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Shifting Card Acceptance Costs to Consumers

More businesses are evaluating card acceptance models that can reduce processing fees by passing them to consumers. Here's a closer look at four options.

Card processing fees are an unavoidable cost for most businesses. Despite the convenience that payment cards provide to customers, they can also impose substantial costs on underlying businesses.

More and more businesses are evaluating card acceptance models that lessen the burden of processing fees by passing those costs on to consumers. The options fall into four categories – service fees, convenience fees, surcharging, and cash discount. Let’s take a closer look at these options.

Service Fees

Service fees are only available to certain types of businesses, specifically government and educational entities. Service fees must be properly communicated and disclosed, and purchasers must have the opportunity to cancel their order to avoid them. In addition, service fees can be assessed as a fixed or variable amount, are available via all payment channels, appear as two separate transactions, and can be assessed on recurring payments.

Convenience Fees

Convenience fees are applicable to businesses that primarily conduct business face-to-face. By adding a new payment channel, the business is providing a genuine convenience in addition to the ability to make in-person payments. For example, if a business has a bill payment counter that is staffed to take in-person payments, accepting those payments online or over the phone offers customers an added convenience. In this case, that business may be able to assess a convenience fee to offset the additional costs of phone or online payments. Convenience fees must be a flat rate, applied to all payment types, disclosed before the transaction is made, and cannot be assessed on recurring transactions.


Surcharging is a program that allows businesses to add an extra fee, or surcharge, to credit card transactions (debit cards are excluded) that offsets the cost of card fees. The surcharge cannot exceed 4% of total purchase price, but businesses can choose any percentage below that threshold. Despite the financial benefits that surcharging can create for businesses, it’s also subject to stringent rules and regulations by the card networks. In addition, surcharging is prohibited in a small number of states, currently Connecticut and Massachusetts. Technical compliance is imperative, and businesses must work closely with their payment partners to ensure that surcharging is being used appropriately and in accordance with the rules.

Cash Discount

Cash discount evolved as an alternative to surcharging. It offers a discount to the stated retail price for customers paying with cash or checks but doesn’t penalize card payments. A key component of cash discount is how it’s communicated to customers. Prominent, clear, and consistent signage is imperative so customers are aware of cash discount’s impact on their purchase price so they can choose their payment type accordingly. Click here to learn more about cash discount.

Are any of these programs right for your business? Get in touch with Paystri to explore your options.

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