging service provider.