Can I Charge Credit Card Fees to Customers?

Passing Along Credit Card Fees-Is It Legal or Illegal?

credit card machine


As a result of some litigation and a settlement reached against Visa and Mastercard, merchants in the United States and it’s territories are now allowed to pass along the cost of processing credit cards directly to clients using credit cards (but not prepaid or debit cards).

This fee is called “merchant surcharging” or “checkout fees” and it’s permitted in most states except the states that have banned merchant surcharges, which are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. In other states, it’s optional.

Recouping Charges

Depending on your local laws-you may be able to charge the client up to 4% on each transaction- though you can’t charge a fee greater than your actual credit card processing cost.


Merchant surcharging, like sales tax, can be automatically added to their bill.

Considerations for Starting Merchant Surcharging or Whether to Charge Credit Card Fees to Customers

If you would like to start to charge credit card fees to customers, and are allowed to by your state- consider the following before starting this practice:

  • Prior to imposing a credit card surcharge, you must must provide a 30-day written notice to Visa and/or MasterCard and their credit card banks or processors of their intent to add a surcharge
  • Consider whether outlining this charge on your client’s bill, will offer your competitors who are not charging this surcharge, an advantage
  • If processing costs are included in your pricing structure, it is possible that charging merchant surcharges will allow you to lower prices across the board, making your business more competitive. This may be the case if most of your customers pay with cash, check, or debit cards.
  • Alternatively, depending on when you last raised your rates-you can consider slightly raising your rates in lieu of the extra charges to their bill to cover the credit card charges, as clients expect periodic price increases to services
  • Make sure that you notify your clients, in advance, verbally and in writing, and post notices that you are charging the surcharge, outlining their payment options such as cash, debit card or prepaid card, so they can decide beforehand their desired method of payment
  • You cannot keep checkout fees if you provide a refund to your clients, e.g. as in the case of a missed or cancelled appointment. When issuing refunds, you must also refund any checkout fees that were charged
  • Make sure you have a system in place to track and monitor the status of all payments. Get into the habit of monitoring your bank account and credit cards accounts
  • Make sure you have system in place to safeguard all credit/debit card, and other protected information

The bottom line here is that you need to think strategically before you decide to charge fees. And if you do decide to pass these costs along to clients, you will need to plan for these changes, notify all parties involved, and put systems in place to manage and track fees collected.

Find out more at the GSA website


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