Can I charge my customers a credit card processing fee?

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Can I charge my customers a credit card processing fee?

Charging a credit card processing fee is transferring the cost of transacting through a credit card in a chain. In several places, the merchants are permitted to charge a processing fee from customers on every transaction made via credit card. If not, then this may be due to the terms of the agreement with the credit card companies.


  • Nearly in all the states expect few; the merchants are authorized to introduce the deduction of processing fee from the customers who swipe a credit card for payments of their purchase.
  • Transacting through a credit card, being an alternative amongst the various modes of payment, is a choice for the customers.
  • Thus, a card processing charge on every swipe borne by the merchants is passed on to the customers at the time of payment.
  • The terminal applications calculate the bill including the additional fee which also reflects in the purchase receipt provided to the customer.

Frequently asked questions

Q. How is a Credit Card Processing Fee determined?
The amount of the credit card processing fee exactly depends on the pricing model used by the merchants to calculate the same. To determine the right type of pricing model for the business solely depends on the merchants. It is essential for a merchant to know about the same and discover that they are not overpaying the terminal application providers.
Q. What is the bifurcation of a credit card processing fee and how can we determine the right processing fee?
It is imperative to understand the working of a credit card processing fee. Four main factors determine and significantly affect the processing fee a merchant pays for a credit card transaction. These factors are:

  1.    The Rate of Interchange
  •    The interchange rate is the actual rate that the credit card companies charge from a merchant for processing the transaction through credit card.
  •    It depends and varies by the type of credit card. For instance, a corporate credit card transaction will have a different interchange rate as compared to the reward credit card transaction.

These rates being non-negotiable are what precisely the terminal application providers or the merchant account handlers pay to the credit card companies.

  1.    Terminal Application Provider Charge or Merchant Account handling fee
  •    For adding the credit card payment mode to your network, a merchant account is required to handle the exact calculations for determining the processing fee.
  •    A terminal application provider helps to avoid the confusion and quickly adds the processing charge in the receipt of the customers.
  •    The merchant account or terminal application providers add a cost to the interchange rate itself, to extract out their fee from the processing deductions.
  •    This fee is based on the nature and type of business plus the volume of sales.

Thus, the fee for the merchant account may vary from business to business, even with access to the same terminal application provider.

  1.    Card Processing

The fee charged by as terminal application provider also varies by the processing of the card.

  •    The transactions in which the customers swipe their respective cards for the payment are the most honest type of sales, also known as in-store transactions. These transactions are decidedly less prone to fraud and have the lowest merchant account or terminal application fee.
  •    Whereas, the transaction handled online are primarily website orders, or the over-call orders, where the details are keyed-in, have a much higher risk and cases of frauds. Thus, they have a higher merchant account or terminal application fee.
  1.    Setup process and Monthly charge
  •    Some of the terminal application or merchant account providers will charge an installation and set-up fee, along with the regular monthly fee.
  •    These charges aid in PCI compliance/support and security purpose. Thus, this also increases the processing fee to an extent, ultimately borne by the customers.

Now concluding all this, the interchange rate is not at all negotiable. Thus, the merchant account or terminal application provider ultimately decides the rate of processing fee to be charged.

Q. Which merchant account and terminal application provider is the best?
It depends on the merchant to choose the best merchant account and terminal application provider. One of the best merchant account providers is Swype Fast. It is a quality service provider that helps in eliminating up to an approximate of 95% processing cost for a merchant. It is one of the best options to consider for taking action on processing charge, directly paid by the merchants. They aim to provide the best merchant services, with no difficulty at all. Swype Fast compensates on the processing fee by collecting the total of the revenue earned by the merchants. The exact calculation of the processing fee is calculated by multiplying the credit card volume per month with 3% as an average. Thus, this helps a merchant in providing a credit card as a payment option and recovering the cost of processing too!
Q. What are the guidelines to follow before charging a processing fee from the customers?
All the credit card companies along with the legal statutes have outlined some specific guideline to follow regarding charging a credit card processing fee to protect the interest of the consumers. If the merchants are willing to charge a processing fee at checkout, it is essential to follow specific rules and guidelines to avoid overpaying, chargeback, and other sanctions from the entailing bank or card companies.

  •    Never charge a processing fee that is higher than the actual cost of processing. Credit card companies such as Visa and MasterCard simple base the same implying the charge in the very last quarter.
  •    Never charge more than 4% per credit card transaction. The limit of charging is always outlined at the time of settlement.
  •    Never surcharge a prepaid card or debit card. It is forbidden, and these payments are entirely expelled from the agreement.
  •    Always notify your customers regarding the charge of the credit card processing fee at the payment terminals.  The credit card companies are very particular about this clause. It is essential to make a note that your customers are well versed with the surcharging practice and the percent of the surcharge. Also, ensuring this beforehand will always help the merchant to avoid a customer fuss.
  •    Never retain the check out fee in case of any deals or refunds. For example, if you’re returning 50% of the purchase bill, then it is also important to refund the 50% of the processing fee.

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