A credit card surcharge is a fee added only when a guest pays by credit. It helps offset processing costs.
Typical rates are up to 3% or your actual cost, per card-brand rules. You must disclose it before the sale and show it on the receipt. Running a pizza shop is busy enough. Surcharging shouldn’t add risk. If you’re still weighing the concept, start here: Should restaurants surcharge—or not?.
Understanding Credit Card Surcharges: A Quick Overview
Credit card surcharges are additional fees that merchants may charge customers who choose to pay with a credit card. These surcharges are intended to offset the cost of credit card processing fees that merchants incur from credit card companies. While adding a surcharge can help recoup some of these costs, it is essential for merchants to understand the regulations surrounding these fees.
Surcharging is a practice governed by both federal and state laws, and it is crucial for merchants to be compliant with these regulations to avoid legal repercussions. The fees typically range from 1.5% to 3% of the transaction amount, and merchants are required to clearly disclose these surcharges to customers before processing the payment.
The big legal line: debit vs. credit
Don’t surcharge debit or prepaid. Ever.
Credit can be surcharged when you follow brand and state rules.
That means caps, clear notices, and correct receipts.
Where restaurants slip up
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Applying the fee to debit by mistake.
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Skipping the 30-day registration with your acquirer/card brand.
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Exceeding the allowed cap.
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Missing signage at the counter, phone order script, menu board, and online checkout.
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POS labels that confuse guests (e.g., “cash discount” vs. “surcharge”).
Real enforcement in our industry
This isn’t theoretical. Visa has been actively enforcing.
One ISO told PaymentsDive they’re seeing monthly surcharge-violation fines, with penalties that can start right away and escalate if not fixed. Good read here: Visa amps up surcharge rule enforcement.
Why pizzerias get flagged:
Phone orders. Slice bar rush. Mixed tenders. It’s easy to miss a debit card or use the wrong code. If your POS can’t block debit surcharges 100% of the time, you’re exposed.
Best practices for compliant setup
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Configure POS to allow surcharges on credit only.
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Register your program in advance with each card type you plan to be surcharging.
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Post clear in-store signs; show the fee online and on receipts.
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Train staff to spot debit vs. credit on phone and walk-up orders.
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Audit regularly. Rules change.
Make surcharging simple and safe
Want the benefits without the headaches? Thrive POS handles the guardrails.
We block debit, enforce caps, and print the right disclosures. That’s peace of mind on Friday night.
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Learn more: Thrive POS Payment Processing
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Still deciding? Read: Should restaurants surcharge—or not?
Legal Implications of Applying Surcharges on Debit and Credit Transactions
Applying surcharges on debit card transactions is generally prohibited in many jurisdictions. The Dodd-Frank Wall Street Reform and Consumer Protection Act specifically bans the practice of surcharging debit card transactions in the United States. Violating this regulation can lead to significant legal penalties.
In contrast, credit card surcharges are allowed under certain conditions, but they must comply with both state and federal laws. Merchants must provide clear and conspicuous disclosure of the surcharge before the transaction is completed, and the surcharge must not exceed the cost of accepting the credit card. Ignoring these legal requirements can result in fines, lawsuits, and damage to the merchant's reputation.
Common Pitfalls and Mistakes in Surcharging Practices
One common mistake merchants make is failing to properly disclose surcharges to customers. Transparency is key, and merchants must ensure that both signage at the point of sale and notifications during online checkout clearly state the surcharge amount.
Another pitfall is applying surcharges inconsistently or incorrectly. For example, some merchants may inadvertently apply surcharges to debit transactions, which can lead to legal issues. Additionally, failing to update POS systems to correctly calculate and display surcharges can result in customer confusion and dissatisfaction.
Penalties for Improper Surcharging: Real-World Examples
Improper surcharging can lead to significant penalties for merchants. For instance, a well-known retail chain faced a class-action lawsuit for failing to disclose surcharges adequately, resulting in a multi-million-dollar settlement.
Another example involves a small business that was fined heavily for applying surcharges to debit transactions, which is illegal under federal law. The business not only had to pay fines but also suffered reputational damage that impacted customer trust and sales.
Best Practices for Compliant Surcharge Implementation
To implement surcharges compliantly, merchants should first ensure that their POS systems are configured correctly to apply surcharges only to credit card transactions. Additionally, they should provide clear and visible notifications about the surcharge both in-store and online.
Regular training for staff on the rules and regulations surrounding surcharges can help prevent mistakes. Merchants should also stay updated on any changes in state and federal laws regarding surcharges to ensure ongoing compliance.