To Surcharge or Not? How to Help your Customers Decide.

Passing credit card acceptance costs to cardholders can generate significant savings for your customers while helping ensure compliance with rigorous card brand rules.


It’s tough to be a business owner these days. Inflation, supply chain issues, labor shortages, and rising wages take a real bite out of profits. Customer payment preferences and the digital shift have led to an increase in card payments, often a business’s second or third highest cost behind payroll*. Lowering the cost of payment acceptance can have an immediate positive impact on your customers’ bottom line.

Surcharging has proven to be an effective way for many businesses to save money.

Passing credit card acceptance costs to cardholders can generate significant savings for your customers while helping ensure compliance with rigorous card brand rules. All of the card brands permit surcharging, and it is legal in all but a few states (Connecticut, Maine, and Massachusetts).** Read on for helpful information when speaking to your customers about surcharge programs, including compliance requirements and best practices to maximize savings.

How credit card surcharge works: Compliance is important

A credit card surcharge adds a fee—typically 3% – 4%—to the total transaction amount when a cardholder chooses to pay with a credit card. The cardholder can avoid the surcharge by paying with cash, a check/ACH, a debit card (signature or PIN), or a prepaid card.

The card brands have published rules about credit card surcharging, and state laws regarding the implementation of surcharge programs vary, so it’s essential to work closely with your integrated payments provider to ensure compliance. Here are a few critical rules regarding credit card surcharge programs:

      • Customers must register their intent to surcharge with the card brands at least 30 days in advance, and many payment providers do this on behalf of the merchant.
      • Businesses can select the sales channels (in-store, online, invoices, recurring payments) to assess a surcharge.
      • Businesses must post specific card brand disclosures regardless of payment channel: at a store’s entrance, point of sale, or on a website’s homepage, payment pages, and invoices.
      • The surcharge has a 4% cap (Currently, 3.5% if the business accepts American Express) and can’t exceed your customer’s actual transaction cost. It can only be used to offset the acceptance costs the business pays.
      • Receipts must show the surcharge dollar amount as a separate line item.
      • Credit card refunds must include the prorated surcharge amount for less than a full refund.

The pros and cons of credit card surcharging: Assessing if it’s a fit for your customers

While credit card surcharging makes sense on the surface—everyone prefers lower fees—the decision to surcharge should be well thought out considering a number of factors. The goal for business owners is to lower costs without alienating their customers or reducing average ticket amounts. Communication is the key to success. Notifying customers about a surcharge—and how to avoid it—before they select their payment method can increase their comfort level. Here are some considerations: 

Product and service differentiation

Businesses that build long-lasting relationships (hair stylists, boutique retailers, home services) can explain how surcharging helps control costs without raising prices across the board. Cardholders will likely be empathetic, especially when they understand how to avoid paying the surcharge. Businesses that offer a unique product or experience (museum, concert venue, 5-star restaurant, non-profit) can more easily surcharge due to the emotional connection their customers have for the purchase.

However, if customers can easily find a nearby competitor that doesn’t surcharge, they may switch. Many large brands, including Walmart and Home Depot, have publicly stated they will not surcharge credit card payments, so it’s imperative to understand the competitive landscape.

Average ticket amount

Chances are that customers won’t mind paying a little more “pocket change” for low-cost purchases. Adding $0.40 to a $10 purchase is more palatable than doling out an extra $40 for a $1,000 TV, especially when searching for the same model elsewhere is easy. And while switching to cash or debit is a simple alternative for low-price transactions, many consumers rely on a revolving line of credit for big-ticket items.

Payment methods by acceptance channels If most of a business’s in-store customers pay with debit cards, a card-present surcharge program may not save enough to make up for any lost business. However, the surcharge fee could be added to payment portals, recurring payment plans, and invoices where consumers more frequently pay with credit cards.

What to look for in an integrated payment provider

It’s essential to work with a payment partner that has checks and balances in place to make it easier to ensure a high degree of compliance. Not all payment providers have solutions that support surcharging for both card-present and card-not-present environments, so do your homework. A provider like Elavon has a selection of card brand-compliant, turn-key solutions and APIs that help your customers implement credit card surcharging for any acceptance channel.



*Deloitte, “2020 Enterprise transformation and cost reduction survey”, 2020

**Currently Credit Card Surcharge is not supported in Connecticut, Maine and Massachusetts, Puerto Rico or the Canadian Provinces. Although we offer surcharging in most states, merchants are responsible for determining the legality of surcharging in their state, and merchants are liable if their activities are found to be unlawful. Credit card surcharge applies to credit card only, not available on debit cards.


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