Is it Legal to Charge Customers
a Credit Card Processing Fee?

Is it Legal to Charge Customers a Credit Card Processing Fee?

Nearly every merchant is readily allowed to charge an additional fee from their customers enclosing a processing amount for making transactions using a credit card. It is when a customer uses a non-customary method of payment; the deductions are made. There is a processing fee charged on every swipe of credit card from the merchants, entailing ahead a deduction from the customers’ end in the hierarchy.

The practice of charging a fee for the use of credit card as payment is known as surcharging. This process is an added expense for the customers and is currently prohibited in 10 regions, including:*

  •    Massachusetts
  •    Kansas
  •    Oklahoma
  •    Connecticut
  •    Florida
  •    Maine
  •    New York
  •    Colorado
  •    California
  •    Texas

The laws followed in the states mentioned above prevent the merchants to charge even a single penny extra from the customer when transacting through credit cards.

According to the state and federal laws of the listed states, if a customer is supposed to pay an additional fee on the use of credit card, it will demoralize the value of plastic money and hinder in the way of developing the financial structure of the state.



Credit card processing fee

  • Credit card processing fees are the charges imposed on the customer for availing the convenience of transacting through an alternative method of payment, which is different from the standard practice.
  • Processing Fee usually includes the payment option of a credit card, which costs an extra processing fee to the merchants and thus transferred to be borne by the customers in a chain. The cost of processing a card is an added expense for the merchants, which accumulates to become a big part of expenditure.
  • Thus, the reflection of a card processing fee can be seen in your receipts of purchase, wherein the processing fee has to be paid by the customers for the recovery of card processing expense.

Frequently asked questions

Q. What needs to be ensured before charging a credit card surcharge or processing fee?
The charge entailing the use of credit cards for the transaction purpose is permitted unless restricted or considered illegal by the state laws of a particular region. However, there are many issues relating to the same, where the merchants have to be vigilant about the deduction of the charge from the buyers.


  •    Companies are expected to follow the restricted protocol for charging this fee to ensure the viability of the same amongst the consumer sections.
  •    Different credit card companies have their code of conduct for introducing this fee to their payment terminal applications, and these set of rules have to be followed as per the restricted guidelines.
  •    By the credit card companies such as Discover, American Express, MasterCard, and Visa, every merchant deducting the processing fee is expected to display a notice for the customers’ about the charge of credit card processing fee at the last terminal application counters or point of transaction.
  •    Adding to this, the purchase bills or receipts of payment should also portray the deduction of the credit card processing fee clearly with a distinctive description.
  •    This will make sure that a customer is well informed about the charge of a credit card fee and is not liable to question the deduction in the first case.
  •    Also, it is important to note that one cannot impose a surcharge on the prepaid debit or debit card transactions in any case. This option is very much viable even if the buyer is choosing a credit option while using their debit card.
Q. Is it legal to impose a surcharge?
The first step to consider before putting up with a terminal application to process a credit card in your business transactions is checking on the laws of the states you’re operating in. If the states and federal laws provide a clear yes to processing fee on credit cards, then you’ll have a long way to go. For merchants, Swype Fast is one of the best options to eliminate the credit card processing cost entirely in a straightforward manner.

From merchants point of view

  •    Considering the merchant’s aspect, it is legal to charge a credit card processing fee. Every swipe costs a small amount to the merchant. So, collectively considering the credit card transactions, the entire processing fee has to be borne by the merchant who makes it distressing for the business in financial terms. This humiliates the revenues, leading to lowered quality with increasing processing fee over time.
  •    Now, if the business increases the prices of the commodities across the board, then it will again lead to a loss of customers on the business part. Thus, to ensure the maintenance of the quality and balance the processing cost borne by the merchants, the processing fee is charged by the customer paying via credit card.

From customers point of view


  •    Now, talking about the customers, imposing an extra fee is usually reacted upon differently by customers. One of the reasons being, the current prevalence of the same in the existing market. If your local markets are already following this practice, then the customers won’t mind paying an extra fee as such.
  •    Looking down to other aspects, paying via credit card is a convenient option for the buyers. As there are other methods of payment available as well, so transacting using a credit card is entirely a personal choice. Using a credit card makes it easy for a customer to transact anywhere, at any point of time without any shortage. The use of plastic money is making their errands easy and protecting them from the extra charges deducted from every ATM transaction.
  •    So, it’s entirely up to the personal interest to choose the mode of payment. Plus, the cash discount provided to the customer paying with cash will compensate the policy in a reverse manner.  But, charging a credit card processing fee, in this case, will not be a significant issue to the customers. And, this may not accurately deter the existing customers.

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