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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
  • UPDATED

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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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146 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Judy

    Hello, we are a manufacturer and have customers that pay up to 50 invocies at a time with a credit card. Other than the initial 30 day notification to our customers regarding the surcharge, how do we notify them if they pay invoices monthly? Before we process each payment? By law, does the surcharge have to be on each invoice? What about customers that have to prepay before shipping. Normally they send the CC info an it is processed, no receipt required. Do we now need to be on the phone with the customer as we are processing the card to let them know of the surcharge?

    Also, our Corporate office is in VA but will ship and bill to all states. Surcharges are allowed in VA so can we charge a surcharge to a customer in one of the states it is banned?

    Thank you,
    Judy

      David Olatilo

      Can a merchant charge surcharge on trust transactions?
      How should surcharge be settle for legal practitioners?
      Can I deposit surcharge in my trust account?
      As a merchant, In a situation where the invoice amount is $100 and surcharge is 3%, both processed in a single transaction. The processor takes 3% of the total transaction amount which is $3.09. Can I add the extra $.09 to the surcharge to make sure I get exact %100 settled into my account or do I have to bear the $0.09?

        Jessica Dinsmore

        Hi David,

        Any credit card transaction can be surcharged, although you might want to consult with a local attorney to make sure there aren’t any state laws regarding trusts that might apply. Surcharges can be as high as 4%, but cannot exceed the actual cost to process the transaction, so in this case, you should be able to recoup 100% of your processing fees.

          sandra l chrisman

          We invoice our customers for a monthly service in California using Quickbooks online. We are charged a fee for each payment the when the customer chooses to pay by CC. When it’s a small invoice it’s no big deal but we have some commercial clients who are recently wanting to pay by CC and that’s a huge hit when QB is charging us up to $150 per transaction. How is it legal for Quickbooks to charge us this fee in California but we are not allowed to pass that on to the customer who is choosing to use that convenience?

            Jessica Dinsmore

            Hi Sandra,

            QuickBooks Payments supports surcharging, but doesn’t advertise this capability. Also, surcharging is now perfectly legal in California, so you would be allowed to use it for credit card purchases. We’d recommend contacting Intuit to set it up to work automatically, rather than trying to manually add the surcharge. Note that some of the information in the QB Help forums is out of date, as CT and MA are now the only states that still prohibit surcharging.

              Jennifer Clark

              We have customers that call to make their payment over the phone using a credit card. What kind of notice is required to give to them so that we would be covered? They won’t see something posted, sometimes don’t request their receipt and they don’t go through a “check out” process where the disclosure would notify them.

                Jessica Dinsmore

                Hi Jennifer,

                Surcharging is still allowed in a card-not-present environment, but the merchant must notify the consumer prior to taking the payment. This gives them the chance to change their payment method if they don’t want to pay the surcharge.

                This scenario raises another problem: surcharges aren’t allowed if a debit card is used. While you could simply ask the customer whether they’re using a credit or debit card, the only reliable way to confirm the card type is by entering the card’s BIN number. The processing network can confirm the card type using this info. This is another reason to use an automated surcharging program from your provider rather than trying to do it manually.

                Here is more info on that. Hope this helps!

                  Daniel

                  I think it is 100% wrong to charge for CC use. The merchants use one of two arguments:\
                  1. “Gas stations do it”: wrong b/c their is a significant difference btw the profit margin of a gallon of gas and a dozen bagels.
                  2. “I have to cover rising prices and Covid”: wrong b/c so do I as the consumer and you are making it worse now.
                  My response to these greedy & short sighted merchants is that I too have a policy which specifically states that I do not pay any surcharges. If you add it on to my restaurant bill I deduct it from the tip. If you add it on to my purchase and there is no means for me to deduct it then I never return to your establishment.

                    Susana Iglesias

                    Hello! I was recently at a restaurant that charged a 4% surcharge on debit cards, doesn’t show the surcharge as a separate line item and is profiting off of the surcharge. Who can I contact in NJ to report the restaurant? I’d really appreciate any help. Thank you!

                      Jessica Dinsmore

                      Hi Susana,

                      Credit card surcharges are limited to an absolute maximum of 4% and never apply to debit cards (even if run as credit). You can contact the business owner and politely point out that they’re not allowed to do this — You’d likely be surprised by how many merchants truly aren’t aware of the rules. It could be an honest mistake. You can also file a consumer complaint with the NJ Attorney General if you wish. A phone call or letter from the AG’s office should solve the problem.

                        Susana

                        Thank you for your help!

                          Jessica Dinsmore

                          Of course! 🙂

                            Travis Scott

                            Is the CC surcharge based on the billing address of a customer or the billing address of the CC? For example, if the billing address for our customer is in Ohio, but the CC billing address is in CT (which is exempt from the surcharge), is the charge valid or do we have to exclude it? Thanks.

                              Jessica Dinsmore

                              Hi Travis,

                              We are not 100% certain, but we believe that the billing address of the customer would be controlling in such conflicts. Also, a mismatch between the customer’s address and the credit card billing address is a big red flag for possible fraud. While it could simply be that the customer moved and hasn’t updated their info yet, it could also be the case that a stolen card is being used.
                              However, this dilemma could be avoided altogether by using cash discounting (which is legal in all 50 states) instead of surcharging. Hope that helps!

                                Rita Dowdell

                                What is the protocol for a quotation vs a sale? If we are providing merchandise cost, but
                                do not know at the time of the quotation how the customer will pay we cannot determine if there would
                                be a service fee or not.

                                  Jessica Dinsmore

                                  Hi Rita,

                                  The rules on credit card surcharging don’t specifically apply to price quotes, but you are required to notify customers prior to the sale of the amount of the surcharge if a credit card is used. We’d recommend including the amount of the potential surcharge as part of the quote, with an explanation that it only applies to credit card sales.

                                    Michael Wondoloski

                                    The surcharge if applied to the transaction must by law be a separate line item. The business cannot profit in any way from said surcharge also.

                                      Jessica Dinsmore

                                      Hi Michael,

                                      Yes, you’re exactly right! We cover this in the Credit Card Surcharge Rules: Visa, Mastercard, American Express, & Discover portion of the post:

                                      2. Surcharge amounts are limited to your effective rate for credit card transactions, capped at 4% (2% in Colorado). In other words, you can’t profit from surcharges; you can only recoup your baseline costs.

                                      4. You need to include the surcharge amount on the receipt as a separate line item. The surcharge also needs to be included in the network authorization request and settlement. (Note: American Express is the only brand with an exception to this rule.)

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