Build Your Business:

Surcharges for Credit Card Payments

July 8, 2013

Is it legal for your business to charge a surcharge for customers to pay with a credit card? Thanks to a recent law change, it may be.

Effective Jan. 27, 2013, the new law states that if you do not accept American Express, you can add a surcharge of up to 4% for credit card purchases by disclosing a flat fee upfront and on your receipts. If you operate your business in one of 40 states that has approved this law, you now have the option of charging a fee to your customers for the convenience of using a credit card to pay for your goods or services.

Before you change your policies, there are certainly some things to consider. Who are your customers (business and/or consumers) and how will they respond to such a charge? Will instituting this change damage your relationship? Do the fees you currently pay severely eat into your bottom line? Does it make more sense to inflate your pricing across the board by 2%-4% to cover the fees and then offer a “cash discount” of up to 2%-4% for customers who pay by cash, check or debit? Is it worth your while to continue to eat the cost of this fee/convenience to maintain a positive relationship with your customers? If you’re taking American Express and are not allowed to institute this surcharge, does taking American Express still make sense for your business?

Some business owners think, “Why upset the apple cart?” For so many years, it’s been illegal to add this surcharge, so why change now? Others think instituting these types of charges is critical to their ability to regain some margin.

Important Considerations
There are a few important points to note should you be considering instituting a surcharge.

1. You may not impose a fee for debit or prepaid cards.

2. The surcharge must be clearly understood by your customer upfront. (In retail it must be listed on the door and at your point of purchase. Online, it must be stated on the first webpage that mentions credit card brands.)

3. The fee must be clearly laid out on all receipts, in retail and online. You can encourage cash, check or debit transactions by offering a discount for using these forms of payment.

4. The following states do not allow surcharges for credit card transactions: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

For official information on this new law, please see Visa’s statement.

Ultimately, only you know what is best for your business and the practices you choose. For better or worse, ours has increasingly become a consumer society that uses plastic rather than cash. What’s most important is maintaining your profitable customer relationships. Because a surcharge must be applied to everyone (or no one) and clearly established before a sale, it will be a big decision for your company.

Darrah Brustein is co-founder of Equitable Payments, an Atlanta- and Austin, Texas-based merchant services brokerage and is a networking and business development expert. She worked in the wholesale apparel business before transitioning into credit card processing. For more information or to comment on this article, email Darrah at