Rules to Know If You’re Surcharging Credit Card Transactions

Credit card surcharging, now available with SertifiPay, is one of many options merchants have to lower transaction costs. In this case, merchants add a surcharge fee to their customer’s total bill to offset the costs incurred for processing a credit card transaction.

Because surcharging increases the overall total customers must pay, it should be considered along with other factors to decide if it's right for your business. If you are interested in surcharging, it’s critical to comply with the legal and regulatory requirements that come with it, so we’re summarizing considerations to research.

Please note requirements may change, and this post provides information as of October 2024. We recommend consulting with legal and financial professionals to ensure you comply with the latest regulations before implementing surcharges.

Location Laws

• Prohibited U.S. States: In states like Connecticut, Maine, and Massachusetts, merchants cannot impose surcharges on credit card payments.

• Regulated U.S. States: Some states, such as California and New York, have specific guidelines merchants must follow if they wish to surcharge customers.

• Cross-Border Transactions: Merchants offering cross-border transactions must comply with both local and international regulations on surcharges.

Disclosure Rules

• Network Disclosure: You must notify credit card networks, e.g., Mastercard and Visa, as well as your bank, at least 30 days before implementing surcharging.

• Customer Disclosure: You must clearly inform customers of the surcharge before the transaction. In the case of SertifiPay, the surcharge fee will be included in a total cost breakdown displayed to customers in the credit card submission form.

• Receipt Disclosure: The surcharge amount must be displayed in the customer’s receipt, which will automatically be sent to the customer’s email by your Sertifi portal once their card is submitted.

Compliance with Card Networks

• Visa and Mastercard: These brands require that the surcharge amount is the same for all credit card brands. Also, surcharging may not be used in a discriminatory manner, i.e., you cannot only surcharge a certain subset of customers.

• American Express: Like Visa and Mastercard, AMEX requires merchants to apply surcharging equally across all card brands and not favor other brands over AMEX.

Surcharge Limits

• Surcharge Caps: The surcharge is capped at 3% of the transaction amount for Visa and 4% for other brands. Other caps may apply in certain jurisdictions an/or limited to the amount charged by the card processor.

• Debit Cards: Surcharges can only be applied to credit card transactions, not debit cards (even when they’re processed as a credit transaction).

• Government Entities: Ensure you have a way to exclude government entities.

Alternative Options 

If you're surcharging, you must also offer a free alternative per Visa requirements. With SertifiPay, you can also accept ACH transactions, which cost significantly less to process than cards.