Surcharging FAQs:
Am I allowed to surcharge?
Not every state allows surcharging, so you must know where it’s prohibited (Connecticut and Massachusetts currently) and where it’s permitted. It’s a good idea to check with the State Attorney’s office.
Is surcharging limited to credit cards?
Yes. Federal law prohibits surcharging on prepaid and debit cards even if they’re run as credit.
How much am I able to surcharge?
Because it was meant to cover costs rather than make a profit, surcharging cannot exceed your processing costs. Mastercard currently caps surcharging at 4% and Visa at 3%. Some states have their own surcharging caps, as well.
Do I have to let my customers know about surcharging?
Yes. Surcharges must be disclosed to customers before the transaction and listed as a separate line item on receipts and invoices. At physical, brick-and-mortar stores, signs explaining surcharging are required at the entrance and the checkout counter. Online businesses need to disclose surcharging on the website’s checkout page before card information is entered. For phone orders, surcharges must be disclosed verbally.
Who else do I have to inform?
Your payment processor and relevant card networks need to be notified at least 30 days prior to surcharging. You may need to specify whether you’re using brand-level surcharging (such as all American Express cards) or product-level (like Visa Signature cards).
Are there penalties if I am not in compliance?
Yes! Businesses will be fined if surcharging is not done in compliance with the card brands, state laws, and federal regulations. In addition, repeat violations will result in a business losing its ability to accept credit cards.
Read the section below titled "Penalties for Illegal Surcharging" for more details.
