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Table of Contents

What is surcharging?

A surcharge is an additional fee that a merchant can add to a transaction when a consumer uses a credit card for payment. A credit card surcharge is a fixed percentage fee on eligible credit card transactions at checkout (paid by the consumer). Surcharge fees are typically added to the final transaction total and itemized at checkout.

Why should my business use surcharging?

Businesses use surcharging to lower their credit card processing costs. Your business can offset the processing fees by bypassing some of the fees on to your customers that pay with a credit card. 

What should I consider before adding surcharging?

  • Possible negative impact on your customers’ experience. It will raise their prices and discourage credit card usage, which may be their preferred payment method.

  • You are required to disclose surcharges to customers. This must be done via signage, documentation, receipt, etc.

  • You are responsible for understanding the rules and regulations. 

  • You are required to offer at least one payment method that is not subject to a surcharge.

Do surcharging regulations vary by card brand and location?

Card brands and states have different regulations. Your Merchant Service Provider will help you navigate the rules for your business to maintain compliant surcharging. 

Surcharging applies to credit cards only. As of December 2022, the following points are the requirements across all 50 states, the federal government, and the card networks/payment processors:

  • State surcharge restrictions: as of April 2023, Connecticut, Massachusetts and Puerto Rico prohibit surcharges. Colorado caps surcharging at 2%, while the other states and U.S. territories have different rules about how merchants may surcharge.

  • Debit cards (including debit cards run as a credit) and prepaid card transactions may not include a surcharge. 

  • The surcharge amount may not exceed the merchant's cost of acceptance and cannot exceed 3% of the total transaction amount. (PayTrace limits surcharging to 3% due to Visa’s April 2023 regulation changes) 

  • No customer surcharge surprises: customers must know you may impose a surcharge before they submit their payment.

  • Alternative no-surcharge payment options: consumers must have at least one payment option that does not carry a surcharge, such as cash or debit card.

  • Treat all card brands equally: you must surcharge all card brands in the same manner.

  • 30-day surcharge registration: certain card brands and acquirers require registering your surcharge program at least 30 days before your first surcharge. 

Are there transactions where I cannot apply surcharging?

Only credit card transactions qualify for surcharging. Debit card transactions and prepaid card transactions do not apply.

What is an “effective rate,” and how do I calculate it?

The effective rate is the fixed percentage of a transaction that you assess your customer as the surcharge fee. The same effective rate is used for surcharging across all card brands and transaction types that comply with law.

Merchant Service Providers will work with you to determine the lowest effective rate across card brands. The rate will be applied to all eligible transactions.  

To identify a merchant’s effective rate per card brand, use a review of the last six months of the merchant’s card brand statements. Identify the Total Credit Card Sales per month, per card brand. Identify the Total Processing Fee Charges per month per card brand. For each month and each card brand, divide the Total Sales / Total Processing Fee Charges = Effective Rate. Enter the lowest Effective Rate in a six month period per card brand into the appropriate card brand Effective Rate field on the Surcharge Settings page.


Special notes: In Colorado (CO), the merchant’s effective rate can not be greater than 2%, so if the calculation above is greater than 2%, enter 2% only. Surcharging is not allowed in Connecticut (CT), Massachussetes (MA) or Puerto Rico (PR). Due to Visa’s maximum cap of 3%, PayTrace will limit all surcharging to a maximum of 3% where applicable.

How do I sign up for surcharging?

You will need to work with your Merchant Service Provider to submit the correct forms to the card brands and to the acquirer where applicable.

How soon will I be able to begin surcharging?

Once the registration forms have been submitted, your MSP will enter the date in the PayTrace surcharge settings. Exactly 30 days later, it will be automatically enabled on your account. 

How do I configure my surcharge settings? 

Work with your Merchant Service Provider to configure your surcharge settings. 

Can I change my surcharge settings later?

Yes, but you will need to work with your Merchant Service Provider. With their help, you may re-evaluate your lowest effective rate once or twice annually.

How do I run a surcharge transaction through the Virtual Terminal? 

Once your effective rate is set by your Merchant Service Provider and you have reached the merchant activation date, surcharges will be automatically applied during the transaction process in the Virtual Terminal. There is a separate line item to indicate the specific amount. You must also acknowledge that you offered the customer additional payment methods.

Where can I see the surcharged amount on a past transaction?

Find the surcharge amount by navigating to Virtual Terminal > View Transactions, then locating the transaction and clicking on the blue transaction ID. You may also see the amount on the receipt and the downloadable CSV report.

Who can I contact if I have questions regarding surcharging?

You can always contact our 5-star Client Services team via phone or email. Reach them at (888) 806-6545 or by emailing

PayTrace strives to provide accurate documentation related to surcharging and other credit card processing information. Please refer to information directly from card brands for the most recent information on surcharging and other processing methods. 

Need more help?

Our support team will be happy to assist you.

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If you cannot find the documentation you are looking for, please let our support team know so we can continue to improve this documentation.