Can Merchants Charge a Credit Card Fee? Surcharge Vs. Convenience

Can Merchants Charge a Credit Card Fee? Surcharge Vs. Convenience

Can you add credit card surcharges to offset processing fees? Here’s what you need to know about surcharges, where they’re legal, and key rules & regulations.If you’re a retail or e-commerce business owner, you’re probably aware of the various fees associated with accepting credit card payments from your customers. 

But do you know whether you’re legally allowed to charge your customers a credit card fee? 

Perhaps you heard years ago from your local barber that some credit card fees are illegal, while others are perfectly fine. Maybe another business owner told you that surcharges aren’t totally legal or illegal, but they will drive your customers away.

It can be hard to figure out what is and isn’t true when it comes to credit card fees and surcharges, especially with the laws constantly changing.

That’s why, in this article, we’re going to review what current regulations have to say about credit card fees and whether merchants like you can legally charge them.

What are Credit Card Fees?

We included the pandemic-era restaurant receipt at the top of this post mostly for fun, but also to point out that only one of those listed fees is actually a credit card fee (the “non-cash adjustment”).

A credit card fee can either be a credit card surcharge—an added fee that a merchant charges to customers who pay with a credit card—or a convenience fee, which is not the same thing at all.

In the case of the receipt image, the non-cash adjustment of 3.5% is a convenience fee, not a credit card surcharge, because a credit card surcharge can be at most 3% (we’ll explain why later).

So, as far as we can tell, this restaurant owner is either in one of two U.S. states where credit card surcharges are illegal...or they just don’t know they can legally charge a credit card surcharge.

Yes, it’s confusing. But it doesn’t have to be.

What is a credit card surcharge?

To simplify things, a credit card surcharge is a fee charged to customers paying with a credit card for the sole purpose of covering the credit card processing fees the merchant has to pay.

This fee is typically a percentage of the total transaction amount and is intended to cover the cost of credit card processing fees.

Notably, credit card processing fees are capped at 3% everywhere in the U.S. except Colorado, where they can be at most 2%. This means that credit card surcharges can at most be 3% everywhere except Colorado, where they can at most be 2%.

Of course, this is assuming you’re paying the maximum credit card processing fee in your state. (If your merchant services provider is Nadapayments, for example, you won’t be.) 

For example, if your business is in Florida and you’ve negotiated a 2.5% CC processing fee rather than 3%, that means your credit card surcharge can at most be 2.5% as well.

It’s important to understand that credit card surcharges are not the same as convenience fees, which are fees charged for alternative payment methods, such as paying by phone or online.

What is a convenience fee?

While credit card surcharges and convenience fees may seem similar, there are some key differences. 

Convenience fees are fees charged for any alternative payment methods different from the usual payment method accepted in the store, such as paying by phone or online at a brick-and-mortar retail store. 

These fees are designed to cover the cost of processing these alternative payment methods and are typically a flat fee rather than a percentage. 

Convenience fees are typically charged on larger transactions, like mortgage payments, property tax payments, college tuition, and taxes. But they can be charged for day-to-day purchases as well.

Can you charge a convenience fee for credit card payments or debit cards? 

Yes—but only if you can demonstrate with reasonable proof that credit cards or debit cards are not the normally accepted method of payment at your business.

That being said, it’s very rare to see a business charge both a credit card convenience fee and a credit card surcharge. While this is legal under very specific circumstances, the juice likely isn’t worth the squeeze as your customer will notice the two fees—and they won’t like what they see.

Where and When Surcharges & Convenience Fees Are Legal

The legality of credit card fees varies by state. Here’s everything you need to know about who can charge surcharges and convenience fees and where they can charge them.


  • Can only be charged on credit card purchases, not debit card purchases.
  • Must be a percentage of the total transaction amount, not a flat fee.
  • Cannot exceed credit card processing fees, which are capped at 3% nationwide and at 2% in Colorado.
  • Legal in all 50 states and U.S. territories except for Connecticut, Massachusetts, and Puerto Rico.

Convenience fees:

  • Can be charged for any payment method that is not the standard payment method for a given transaction type.
  • Can only be charged if there is another preferred form of payment as an option.
  • Is typically a flat fee rather than a percentage.
  • Legal in all 50 states and U.S. territories.

Both surcharges & convenience fees:

  • Must be prominently and transparently displayed to customers on store signage and on receipts, and clearly labeled as such.
  • The major credit card issuers (Visa, American Express, Discover, and Mastercard) have different rules for surcharges and convenience fees that merchants must follow. These rules may vary from state to state.

The numerous laws surrounding credit card fees can be complex and difficult to navigate, which is why it is important to consult with an expert like Nadapayments before implementing credit card fees at your store.

Read more: Are Credit Card Surcharges Illegal? Here's Everything You Need to Know

Charging a Credit Card Fee Without Upsetting Your Customers

If you’re considering charging a credit card fee to win back some of your hard-earned dollars, it’s important to do it in an above-board way that does not upset your customers. 

One way to legally and diplomatically charge a credit card surcharge, for example, is to offer a discount to customers who pay with cash or another payment method that does not incur a credit card fee. These types of good-faith gestures can go a long way.

Another option is to be transparent about your credit card fee and explain why it is necessary in plain English. After all, most customers have no clue how card issuers work, or that merchants have to pay their card issuers to process credit card transactions.

By educating your customers about the cost of credit card processing fees, you may be able to mitigate any negative feelings they may have about the fee.

Are You Getting the Most You Can Out of Every Sale?

Credit card fees can be a complex and confusing topic for both merchants and their customers. But they’re also legal for a reason. 

Whether you’re running a business with low profit margins, like an auto-body shop, or one with high prices, like a cosmetic surgery clinic, remember that credit card processing fees are a percentage of each sale, not a flat fee.

In other words, they can really cut into your profits. And your business deserves better than that.

If you do choose to start implementing credit card fees, however, be sure to do so in a way that is 100% above board and does not upset your customers. By offering discounts or being transparent about the fee, you can help ensure that your customers continue to do business with you.

Looking for a payment processing solution that meets the needs of your business? Contact Nadapayments today to learn more about our payment processing solutions and how we can help your business succeed.

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Aleksey Nugid
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