Can businesses charge a fee for paying with a credit card?

Many merchants find themselves wrestling with this question. They want to start accepting credit card payments from their customers, because accepting credit cards can help establish their credibility as a business, boost sales volume, and increase cash flow, among other benefits. But some businesses may balk at the idea of paying credit card processing fees. Won’t those fees add up over time?

Processing fees can definitely add up, so it’s smart to find a trusted merchant services provider who will give you a good rate and partner with your business to help you grow. But merchants also have the option to charge their customers additional fees to help offset the cost of accepting credit card payments.

Ultimately, merchants do have the ability to charge a convenience fee or a surcharge when customers pay with a credit card. Read on for the pros and cons and decide for yourself whether or not it makes sense for your business.

Rules for charging fees on credit card payments

When deciding if your business will charge customers a fee for paying with credit cards, it’s crucial to ensure you abide by all laws and policies set by stakeholders.

From the perspective of the credit card brands (Visa, Mastercard, American Express, Discover) and consumers, fees on credit card payments are an unnecessary burden on the customer. The card brands frown upon these fees, so they’ve set up a number of rules your business will have to follow. If you break these rules, it could have serious consequences for your business.

Before deciding whether or not to impose fees on credit card payments, ask the following questions:

1. Are you charging a convenience fee or a surcharge?

There are two different fees you can charge customers: a convenience fee or a surcharge.

Convenience fees are legal in all states; surcharges are not, so it’s important to know the difference.

Convenience fees are extra costs applied to payments made in a non-standard way. For example, most people buy museum tickets in person at the front desk. If you choose to buy tickets online, that’s outside the standard payment method, so the museum charges you a convenience fee for the advantage of using this alternative, more convenient payment method.

Surcharge, on the other hand, is a fee imposed on every credit card transaction, regardless of how it’s made, and is usually meant to recoup some or all of the costs of processing credit card payments.

Before charging customers, make sure you know whether you’re using a convenience fee or a surcharge.

2. If you’re charging surcharge, is it legal in your state?

Many states have deemed surcharge illegal, so you’ll have to do your research to ensure you’re following all laws in your state.

3. Are you charging the correct amount?

The card brands set limits on both convenience fees and surcharge.

Each of the cards brands has different rules on how to apply convenience fees. For example, Visa requires convenience fees to be a flat price instead of a percentage of the sale, while Mastercard allows either option. Do your research to make sure your business is following the appropriate rules.

For surcharge, the fee can’t be higher than your effective rate for credit card processing, and it can’t be more than 4%. This cap prevents merchants from making a profit off surcharging.

4. Did you properly notify everyone involved?

Before you can start charging a convenience fee or surcharge, you must notify:

  • The credit card association
  • Your acquirer
  • Your credit card processor
  • Your customers

The credit card association, acquirer, and credit card processor require at least 30 days’ written notice of your intentions to levy a convenience fee or surcharge.

You’ll also need to provide your customers with ample notification ahead of the sale. For brick and mortar stores, this could be physical signs by the door and cash register; for eCommerce stores, this could be a notice on the checkout page. The convenience fee or surcharge also has to appear as a line item on the customer’s receipt that clearly states the amount of the fee.

The verdict

So: can businesses charge a fee for paying with a credit card?

Yes, they can! Despite all the regulation surrounding these extra fees, it’s possible to act responsibly, stay within the limits, and make a decision that benefits your business.

Is it worth it to charge a fee on credit card payments?

Once you’ve sorted through all the laws and regulations around convenience fees and surcharge, you have to decide if imposing these fees will have a positive effect on your business.

One question worth considering is whether or not these fees will drive away potential customers. Ask yourself if your customers will be willing to pay extra, and determine what your competitors are doing. If your business is the only one in your niche imposing fees on credit card payments, then your customers will easily be able to turn to your competitors to avoid paying extra fees, and you’ll lose business.

Second, how will you disclose the new policy to your customers? Will you make an announcement, or let customers discover the change on their own? Will you explain your reasoning behind the decision? What is the best way to implement this new change without damaging existing customer relationships?

Third, instead of penalizing customers for using credit cards, can you incentivize them for using cash? Of course, for merchants, convenience fees and surcharge aren’t a penalty, but a way to offset the cost of credit card processing. But for customers, these extra fees can leave a bad taste in the mouth. So instead of adding extra fees to credit cards, some merchants give discounts when customers pay with cash. This method has the added bonus of allowing merchants to avoid all the laws and regulations surrounding convenience fees and surcharge.

And finally, if your credit card processing fees are so high that you’re considering convenience fees or surcharging, maybe the solution isn’t to impose extra fees. Maybe it makes more sense to negotiate lower processing fees or switch to a better merchant services provider. Look for those that offer several different pricing options and solutions that can lower your processing costs.

If you decide to move forward with surcharging or convenience fees, use a payment integration like EBizCharge to automatically add surcharge to all your transactions.


At the end of the day, businesses can charge a fee for paying with a credit card. It’s up to you to weigh the pros and cons and decide what’s best for your business.