As credit card processing costs continue to rise, many business owners are looking for ways to protect their bottom line. One strategy that’s gained traction is surcharging—adding a small fee to credit card transactions to offset processing expenses. But surcharging comes with strict rules, legal requirements, and customer perception concerns that every merchant should understand before implementing it.
At Beacon Payments, we prioritize transparent, compliant payment solutions. Here's everything you need to know about credit card surcharging, how it compares to dual pricing, and what to consider before moving forward.
What Is a Credit Card Surcharge?
A credit card surcharge is an additional fee added to a sale when a customer chooses to pay with a credit card. This fee helps the business cover the cost of accepting that payment.
Example:
If your posted price for an item is $100, and you apply a 3% surcharge, the customer would pay $103 when using a credit card.
📌 Important: Surcharges can only be applied to credit card transactions—not debit or prepaid cards.
Surcharging vs. Dual Pricing: What’s the Difference?
Many people confuse surcharging with dual pricing, but the two models are different:
| Feature | Surcharging | Dual Pricing |
|---|---|---|
| What It Does | Adds a fee to credit card payments | Displays two prices: cash and card |
| Legal Status | Not allowed in some states | Legal in all 50 states (if done properly) |
| Compliance Complexity | High (with card brands and states) | Lower (with proper signage) |
| Receipt Display | Shows surcharge as separate line item | Shows selected price only |
Where Is Surcharging Legal?
While surcharging is legal in most of the U.S., some states restrict or prohibit it entirely. As of 2024, surcharging is prohibited or limited in:
- Connecticut
- Massachusetts
- Puerto Rico
Laws and enforcement can change, so it’s important to check with your state or consult with a payment professional before adding any fees.
Card Brand Requirements
Visa, Mastercard, American Express, and Discover all allow surcharging—but they set strict rules:
- You must notify the card brands at least 30 days in advance of implementing a surcharge
- You must disclose the surcharge at the point of entry, point of sale, and on receipts
- The surcharge cannot exceed 3% or your actual cost of acceptance, whichever is lower
- You must apply the surcharge uniformly to all credit card brands you accept
- You cannot surcharge debit or prepaid cards, even if run “as credit”
Failure to follow these rules can result in fines, loss of processing privileges, or account termination.
Best Practices for Transparent Surcharging
If you’re considering implementing a surcharge program, here are a few tips to keep it customer-friendly and compliant:
✅ Be upfront and transparent
Display signage at the entrance and point of sale, and ensure receipts clearly show the surcharge.
✅ Keep the math simple
Use a flat percentage (typically 3%) that customers can quickly understand.
✅ Train your staff
Make sure employees can explain the policy and answer questions confidently and respectfully.
✅ Monitor customer feedback
If customers begin expressing frustration or taking their business elsewhere, it may be time to reevaluate.
Is Surcharging Right for Your Business?
That depends on your industry, customer base, and sales volume. While it may help offset rising costs, some customers react negatively to added fees—especially if they’re not clearly disclosed.
Dual pricing is often a better alternative, offering a compliant, transparent way to offset processing fees while giving customers a choice.
Final Thoughts
Surcharging can be a useful tool—but it’s not without its risks. Between legal restrictions, card network rules, and customer perception, it requires careful implementation and oversight.
Want to explore fee-reduction options without the compliance headache?
Contact Beacon Payments today to learn more about dual pricing and other solutions that help you keep more of your revenue—without compromising on compliance or customer experience.