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The Complete Guide To Credit Card Surcharging: Guidelines For Visa, Mastercard, American Express, & More

This go-to guide on surcharging details what surcharges are, the legal requirements surrounding them, and whether (or not) your business should charge them.

    Frank Kehl
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Frank Kehl

Frank Kehl

Expert Analyst & Reviewer at Merchant Maverick
Frank Kehl has been researching and analyzing merchant services, payment gateways, and international money transfer services since 2015. He has a Bachelor of Science degree from Penn State and a Juris Doctorate from the Ventura College of Law.
Frank Kehl
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    All credit card charges are deductible on state and federal income tax returns.
    If they are allowed to charge a surcharge then those amounts should not be allowed to reduce their taxable income on their returns. To me the surcharge is extra in their pocket.
    Like rent and insurance, the fees charged to accept a credit card is just another cost in doing business.


      Went for a meal at a NM pub a few days ago and when the bill arrived I was shocked to read the small print at the bottom which said that a service charge would be added if I was to pay by credit card. There were NO NOTICES ANYWHERE in the establishment, not even on the food/drinks menu.

      Querying this with the server, I was told that he had no idea what amount would be charged and at what rate but it “wouldn’t be very much”. He also said that if there was a big party and a large bill, they’d make an adjustment, which I thought was totally wrong. Surely it is has to be everyone or no-one? He then told me to take the surcharge out of his tip, which I thought was extremely presumptuous of him, so I did.

      After paying (by VISA), the receipt came with the surcharge noted on it. It worked out at 3.50% (INCLUDING TAX). Really? I had to pay tax on the surcharge? Is that even legal?

      But adding on that surcharge increased the amount of the credit card transaction so the pub ended up paying even more processing fees.

      I won’t go back there until they withdraw this HIDDEN POLICY, so they lose out in the end. Plenty more places to spend my money, what there is of it.

      If people reduce their use of credit cards, that’ll hit the likes of VISA and Mastercard who’ll just increase their charges even more to recoup their losses. Adding surcharges is a very short-sighted policy. It is also the cost of doing business. I’d far rather see pubs etc. increase their charges, that way nothing is hidden. At the same time they should also increase their charges in order to pay their staff a proper wage and stamp out the demeaning tipping habit.


        We have found the submission form for visa as well as mastercard… however, i have not been able to find anything for discover. Can you provide a link? Thanks in advance


          This is in regards to letting the cc company know that we will be implementing a surcharge.

            Jessica Dinsmore

            Hi Heather,

            Great question. We were able to find you a fillable pdf link here. Best of luck to you!

              Dan Ferguson

              Is the fee dependent upon the location of my business or the purchasers business? For example I am a Colorado based business so am I able to charge a surcharge for payment by credit card from a Florida based customer?

                Jessica Dinsmore

                Hi Dan,

                We weren’t able to determine a definitive answer to your question, but since surcharging laws are intended as a consumer protection measure, it would make sense that the law governing the consumer’s location would take precedence.


                  I live in Iowa. Most auction companies charge 5% for using credit and debit cards. Those companies along with others say they charge so much to offset the cell phone use to process the payment. Most of these companies add your total bill then add the surcharge and process this as amount owed. Most of these companies also state they don’t get a exact amount they are charged so they just bill a high percent (guessing making illegal profit). Is there a government agency to report too.

                    Jessica Dinsmore

                    Hi Steve,

                    Iowa law now allows credit card surcharging, but only up to the actual cost of processing and never more than 4%. Complaints against businesses that may be violating this law can be filed with the Iowa Attorney General’s office. Best of luck!

                      Devin Foster


                      In addition to reporting to the Iowa Attorney General (as Jessica Dinsmore posted), you can also report the company to Visa and MasterCard directly. Good luck!

                        Andrew Damerau

                        hi there recently our credit card processor called to ask if we wanted to switch to a new system where our business would only be charged a monthly fee of $25 and any credit card processing fees would automatically be added to the customers credit card when we use it for there purchase it sounds to good to be true please advise thanks

                          Jessica Dinsmore

                          Hi Andrew,

                          Without knowing who your current processor is and what state you’re operating in it’s a bit hard to give a specific answer. Nonetheless, it’s likely that the “offer” from your processor isn’t as great as they say it is. There are probably other fees besides the $25/month fee, such as PCI compliance fees, chargeback fees, equipment leasing fees, etc.

                          We’d also want to know what kind of processing fees you’d be charged. A lot of processors are simply charging merchants the maximum 4%, figuring that they won’t care since it’s being passed onto their customers. This will usually backfire, leading to lost sales and unhappy customers switching to a competitor.

                          While surcharging can be a good idea if you’re in an industry where your competitors are already using it, we feel that it’s being oversold to merchants and ultimately only benefits the processors themselves. We recommend this article, where we profile several reputable providers that offer legitimate surcharging programs. Best of luck to you!

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