Understanding Surcharging Compliance

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

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 that is 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. 


To start…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 Visa and Mastercard require merchants to submit a form notifying them the intention to Surcharge 30 days prior to the start date of surcharging.  
  • Here are the Surcharging notification forms from Visa and Mastercard.
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

    NOTE: Stax Connect does this for you, so you don’t need to worry!

      • Over the Phone: Verbal notice prior to payment being processed.

    The surcharge amount cannot be greater than 4%, and the merchant cannot profit from the surcharge

    • Processing costs are variable based on the type(s) of cards you accept, but don’t worry, we establish the percentage for you. 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: 4% Surcharging fee + $100 sale = $104 total transaction

    NOTE: Stax Connect handles all of this for you.

      The Surcharging Amount is Displayed Prior to Processing + Stated on Receipt

      • This can be difficult to implement, however Stax automatically places your Surcharge amount within your payment types once configured. 
      • The Sale Amount, Surcharge Amount, and Total must be clearly identified before processing and also represented on the receipt.

      NOTE: we handle this for you too.

        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 it is a consumer card, rewards card, business card, corporate card, or purchase card.

        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. 

          Is Surcharging legal in every state? 

          • Currently there are three States and one US Territory that prohibit surcharging: Colorado*, Connecticut, Massachusetts, and Puerto Rico.
            *On July 1st, 2022, new legislation takes effect permitting surcharging in Colorado.
          • Continue to check with your state laws if you reside in one of these states where surcharging is prohibited. As of recently, there have been many states that have overturned their legacy anti-surcharging laws such as Colorado and Kansas.

          At Stax, our team of Developers and Partner Success Managers will guide you through the enablement process 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 Partner Success Manager directly to discuss if Surcharging is right for you.