According to Ipsos Consulting, 31% of small businesses charged a credit card fee to their customers in 2022. This was a notable increase from previous years, fueled by a behavioral shift among consumers who started increasingly relying on card payments over cash. Another factor behind charging credit card fees was the inflation eating into businesses’ profit margins.

If you’re looking into this strategy yourself, the key thing you should know is whether passing on credit card fees to customers is legal in the first place. Here’s a list of four common ways to charge customers a credit card fee and when to use them!

1. Credit Card Surcharges

Surcharging allows businesses to charge an additional fee (up to 4% of the total transaction for Mastercard and up to 3% with Visa) for credit card purchases. Surcharging may discourage people from paying with credit cards, so consider how your customer base will react. It also helps to find out if your main competitors use surcharging.

This practice is legal in 46 states — the only exceptions are Connecticut, Massachusetts, Maine, and Oklahoma. However, some states limit the surcharge fee, so make sure you look into your state’s laws before implementing this practice.

2. Convenience Fees

A convenience fee is an optional flat fee that you can only charge in some instances, which depends on the card network. For Visa cards, you can charge this fee when you offer a payment method that’s different from how you usually conduct business. A museum can charge this fee for buying tickets online, but not at the register since this is where most people do it.

Other card networks may have rules that only certain kinds of merchants can charge convenience fees. For example, Mastercard only makes this possible for certain government agencies and educational institutions.

3. Cash Discounting

Cash discounting (or dual pricing) is another popular way to minimize credit card processing fees for merchants. The idea behind this method is to give customers a choice to pay with cash instead of a credit card. By advertising both the full cost of a good or service and the (usually discounted) cash price, you can avoid credit card processing fees.

This practice is legal in all states, but there are certain rules you need to follow. For starters, you must clearly list the credit card price before the point of purchase. You may also need to invest more effort into accommodating bank deposits.

4. Minimum Purchase Amounts

As the name implies, this practice allows you to reject credit card transactions unless they exceed a set amount, usually $5 or $10. You may want to implement this practice because the fees for smaller purchases may eat into your profit enough to lose money on the sale. Basically, this allows you to be pickier about which transactions are worth the fees.

States don’t have any minimum purchase requirements, but credit card networks have their own rules about this practice. If a customer is using a Visa card, for example, you can’t impose a minimum purchase amount higher than $10.

See If You Qualify

If you’re considering passing credit card fees on to your customers, it’s essential to understand your options—and whether you’re eligible to implement them legally and effectively. At MONA Payment Solutions, we help business owners navigate compliance and choose the right strategy based on their industry, location, and goals. Contact us today to find out if your business qualifies and how you can start offsetting processing costs the right way.