What’s the Deal with Credit Card Surcharging?

What’s the Deal with Credit Card Surcharging?

Imagine tacking on a small fee to your customer’s bill—not to tip the waiter, but to cover the cost of credit card processing. That’s credit card surcharging in a nutshell. These fees, especially for rewards-heavy credit cards, can hit businesses hard, often around 3% per transaction. Debit cards, on the other hand, are like the budget-friendly cousin, with fees typically under 1%.

Here’s the catch: surcharges apply only to credit cards—not debit, prepaid, or gift cards. That’s a hard rule from the major card networks. The key is to keep it transparent, so customers know exactly what they’re paying. For instance, if someone pays a $100 check with a credit card and there’s a 3% surcharge, the receipt will spell it out clearly:

• Total purchase: $100
• Credit card surcharge: $3
• Total charged: $103

Transparency makes all the difference.

Why Businesses Would Implement Credit Card Surcharging

Running a business is no walk in the park, especially when credit card fees start eating into profits. Credit card processing fees, which usually range from 1.5% to 3.5% of each transaction, can quickly add up, especially for businesses operating on thin margins. That’s where credit card surcharging comes in. Instead of raising prices for everyone, you pass the cost directly to customers who choose to pay with credit cards. Seems fair, right?

For industries like dining, retail, and hospitality, where credit card payments are king, credit surcharging can be a lifesaver. Customers often use cards for the convenience or to rack up rewards, and when communicated properly, a surcharge won’t usually scare them off. The trick is keeping the experience smooth and pleasant so nobody feels nickeled or dimed.

Playing by the Credit Card Surcharge Rules

Credit card surcharging isn’t the Wild West—it comes with rules to keep things fair and square. For one, some states outright ban it. If you’re in Connecticut, Massachusetts, or Oklahoma, surcharging isn’t an option. Meanwhile, Colorado caps it at 2%, while most other states allow surcharges up to 4%. