Is Credit Card Surcharging Right for Your Business?

Credit card surcharging is a system that was prohibited by MasterCard and VISA until 2013 and is still not legal in every state. Surcharging is when the merchant passes along the credit card transaction fee to the consumer at the time of sale, not to be mistaken with debit card transactions. Its purpose is to help business owners compensate with interchange fees.


The guidelines you follow are pertinent to the credit card company you process through. There are some staple guidelines you need to remember to be compliant across the board:

  1. Your surcharge cannot be over 3% of the total 
  2. You cannot surcharge debit cards  
  3. It has to be correctly documented on the receipt under its own line 
  4. You cannot favor certain brands over others 
  5. You must have signage at the entrance to the store, your point of sales system and on your company website  


The biggest question you need to ask yourself, “is this right for my business?” Like any situation there are pros and cons to surcharging your customers, as well as alternative solutions. Using best practices, software solutions and cash discounts are examples of possible solutions to help price down your expenses. Besides that, it comes down to how you prefer to run your business and the type of clientele you have.  

Asking yourself what kind of business you have and who your customers are is your primary question. If you primarily deal with e-commerce and department store transactions, you are going to see an influx of credit cards in your business. Compared to if you are a local food joint that may see an equal amount of cash and card. What you do not want is the addition of credit card surcharges to decline the usage of credit cards.  


How can this help you? 

  1. You can reduce your expenses while still allowing your customers a choice for payment type 
  2. Customers can see the cost required behind using credit cards, if they pay with cash or a with debit card there is no fee 
  3. Allowing credit cards lets you offer additional convenient payment methods 


How can this hurt you?  

  1. Some customers will not be willing to pay that extra fee  
  2. There are a plethora of rules and regulations that need to be followed to execute this properly  
  3. Surcharging raises your effective prices after the surcharge is accounted for 


If you do not think surcharging is right for you there are other alternatives that can help you meet the same end goal. You can require a minimum cost to check out when using a credit card or change the way you accept cards all together. Also, consider using payment integration to automatically lower costs or consider changing your pricing model. It may be time for you to talk to your processor or consider switching to a new one. 

But if you have decided not to accept credit cards at all because of interchange fees, you can offer your customers cash discounts or promotions. There are a lot of different methods you can use till you find what’s right for your business model. 

If you are unsure of your next step, give us a call at USB, (410) 828-4286, and we will have our team walk you through your options, step by step. Helping you find the best solution for your business.