Understanding Credit Card Surcharging: What Merchants Need to Know

Credit card fees are one of those unavoidable costs that can quietly chip away at a business’s profits.

Every time a customer pays with a credit card, the merchant absorbs interchange and processing fees that usually range from 1.5% to 3.5% of the sale. At first glance, that percentage might not seem like much, but across hundreds or thousands of transactions it can turn into a major hit on margins.

That reality is why many businesses explore surcharging—adding a small fee at checkout when a customer chooses to pay with a credit card. Instead of raising prices across the board, surcharging shifts the processing expense to the customers who opt for credit. Those paying with debit, cash, or check aren’t impacted. In other words, it’s not about creating extra profit, but simply covering costs that would otherwise eat away at the bottom line.

Surcharging wasn’t always an option. For years, credit card companies prohibited it, and state laws across the country enforced outright bans.

That changed in 2013, when a legal settlement required card networks to allow surcharges under certain conditions.

Fast forward to today, and most states now permit it—with a few exceptions like Connecticut and Massachusetts (at the time this article was published), and restrictions in states such as Colorado and Oklahoma where the fee cap is lower than the card brand rules allow. Merchants operating nationally need to pay special attention, as rules vary state by state.

Even when state law allows surcharging, card brands like Visa and Mastercard still impose strict compliance requirements. Surcharges can only be applied to credit cards—not debit or prepaid—and the fee cannot exceed the actual cost of processing or the brand’s maximum cap (generally 3% with Visa and up to 4% with Mastercard, though most merchants stay at or below 3%).

Businesses must also notify their processor before implementing a surcharge, display clear signage at the point of sale, and show the surcharge as a separate line item on the receipt. Getting this wrong can result in steep fines, so compliance is non-negotiable.

Naturally, many business owners hesitate. Won’t customers complain? Will they take their business elsewhere? The truth is, when handled transparently and fairly, most customers adapt without issue. They understand credit card companies charge businesses to accept their cards in exchange for customer convenience, and giving them the option to use debit or cash avoids the fee altogether.

In fact, surcharging is becoming more common across industries, and customers increasingly see it as standard practice rather than a penalty. For the business, the impact on profitability can be dramatic—often the difference between cutting into margins and keeping them intact.

This is where technology matters. Setting up a compliant surcharging program on your own can be complex, but with Paystri’s integrated surcharging solution, the hard work is done for you.

Our platform automatically ensures debit cards are excluded, applies the correct caps on fees, generates all required disclosures, and itemizes the surcharge properly on every receipt. It’s fully compliant with card brand rules and state regulations, which gives merchants peace of mind while reducing administrative burden. Setup is quick, ongoing management is seamless, and support is always available.

In the end, surcharging is about fairness. Instead of raising prices for everyone, it allows businesses to keep costs down for the majority of customers while passing along credit card expenses only to those who choose that method of payment. With Paystri’s technology, surcharging is not just possible—it’s safe, simple, and effective.

Ready to take back control of your margins? Contact Paystri today to learn how our integrated surcharging technology can be set up quickly, keep you fully compliant, and immediately reduce your cost of accepting payments.