Yes, a surcharge can help you recoup some of the expenses associated with accepting credit cards for payment. But this must be weighed against how this cost passed on to your customers will make them react.

But even before you consider adding a credit card surcharge, it’s important that you understand the basic rules and regulations that apply to surcharges. There are several of them, and they can greatly affect whether or not surcharges are appropriate for your business.

First, you must know that surcharges are prohibited in some states where you might sell your products or services. As of this writing, Connecticut, Massachusetts, Maine, and Puerto Rico do not allow credit card surcharges and there are additional requirements and risks for surcharging in California, Colorado, Florida, Kansas, New York, Oklahoma, and Texas. If you have customers in these states, you will need to know those states’ particular surcharge fee guidelines and abide by them.

Be aware that this list of states that prohibit surcharges may likely get longer as more states pass laws protecting consumers. Also, some states that do allow surcharges have certain limitations regarding how surcharges can be administered.

The reality is that legislation is changing rapidly in the area of consumer rights. Keeping up with these changes is essential. That’s why you will want to consult with your legal advisors before you decide to implement a surcharge program. They should be able to tell you what is taking place not only on the state level but also with federal policies.


Surcharges and convenience fees—are not the same.


It’s also important for you to know the difference between surcharges and convenience fees.

A surcharge is a percentage fee of the purchase price of a product or service that a customer is charged for the privilege of using a credit card. For example, a 3% charge when a Visa card is used. Surcharges can only be applied to credit cards.

This is different from a convenience fee.

A convenience fee is a flat dollar amount added to a purchase price for the convenience of making a payment in a way that inconveniences the merchant. For example, a straight $5 charge on top of any and all purchased products or services when paying online (the unusual way) instead of in-person (the usual way).

One of the advantages of a convenience fee is it can be applied not only to credit card purchases but also to cash, checks, debit cards, and prepaid cards processed on Visa- and MasterCard-owned networks. Another plus is that it is allowed in the same states where surcharges are allowed. The disadvantage is that you cannot apply a convenience fee when you do not have at least one card-present payment channel.

But be advised—you cannot charge a surcharge and convenience fee for the same credit card purchase. It’s only one or the other.


Plenty of other stuff you need to know (we told you).


If you elect to implement a surcharge, this surcharge must be applied to every brand of credit card you accept (though you may choose to surcharge only specific card products such as commercial cards). In addition, businesses that utilize surcharges are required to give the customer the opportunity to cancel the surcharged transaction and provide a surcharge-free means of payment. That means you need to offer an alternative payment method that is not surcharged. This allows your customers the ability to avoid the surcharge payment if they so choose.

But even before you decide a surcharge is right for you, you need to find out if it is allowed in your industry. There are specific MCC’s (Merchant Category Code) that are not eligible to surcharge credit card transactions.

Both Visa and Mastercard have their own criteria when surcharging, including a cap on the surcharge %. The amount of the surcharge cannot be more than the cost of accepting your customer’s credit card. So, you can’t assess a surcharge that exceeds your cost of accepting credit cards.


Your customers have rights that affect how surcharges are assessed.


Businesses must disclose at the point of sale that they are assessing a surcharge. For telephone orders, a verbal disclosure of the surcharge is permitted. A written confirmation is required for all other payment channels. Some states, such as Colorado, have laws specifying the exact disclosure language and where it must be displayed. Once more, you will want to confirm all aspects of your surcharge program with your attorney to ensure you have complied with any state and federal laws as well as card brand rules.

All invoices and receipts from your sales must clearly show the amount of the surcharge fee. Your customers must also be given an opportunity to cancel a transaction before the surcharge is assessed. They then need to be allowed to pay by another means that avoids the surcharge if that is their preference.

There’s more. Should a customer seek a refund for a purchase, the credit card surcharge that went with the purchase must also be refunded.


Before you opt for a surcharge, consider what your customers will accept.


As we said, deciding whether to add a surcharge is not easy. Ultimately it comes down to how your customers feel about paying an extra charge.

If you operate in a very competitive business environment, the higher cost resulting from a credit card surcharge might put you at a selling disadvantage. Your customers might react negatively to seeing this fee added to their bill. In response, they might take their business to a competitor. Or they might switch back to using a check. Checks are a lot less convenient for you than credit cards. They have a longer billing period and require additional invoicing and paperwork.

This is why it is essential to see what your competitors are doing and also to get a firm sense of the price sensitivity of your market. Remember, what is best for your customers is always what is best for you.


Finally, talk to your payment or software provider.


To make the changes, you will need to set up a surcharge system and you will want to contact either your payment provider, software provider or both. They should be able to work with you and your friendly lawyers to assess and implement a surcharge system that meets all state and card brand guidelines. They should also ensure you receive and pass on the correct surcharge rate.

Surcharge changes are coming to Visa. And to you.


Visa is instituting two big changes in its rules regarding surcharges.


Starting April 14th 2023 the maximum amount merchants can charge for a Visa credit card purchase will be lowered from the current 4% to 3%. This new rate applies to all merchants operating in the US and Canada. This new maximum surcharge rate align’s Visa’s rate with current industry standards.

Additionally, the way merchants inform Visa that they intend to add a surcharge to purchases made with a Visa credit card has also changed. Before, a merchant needed to inform both Visa and their payments processor 30 days in advance and in writing that they planned to add a surcharge. Now, a merchant only needs to inform the payments processor. This change also starts on April 14th.

These and some other changes being implemented by Visa are meant to benefit both merchants and customers by making the process of using credit cards smoother and more transparent. In particular, they should also increase consumer protections around processing fees.


What these changes mean for Qualpay clients.


For merchants who have Qualpay as their payments provider and intend to add a surcharge, you’ll be glad to know that we will handle much of what you need to do to meet these new Visa rules. This includes configuring your account, advising you on necessary disclosures and recommending a percent charge that we believe will work best for you and your customers. Again, you will need to inform us of your intention in writing 30 days in advance to comply with MasterCard requirements, before a surcharge fee can go into effect.

For Qualpay clients who are already applying a surcharge fee to Visa card purchases and those who intend to do so, the surcharge amount must be sent through the Qualpay Payment Gateway in the amt_tran_fee field. Qualpay then mapped this field to a Visa field that must be included in all Visa transactions having a surcharge.


Questions? You know who to call.



Phone: 207-321-1150

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About Qualpay

Qualpay is a technology-first, flexible payments platform. We simplify and improve the payments process for merchants across a range of industries, and we help ISVs create value for their customers with elegantly embedded payment and banking services. Qualpay leverages the most up-to-date technology to reduce costs and streamline back-office operations.

Learn more about our affinity partnership with the NPGA



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