Can You Legally Pass on Credit Card Fees to Customers?

If credit card processing fees are cutting into your business’s bottom line, it could be worth charging them to your customers. It's legal for business owners to do this — in most instances. Here are four options for passing along card fees, as well as the rules you should know for each.

1. Credit card surcharging

Credit card surcharging enables a business to charge an additional fee (up to a maximum of 3% of the total transaction for Visa and up to 4% for Mastercard) when a customer pays with a credit card. This is meant to cover the cost of the processing fees for the business.

Just don’t be surprised if card networks try to talk you out of implementing surcharges when you notify them. After all, surcharging may discourage customers from paying with credit cards. In reality, though, your most important consideration should be your customer base. How will your customers react to seeing an additional charge at checkout? It’s worth looking into whether your competitors use surcharging and even asking trusted customers for their opinions.

2. Cash discounting

Cash discounting, sometimes referred to as dual pricing, is another option available to business owners who wish to minimize the impact of credit card processing fees on their bottom line. Instead of adding a fee for card payments, businesses that offer a cash discount advertise both the full cost of a good or service (or the amount owed if purchased with a card) and a discounted price available to customers who pay with cash.

3. Convenience fees

Rather than attaching a fee to a specific payment type (e.g., credit cards), convenience fees charge for the specific payment method used (e.g., online). For example, businesses that typically accept payments in person may charge a convenience fee for transactions completed via an alternative, non-standard method — like a concert venue that lets you buy tickets over the phone or online. While imposing this fee wouldn’t offset the fees on all credit card transactions, it helps cover some.

4. Minimum purchase amounts

Businesses may prevent customers from paying with a card unless their transaction total exceeds a set amount, like $5 or $10. Processing fees for very small purchases may eat into the business’s profit enough that the business could actually lose money on the sale. Unlike the options above, there’s no extra fee involved in this strategy. However, it does let businesses be pickier about which transactions are worth paying processing fees for.

Payment processors with solutions for passing on credit card fees

Solution type: Credit card surcharging.

Why we like it: While Dharma’s surcharging solution comes with an added monthly cost, it also comes with extra benefits, including the ability to surcharge for card-present and card-not-present transactions within Dharma’s virtual terminal and for invoiced and recurring payments. Dharma’s platform that enables the surcharge option also integrates with QuickBooks, which makes for smoother bookkeeping. Read our full Dharma Merchant Services review.

Solution type: Credit card surcharging.

Why we like it: Stax’s surcharging program lets businesses pass up to 100% of an online or in-person transaction’s processing fees to the customer. The company’s payment processing platform is best for high-volume businesses that process enough card transactions to negate the monthly subscription fee.Read our full Stax review.

Solution type: Cash discounting.

Why we like it: While many processors have begun to offer compliant credit card surcharge programs, National Processing stands apart with its compliant cash discount offering. As long as you meet the monthly processing minimum of $3,000, there’s no additional charge to make use of the cash discount program. Read our full review of National Processing.