CREDIT CARD SURCHARGE FEE WORDING
How to successfully share the cost of accepting credit cards with your customers


Doing business in the modern marketplace means appealing to modern customers. Increasingly, this also means turning to digital payments as the mainstay of payment methods. For small businesses, it’s important to bring in new technology to accommodate those payment methods.
Card processing can be a hefty expense; for many small business owners, it is a significant impact on their bottom line. Operating off of very thin margins, small businesses have to balance a variety of concerns, including:
-
- Employee payroll
- Product/material sourcing
- Infrastructure payments (water, electricity, etc.)
Modern technology helps to ease these costs, or, in the case of credit card surcharge fees, eliminate them. This page outlines the benefits of offering credit card payments and discusses ways to offset the costs with surcharging features.
Why should I take credit card payments?
Although credit cards are the most used payment method for modern customers, some business owners maintain reservations about modernizing their operations. After all, their businesses have operated for decades and have never needed this feature before; why should they start now?
However, accepting credit card payments is essential to conducting business in the 21st century. These transactions improve your bottom line by:

Getting payments faster
Although payment methods like cash immediately add to your company’s finances, other traditional payment forms like checks are invoices that take several days to fully process. This can lead to intermediate periods in which your company is struggling to make ends meet. Taking credit card payments quickens this process, automatically adding funds to your account as each transaction is processed by your acquiring bank.

Expanding your reach
Credit cards are the preferred payment method of the modern customer; this means that for a company to stay relevant, they need to offer the services to stay competitive. This is also essential for companies wishing to offer online services, which can expose your company to a whole new demographic of customers that may not have heard of you otherwise.

Increasing your profits
Studies have shown that customers using card payments are more likely to spend more money than customers using cash. The logic is simple; if you can see the money leaving your hand, you are more likely to hang on to it than would otherwise be the case. Switching your system over to card payments prevents this hesitation, maximizing your total profits and padding your bottom line.

