How to Successfully Implement a Credit Card Surcharge Program In Your Practice

Tim Sines

Passing on credit card fees to customers has been hotly debated, but most of the country has agreed: Credit card surcharge should be available to merchants. 

As of the time of publication, this practice is allowed in all but a few states; Connecticut, Massachusetts, Maine, and Oklahoma are still working to turn the tides. Everywhere else, surcharging is officially on the menu.

What is Credit Card Surcharging? 

For anyone new to the term, surcharging is a payment processing option allowing merchants to pass on credit card fees. Customers who want to use their credit card have to pay an additional fee covering the processing costs. 

You may have come across no-fee credit card processing. This is typically surcharging wrapped up in a packaged service—usually with an increased merchant fee. 

Setting up a surcharging program can be a bit complicated, but once done, it runs automatically.  

Surcharge rules do differ from state to state. There are federal laws and state laws that need to be followed to implement surcharging legally. 

The Ideal Accounting Invoice Template

Don't let your invoices cause confusion and slow down the payment process. Get paid faster using our ideal accounting invoice template.

Why Should You Consider Implementing a Surcharging Program? 

Credit card processing fees take a significant chunk out of your bottom line. Businesses of all sizes feel the stress of it. But small accounting practices, in particular, can be crushed by these fees. 

To be competitive, you have to accept card transactions. There’s no way around it. The only choice some merchants have is adding surcharge fees instead of fully shouldering the processing costs. 

Customers can choose to pay the fees or select an alternative form of payment. Cash payment incentives are a popular alternative. 

Can Credit Card Surcharges Be Passed to Customers Using a Debit Card? 

No. Surcharge fees cannot be added to debit card transactions or prepaid cards. This makes debit cards one of the alternative forms of payment your customers could select. Sure, it does mean you have to pay the debit card processing fees to your payment provider. However, debit card processing fees are capped, and the interchange rates are less than credit card processing rates. 

What are the Steps Involved in Starting and Running a Credit Card Surcharging Program? 

Setting up a credit card surcharging program requires a reasonable amount of work. If you endeavor to do it all yourself, you have to follow these steps carefully. Also, be sure to check your local rules and follow them. 

If you’re working with a payment processing provider like Mango Payments, we can take care of much of the following. Still, there are best practices that every merchant should consider to keep their customer relationships strong as they transition. 

Step by step, here is all you need to do to set up your credit card surcharging program: 

1. Explore your options with your merchant service provider

Not all merchant account providers have the capabilities or services for surcharging. This means you may have to switch vendors to set up your surcharging program. 

Even if they offer a surcharging service, a review is wise to ensure you’re getting the best solution. If you have to swap, consider a provider like Mango Payments that helps you with the setup and offers flexible solutions. 

2. Notify the appropriate people

When you set up surcharging, most card networks need written notice at least 30 days before its introduction. 

The easiest way to approach this is to call your merchant account provider and ask who you need to notify. Providers with strong surcharging solutions, like Mango Payments, will have all the necessary information on hand to save you from searching online. 

3. Plan your communication with customers

There is no legal requirement to tell customers ahead of time that you plan to introduce surcharging. But it is advised. Communicating this intention to customers before it’s in place shows respect. It is a window where customers can feel grateful they don’t have to pay fees just yet. It also gives them time to consider why you would introduce this. It helps to build empathy with your motives. 

Once surcharging is in place, you’re legally obligated to post signage. Online businesses must have this notification on the checkout page. In this disclaimer, you need to highlight the rate charged and communicate that it is not more than the processing fees. 

Surcharging State Law and Card Brands FAQs 

If you opt to introduce surcharging, you have to pay attention to the legal limits of this scheme. These can change state by state. 

Where is credit card surcharging illegal? 

Unfortunately, Connecticut, Maine, Massachusetts, and Oklahoma do not currently allow surcharging. Puerto Rico also does not allow surcharging at this time. 

Where are there anomalous surcharge rules? 

California, New York, Florida, Texas, and Kansas all have anti-surcharging laws. Class action lawsuits are being fought in many of these locations to have the laws overturned. 

Colorado also has its own rules. The state’s laws give merchants the option to surcharge at 2% or implement a surcharge equal to the merchant’s processing costs, effectively passing them on to consumers. 

In California, there is a unique process where customers can report merchants to the Attorney General if they feel their surcharging practice is misleading. Californians then must be extra cautious about following the state laws and card network policies—more on those below. 

Meanwhile, New York allows surcharging if the merchant posts the credit card price in dollars and cents. 

Planning to Implement Credit Card Surcharging? 

With the forced shift to cashless payments in recent years, the case for surcharging has gained popularity. Switching to card transactions may have been convenient for customers, but small businesses have really felt the sting. 

That’s why surcharging—when implemented correctly and ethically—is a system worth considering. 

If you’re looking to save on credit card fees through surcharging, schedule your demo with Mango Payments—we’ll help you get surcharging up and running for your accounting firm.  

Unlock your accounting firm’s potential.

Save time, streamline workflows and get paid faster with Mango’s all-in-one Time and Billing Practice Management software.

Blog Categories

Recent Articles

2 clients are smiling while the CPA is discussing

Shifting Gears: Offering Client Advisory Services Post Tax Season

If you run your own practice, you know all too well the…

Happy Fourth Anniversary! Celebrating the Release of Mango’s ImagineShare Client Portal & eSignature Module

Happy Fourth Anniversary! Celebrating the Release of Mango’s ImagineShare Client Portal & eSignature Module

At Mango, we enjoy a good celebration-and we can’t think of a…

Accountants How to Stop Leaving Money on the Table

Accountants: How to Stop Leaving Money on the Table

One big challenge that accountants, medical practitioners, lawyers, and all independent contractors…

Integrated Payments System at Your Accounting Firm

The Pros and Cons of Integrated Payments

In this post, we discuss why you should use an integrated payments system at your accounting firm, along with three considerations to keep in mind.

What is a realization rate

How To Increase Your Realization Rate

In this guide for accountants, we discuss what is a realization rate, and how you can use this metric to improve your firm’s profitability.