FAQs

Surcharging is the practice of adding a fee to a customer’s bill when they pay with a credit card. This fee helps offset the cost of credit card processing for the merchant and is capped at 3% per transaction. It’s only allowed on credit card payments—not debit or prepaid cards—and must follow specific rules set by card brands and state laws.

Surcharging is legal in most U.S. states, but some prohibit it entirely (e.g., Connecticut, Maine, Massachusetts), while others impose restrictions like fee caps or signage requirements. Before implementing surcharging, it’s important to check your state’s current laws and consult with legal or compliance experts.

To remain compliant:

• Register with card brands (e.g., Visa, Mastercard) at least 30 days before starting.
• Display clear signage at your entrance, point of sale, and online checkout.
• Communicate the surcharge before completing a phone order.
• Cap the surcharge at your actual processing cost or 3%, whichever is lower.
• Only apply surcharges to credit cards, not debit or prepaid cards.

It depends on your pricing strategy, customer base, and transaction mix. If your prices already account for processing fees, adding a surcharge could result in overcharging. You’ll also want to consider how your customers might react—some may spend less or shift their business to a competitor that does not surcharge.

Surcharging adds a fee to credit card transactions, while cash discounting offers a reduced price to customers who pay with cash. With surcharging, the customer pays more than the advertised price; with cash discounting, they pay less. Both models have different compliance requirements.

You can’t surcharge more than your actual cost of acceptance or the card brand’s maximum—typically 3%. The fee is calculated as a percentage of the transaction amount and must be disclosed to the customer before payment.

You must provide clear disclosure:

• At the entrance of your business.
• At the point of sale or on the payment terminal.
• On receipts and during online checkout.
• For phone orders, the surcharge must be disclosed verbally.

No. Surcharges are only allowed on credit card transactions. Applying them to debit or prepaid cards—even if processed as credit—is prohibited by card brand rules.

Potential risks include:

• Customer dissatisfaction.
• Reduced or loss of sales.
• Compliance violations if rules aren’t followed.
• Negative brand perception, especially if surcharges aren’t clearly disclosed.

Some businesses report reduced credit card usage or lower overall sales after implementing surcharging.

Start by verifying legality in your state, registering with card brands, and working with your payment processor to enable surcharging. You’ll also need to set up signage and disclosures and train your staff to handle customer questions. Your processor may offer tools to help manage compliance and configuration.