Credit Card Surcharges: Are They Right for Your Business?

Credit card surcharges can cut your operating expenses by passing the cost to consumers. We weigh the pros and cons of this approach to help you decide.

Credit card fees can take a chunk out of your company's bottom line. Some businesses decide to pass these costs to the consumer in the form of credit card surcharges. 

If you're looking for ways to reduce the expense of accepting credit cards, review this guide for a thorough investigation of the pros and cons of implementing surcharges.


What Is a Surcharge?

Some merchants add a surcharge to customer bills that covers the cost of credit card fees. This method lets businesses accept credit card payments without the expense normally associated with these transactions. You might hear about "free" or "no-fee" credit card processing, which usually means you pass the surcharge along to the customer instead of absorbing it as the merchant.

The surcharge is usually a percentage of the person's purchase amount. For example, if a customer uses a credit card to buy a $50 item and you have a 2% surcharge, the final bill would be $51.

Are Credit Card Surcharges Legal?

Most states legally allow credit card surcharges. However, you have to follow federal and state laws if you decide to include these fees on customer bills. For example, New York businesses have to advertise the full price of products and services including the surcharge if applicable. Also, you can't charge these fees on debit card or prepaid card transactions.

Credit card surcharges are illegal in Oklahoma, Massachusetts, and Maine. In Connecticut, you can't add a surcharge that applies only to a certain type of payment method.

You'll need to follow rules from each of the three major credit card issuers (Visa, Discover and Mastercard) about customer disclosure when adding surcharges. You have to notify customers about these fees on signs in your physical location (both at the entrance and register) as well as on invoices and receipts. 

You'll also need to notify Mastercard and Visa in writing at least 30 days before you plan to start adding surcharges to transactions using those cards. You can charge either product-level surcharges or brand-level surcharges, but you can't combine these fees. The brand refers to all cards from a particular issuer while the product is a specific type of card under the brand umbrella.

What's the Difference Between a Surcharge and a Convenience Fee? 

Many people lump convenience fees and surcharges into one category, but these charges aren't quite the same. Merchants can only charge convenience fees for accepting alternative payment methods, like if you buy concert tickets online instead of visiting the box office.

Conversely, credit card surcharges can apply to any purchase made with a credit card. Different laws govern these two types of fees as well. Thirteen states restrict or ban the use of credit card surcharges, while all states allow convenience charges. 

How Much Should a Surcharge Be?

The maximum credit card surcharge is 4% of the purchase price. Some states have lower caps on these charges. For example, in Colorado you can't charge more than 2% or the percentage your payment service provider charges (whichever is higher).

You may want to experiment with different surcharges to see how these fees impact your sales. Before you go this route, make sure you review state and local laws about surcharges so you can adhere to these mandates.

The Pros and Cons of Surcharges

Surcharging may carry these benefits for your business:

  • Reducing the cost of credit card payments, especially since few businesses can avoid accepting plastic in the digital age.
  • Providing the flexibility for your company to accept multiple payment methods regardless of associated cost.
  • Decreasing the risk of purchases without the card present, which typically have higher interchange fees.

On the other hand, it's important to consider these possible drawbacks of passing credit card surcharges along to your customers:

  • Impact on their overall experience and satisfaction with your business. Added fees can lead to cart abandonment and even cause some loyal customers to look elsewhere for similar products and services.
  • Competitive advantage. If you're the only company in your niche charging this fee, you'll likely lose business. Conversely, you could have the edge if you avoid adding surcharges to customer bills when it's standard practice in your industry.
  • Price increase. If you increase the cost of your products and services, you may price your brand out of the market. You need to carefully evaluate how much your audience will spend and whether you provide real value. If you don't, they'll eventually go elsewhere.

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  • An interface that's quick to set up and easy to use, whether you want to integrate other services with our API plug-ins or set up a customized checkout that doesn't require coding
  • Detailed payment tracking through our intuitive Pay Dashboard, with reporting capabilities so you can see exactly how surcharges and other changes affect your sales metrics
  • The ability to accept many different payment methods, including everything from credit cards to the latest digital wallet apps and electronic transfer tools
  • Level 1 compliance with the Payment Card Industry Data Security Standards (PCI DSS), offering high-tech tools to keep sensitive payment data safe

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The Bottom Line

If you're thinking about adding credit card surcharges, carefully evaluate how these extra fees might affect your audience. Once you move forward with surcharges, track and analyze sales to determine whether the impact makes sense compared to the cost savings. 

You can conduct market research about decreased sales after you add fees, particularly among customers who used to buy from your brand but haven't returned lately. If you decide to walk back a decision to include surcharges, you can potentially make up the lost profit by establishing a minimum credit card purchase amount or giving discounts to customers who pay cash.

Regardless of your decision on this important financial matter, your company needs an affordable way to accept credit cards and other payment methods. makes it easy to customize checkout for your business and target audience, optimizing your ability to provide an outstanding user experience that supports strong sales. Click here to create your account now.


What's the best way to accept credit cards online? provides an easy-to-use, full-service payment infrastructure to accept multiple methods of payment, including credit cards. We use a transparent structure with a flat per-transaction fee, so you won't be caught off-guard by an expensive bill. We also protect every transaction with the highest level of industry security compliance, including high-tech tokenization.

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Are there any disadvantages to charging surcharges?

Credit card surcharges can discourage customers from buying from your company, especially if your competitors don't charge these fees. You might find that you lose business by passing these costs along to clients and consumers.

Can a small business charge surcharges for credit cards?

Small businesses can charge credit card surcharges. You can reduce your operating expenses by charging this fee, but you also run the risk of diminishing the customer experience, possibly negatively affecting sales and increasing the rate of abandoned carts.

Can an online business charge surcharges?

Online businesses can add credit card surcharges to customer shopping carts. Like other types of businesses, they must follow state laws that govern these charges as well as credit card issuer requirements for disclosure. You have to tell customers about these fees so they understand each charge on their bills.

Meet the author
Andrea Miller
Andrea Miller has been a writer and editor for more than two decades. Specializing in business and finance, she has written for some of the major websites in the financial sector. Outside of work, she spends most of her time with her family and enjoys hiking, yoga, and reading.
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