How Do You Legally Pass Credit Card Fees to Customers?

You can pass card processing fees to customers two legal ways: a surcharge, which adds a fee to card payments, or a cash discount, which posts the card price and gives cash customers a break. Both are allowed in most of the country if you follow the card brand rules, and a processor sets the program up so it stays compliant. Here is the difference and what keeps each one legal.

The two legal ways to pass on card fees

A surcharge adds a fee on top of your posted price when a customer pays by credit card. A cash discount posts the card price as your standard price and takes an amount off for customers who pay cash.

They get to the same place, but they are different programs with different rules, and this is where merchants get into trouble. Running a surcharge and calling it a cash discount is not allowed and carries penalties. Pick one, set it up correctly, and label it honestly.

The rules that keep a surcharge compliant

A surcharge follows the federal and card brand rules. In practice that means:

• Disclose the fee before purchase and again on the receipt, so the customer sees it in advance.
• Cap it at your cost of acceptance, up to the card brand limit. You cannot profit on the fee.
• Never apply it to debit or prepaid cards, even when the customer runs a debit card as credit. This one is nationwide.
• Notify the card networks and your processor first. Surcharging has a registration step before you can start.

Where surcharging is restricted

A handful of states have surcharge restrictions on the books, but several of those bans have been struck down in court on free-speech grounds, which is why a lot of the advice online is out of date. The rules genuinely differ by state, so confirm your state before you start.

We keep the current position for the states where it matters most on their own pages: Texas, California, and Florida. If your state is not listed, ask us and we will tell you where it stands.

Cash discount: the simpler route

If you would rather not deal with surcharge rules at all, a cash discount program sidesteps most of them. You post card prices and give cash-paying customers a discount, which keeps you clear of the surcharge registration and the state-by-state restrictions. For a lot of merchants it is the cleaner option.

Who sets this up for high-risk merchants?

A processor that supports both programs and knows the rules. Structure Payments sets up compliant surcharge and cash discount programs for high-risk merchants, so the fees are passed correctly, the disclosures are right, and the account stays in good standing.

If you can't get a merchant account, your best chance is with us, because we'll do everything possible to get it for you.

Talk to us about passing on card fees

Frequently asked questions

What is the difference between a surcharge and a cash discount?

A surcharge adds a fee to card payments on top of your posted price. A cash discount posts the card price and takes money off for customers who pay cash. Both offset processing costs, but they follow different rules, and presenting a surcharge as a cash discount is not allowed.

Is it legal to charge customers a credit card fee?

In most states, yes, if you follow the card brand rules: disclose the fee before purchase and on the receipt, cap it at your cost of acceptance up to the card brand limit, never apply it to debit or prepaid cards, and notify the card networks and your processor first. A few states restrict surcharging, though several of those bans have been struck down in court.

Who sets up surcharging for high-risk merchants?

A processor that supports compliant surcharge and cash discount programs. Structure Payments sets these up for high-risk merchants so the fees are passed correctly and the account stays compliant.