What is Surcharge Pricing? A Transparent Way to Offset Credit Card Processing Fees
Surcharge pricing, also known as credit card surcharging or a checkout fee, is a payment processing model that allows businesses to pass on the cost of credit card processing fees directly to customers who choose to pay with a credit card. This approach helps merchants offset the expenses associated with credit card transactions, which can range from 1.3% to 3.5% of the transaction amount.
How Surcharge Pricing Works
When implementing surcharge pricing, a business adds a small percentage fee—typically up to 4%—to the total transaction amount when a customer pays with a credit card. This fee is clearly disclosed at the point of sale and itemized on the receipt, ensuring transparency. It’s important to note that surcharges can only be applied to credit card transactions, not debit card payments.
Compliance and Legal Considerations
While surcharge pricing is permitted in many U.S. states, it’s essential to be aware of state-specific regulations. For instance, as of July 1, 2024, California prohibits credit card surcharges. Additionally, card networks like Visa and Mastercard have their own rules governing surcharges, including caps on the surcharge amount and requirements for disclosure.
Contact us to learn more about compliance and legal considerations for your business.
Explore the Features and Benefits of Surcharge Pricing for Your Business
Learn how surcharge pricing can help your business eliminate credit card processing fees.
Cut Costs
Surcharge pricing allows you to pass the cost of credit card processing onto the customer, freeing up your budget for other business needs.
Increased Profits
By implementing surcharge pricing, your business can increase its profit margin without increasing prices.
Greater Financial Stability
Surcharge pricing helps to stabilize your finances by offsetting credit card processing fees, enabling you to plan and budget more effectively.