To legally notify customers of credit card processing fees, clearly disclose them before transactions via signage at the point of sale, on e-commerce checkout pages, and itemized on receipts. Surcharges (typically 3-4%) must only apply to credit cards, not debit cards. Use clear, simple language, such as: "A 3% surcharge applies to credit card payments".
Am I required to disclose the surcharge to my customers? Yes. U.S. merchants that surcharge must disclose the surcharge dollar amount on every receipt. In addition, disclosures that a merchant outlet assesses a surcharge on credit card purchases must be posted at the point-of-entry and point-of-sale.
Credit card processing fees are the fees a merchant pays for each credit or debit card sale. This fee is predetermined by your merchant services provider and can include fees such as interchange fees, assessment or service fees, chargeback fees, and more.
A standard wording could be: “A credit card convenience fee of [percentage or flat amount] will be applied to all transactions. This fee is charged to cover the processing costs associated with credit card payments. Please note that this fee does not apply to other payment forms such as cash or debit cards.”
“We impose a surcharge X% on credit card purchases, which is not greater than our cost of acceptance.” It's that easy! You could also add the phrase “We don't surcharge cash or debit card transactions,” or add which card brands you accept.
Yes, charging a 3% credit card fee (surcharge) is generally legal in most U.S. states and follows card network rules (like Visa's 3% cap), but it depends heavily on your location and requires strict adherence to rules, such as not surcharging debit cards, capping it at your actual processing cost (not to exceed 3% for Visa/4% for Mastercard), and providing clear customer notification. Some states (like Connecticut, Massachusetts, Texas) may have their own bans or restrictions, so it's crucial to check your specific state laws.
The most common fees for accepting credit card payments are transaction fees, which are usually a percentage of the payment plus a fixed amount per transaction. You can pass on credit card processing fees to clients by adding a small percentage or flat fee to the invoice to cover those costs.
While many businesses choose to absorb credit card processing fees to maintain a frictionless customer experience, there are situations where surcharging can be a smart, strategic choice, so long as it's executed thoughtfully, legally, and transparently.
The 2/3/4 rule is a guideline, primarily used by Bank of America, that limits how many new credit cards you can get: no more than 2 in 30 days, 3 in 12 months, and 4 in 24 months, helping to prevent over-application and manage hard inquiries on your credit report. While not universal, it's a useful benchmark for responsible card application, though other banks have different rules (like Chase's 5/24 rule).
Examples of Credit Card Surcharge Fee Wording
“3% surcharge on all credit card payments.” “2.5% fee on credit card purchases.”
Payment processing fees refer to fees charged to merchants for processing credit card payments and online payments from customers. The amount of payment processing fees depends on the pricing model preferred by the payment processor, as well as the level of risk of the transaction.
Interchange fees are fees charged between banks for processing credit and debit card payments. If a customer completes a purchase using a card, your business' acquiring bank pays the interchange fee to the cardholder's issuing bank.
Legal Background in Canada
This was mainly due to card brand rules from Visa and Mastercard, which contractually prohibited surcharging. That changed in 2022. A class-action settlement between Canadian merchants and Visa and Mastercard gave businesses the ability to start surcharging customers for credit card payments.
The average credit card processing fee, which will be taken out of a merchant's sales revenue, is in the range of about 1.5 percent to 3.5 percent. Merchants can negotiate their card processing fees, and they are not set in stone.
If you believe a merchant is improperly charging customers or otherwise engaging in false or misleading sales practices, you should file a complaint with the Attorney General's Office. The Office uses complaints to learn about misconduct.
When using a credit card, remember the golden rule: only spend what you can afford to pay off in full each month. Carrying a balance leads to interest charges that can grow quickly. Paying off your statement balance each billing cycle keeps your costs down and your credit score in good shape.
What Is the 15/3 Rule?
Yes, charging a 3% credit card fee (surcharge) is generally legal in most U.S. states and follows card network rules (like Visa's 3% cap), but it depends heavily on your location and requires strict adherence to rules, such as not surcharging debit cards, capping it at your actual processing cost (not to exceed 3% for Visa/4% for Mastercard), and providing clear customer notification. Some states (like Connecticut, Massachusetts, Texas) may have their own bans or restrictions, so it's crucial to check your specific state laws.
Example 2: "Credit Card Payments Include a 2.5% Surcharge"
This wording clearly states that a 2.5% fee will be added to the total amount when paying with a credit card, ensuring customers know the additional cost upfront.
This practice is legal in all but four states — Connecticut, Maine, Massachusetts and Oklahoma. Other states allow surcharging but may limit the amount or mandate that the total price (including the surcharge) must be disclosed before the sale is completed. For example, Colorado caps the surcharge fee at 2%.
This rate and fixed fee can vary depending on the agreement with the payment processor and the specifics of the transaction. To calculate a 3% processing fee, simply multiply the total transaction amount by 0.03.
At-A-Glance. The five Cs of credit – character, capacity, capital, collateral, and conditions – refers to a method lenders use to assess a potential borrower's creditworthiness.