Providing records
Card transactions also create customer histories that document how money is being spent at your store. This information is invaluable for small business owners, as it allows them to more effectively plan the next steps to grow their operations.
That being said, credit card transactions are not without some level of risk; while business owners profit from credit card transactions, they also suffer the costs of making those transactions happen. These fees, known as merchant services or credit card processing, are expensive; in fact, they routinely place in the top three expenses listed by small business owners. Making matters worse, these rates have steadily increased over the last few years.
So the question is; how can business owners take advantage of credit card payments while mitigating the costs? In recent years, the common answer has been “surcharging.”
What is surcharging?
Credit card surcharging is the process of passing along your processing fees to your customers. For each transaction at your counter, they are asked to pay an additional fee that covers the cost of processing. These costs are capped by federal law at 4%, but typically range between 1.5-3.5% of the total transaction.
These fees cover the total processing cost of the transaction but specifically cover:
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- Interchange: The fee that goes to the customer’s bank (Bank of America, Citi, etc.)
- Assessment fees: The fee that goes to the card issuer (Visa, Mastercard, American Express)
- Payment processor fees: The fee that goes to the processor company that facilitates the transaction between all the other financial institutions.
Surcharging can be applied regardless of the transaction type; whether by swiping the physical card, manually entering information online, or using digital wallets, surcharging fees can be applied. However, they are only applied to credit cards; debit or prepaid gift cards are not subject to surcharging.
The service is typically provided through the merchant service provider, meaning it is not always offered. The ease of implementation varies depending on the provider but often involves signing a few forms for approval. If this is not the case, it may be a sign to look into another provider, as signing up and getting approved can be taxing with the wrong partner.
What are the benefits of surcharging?
Surcharging is most effectively used as a cost reduction tool; this is particularly useful for small businesses operating on thin margins that need to save every penny. Passing on processing fees to customers means eliminating one of your biggest expenses. This allows for a more sustainable business model that lets your business grow.
Growing your business through surcharging can also be used to the customer’s benefit. As you pad your bottom line and increase your ROI, you open up new options to improve the customer experience. For example, part of the savings you keep from surcharging can go into running promotions to draw in customers. Similarly, the transaction histories provided through credit card processing can create targeted promotions to encourage return visits from existing customers.
Are there any risks associated with surcharging?
Because of the burden it places on customers, surcharging is quite unpopular with certain groups. Although these feelings do not necessarily represent everyone, interested businesses need to keep these concerns in mind. Customers, businesses, and even some card providers dislike surcharging because:
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- They see it as fundamentally unfair: While surcharging greatly reduces the financial burden on a company, it does so at the expense of the customer. Customers are not expected to pay for any other basic upkeep costs for the business; rather, the money generated from their transactions is meant to go into these costs. For many customers, it is the same as applying an additional charge to pay the electric bill or to properly pay employees. Fundamentally, they argue, these are responsibilities that the business owner takes on when they open their doors.
- It might drive away business: For the reasons stated above, many businesses fear that implementing a surcharging practice will drive away customers. After all, why shop at your store when there are others out there that don’t implement this practice? For this reason, many business owners simply refuse to implement surcharging features, instead taking on processing fees themselves.
- It might discourage card use: Most importantly, many credit card providers themselves oppose surcharging because customers may opt to use other means of payment to avoid the fees themselves. This poses a risk for business owners as well; the additional benefits of card processing might not be seen if customers aren’t using their cards. For example, the benefits normally provided by transaction histories are useless if there is no history to evaluate.
For these reasons, surcharging is not available in several states, including:
California
Colorado
Connecticut
Florida
Kansas
Maine
Massachusetts
New York
Oklahoma
Texas
For businesses operating in these areas, surcharging options are not available to you. For businesses not in these states, it is important to consider how surcharging could affect your operations; although it is an effective cost reduction tool, it can also drive away some customers and strain your relationships with card providers.
With that said, surcharging is often worth the risks involved. It’s important to note that many customers hold no specific attitudes about surcharging. It can even be presented as a positive way for them to help small businesses maintain their costs.
How do I implement a credit card surcharge fee (wording, etc.)?
As mentioned above, getting started with surcharging features depends somewhat on the provider. In a best-case scenario, all you need to do is notify the card issuer of your intent to implement surcharging. Once this has been approved, the most important thing to do is to make sure you are properly notifying the customer.
Notification should take place in two ways:
Notifying customers of your intent to use surcharging features should begin the second they walk through your door. A carefully posted notice at the front door telling your customers that your business utilizes surcharging features goes a long way towards a more synergized shopping experience.
In addition, it helps you gauge your customers’ reactions to surcharging; by seeing how many customers choose to enter the shop after reading your notification, you can get an idea of their general reactions to the practice.

Companies can experiment with the wording to fit their brands, but the essential information to include is:
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- An additional fee is being charged
- The amount of the fee
- The fee does exceed the cost of processing
Template messages usually read something like this:
“We impose a surcharge on credit cards that is not greater than our cost of acceptance.”

Making customers aware of your intent to surcharge should be essential, as it prevents possible confrontations at the register at the time of purchase. We also recommend a healthy amount of observation; customers choosing not to shop with you will be reflected in your transaction data. A dip in sales or a change in preferred payment methods may be an early warning that you should consider removing the surcharge.
When considering a surcharge option, cancellation plans should also be a concern. While surcharging features are optional, you should pay close attention to any cancellation fees should you decide to end surcharging in your stores. These fees can be costly and can add to an already damaging situation.
Picking the right equipment goes a long way
Considering surcharging for your small business can be a daunting challenge, as there are many options to consider. Even experienced financial strategists struggle to find the right provider. The right data analytics stack is similarly difficult to find.
In many cases, the equipment you decide to work with may come with a merchant service provider already. For example, talech’s partnership with Elavon gives business owners speedy access to surcharging features should they choose to pursue them. Reach out about a free demo and to learn how we can become your trusted partner.
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