Understanding Surcharging Compliance

What is surcharging and what regulations do your users need to be aware of to integrate surcharging?

NOTE: Stax offers the technology that determines the card type and automatically adds the pre-set Surcharge amount that is displayed in Online and Card Present situations. In today’s business environment, credit card payment acceptance is more important than ever. To help offset the increase in credit card usage, Surcharging is a viable and legal option.

Surcharging is a fee automatically added to the bill or sale when a credit card is used for payment to offset the cost of transaction fees and is passed on to the customer.

Even though surcharging is straightforward, many regulations are in place by state laws and card brands that must be followed. 

First, make sure it is legal in your state, look at what card brands you accept, and understand some of the regulations.

Here is what you need to know

Notifying the card brands

  • Only Mastercard require merchants to submit a form notifying them of the intention to surcharge 30 days before the start date of surcharging.  

Disclosure to Customers

    • This notice is a requirement whether you are accepting payments online or in-person.
      • Card Present (in-person): Signage should be posted at the entrance and the Point of Sale location.
      • Online: Clearly defined within the checkout flow
      • Over the Phone: Verbal notice before payment is processed.

    The surcharge amount cannot exceed 3%, and the merchant cannot profit from the surcharge

    • Processing costs are variable based on the type(s) of cards you accept, we establish the percentage for you based on the card brands "level-playing field" requirements that mandate parody of the surcharging rate between all major card networks.
    • Our industry leading surcharging technology distinguishes credit vs. debit card types and automatically applies the surcharge rate to credit card transactions ONLY.

    Surcharge amount and sale price are processed in one transaction

    • Simply stated, merchants cannot process the amount for your product or service and then process the Surcharge amount. 
      • Example: 3% Surcharge fee + $100 sale = $103 total transaction

      The surcharging amount is displayed before processing and displayed on the receipt

      • This can be difficult to implement; however, Stax automatically places your surcharge amount within your payment types once configured. 
      • The sale, surcharge, and the total must be identified before processing and represented on the receipt.

        Applying Surcharging ONLY to Credit Cards

        • Debit cards (even if run as credit), Gift Cards, and Prepaid cards cannot be surcharged. 
        • Surcharging fees apply to all credit cards, whether a consumer card, rewards card, business card, corporate card, or purchase card.

          Is Surcharging legal in every state? 

          • Currently, two States and one US territory prohibit surcharging: Connecticut, Massachusetts, and Puerto Rico.

          • Continue to check your state laws if you reside in one of these states where surcharging is prohibited. Recently, many states have overturned their legacy anti-surcharging laws, such as Colorado and Kansas.
          • Each state has varied laws and legislature, but our experts will guide you through compliance. For example, Colorado law allows business owners to surcharge at 2% or the "merchant discount fee" as long as there is no profit from the fee. 


          Stax offers industry leading automated surcharging technology that takes care of all of the above for you. Our technology determines the card type, prohibited states, and automatically adds the pre-set Surcharge amount that is displayed in Online and Card Present situations.  


          At Stax, our team of Developers and Growth Managers will guide you through the enablement process and state specific laws ensuring you are compliant and advise on which surcharging payment acceptance solutions make sense for your merchants, from online payments, recurring billing, to card present (in-person) transactions.


          Contact your Growth Manager directly to discuss if Surcharging is right for you.