TL;DR – Credit Card Surcharging 101 for Business Owners

You’ve probably heard about credit card surcharging AKA free credit card processing, 0% payment processing fees, or passing on the fees. We’ve put together a comprehensive guide to understanding credit card surcharging, and the pros and cons of passing on the fees to customers.

For those of you who want the skinny in less than 2 minutes, you’re in the right place. Let’s go!

1. What is Credit Card Surcharging?

Credit card surcharging is when a business adds a fee (2.4%) to a customer’s bill when they pay with a credit card. It helps cover credit card processing costs, which would otherwise eat into the business’s margins.

2. How Does Credit Card Surcharging Work?

Instead of the business absorbing the fee, the customer pays it. For example, on a $100 purchase, a 2.4% surcharge means the customer pays $102.40 while the business keeps the full $100 after processing.

3. Why do Businesses Use Credit Card Surcharging?

To maintain profit margins, be transparent about fees, and nudge customers toward cheaper payment methods like debit or cash.

4. Is Credit Card Surcharging Legal?

Yes—but with rules. In Canada, the cap is 2.4%. In the U.S., most states allow it with caps (e.g., 3% for Visa, 4% for Mastercard), but some places like Massachusetts, Connecticut, and Puerto Rico prohibit it. For more information, check our guide on credit card surcharging or consult your local rules.

5. What are The Pros and Cons of Credit Card Surcharging?

Pros:

✅ Keeps margins healthy
✅ Encourages cost-effective payment methods
✅ Promotes fee transparency

Cons:

⚠️ Might irritate customers or hurt loyalty
⚠️ Requires legal compliance and clear disclosures
⚠️ Could create operational headaches (e.g., more cash, cheques, or admin work)

Is credit card surcharging right for your business?

Figure out whether passing processing fees to customers makes sense for your business.

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6. What are The Most Important Considerations Before Implementing Credit Card Surcharging?

• Will your customers accept it?
• What are your competitors doing?
• How big are your average transactions?
• Do you have a plan to train staff and communicate the change?
• Could loyalty programs offset any backlash?
• Can the cost savings be reinvested into the business?
  
  
  

Bottom line

Surcharging isn’t for every business, but it can be a smart move—especially if done thoughtfully, legally, and with customer experience in mind.

Credit card surcharging—explained

Discover how it works, legal requirements, and tips to protect your margins without losing customer trust.

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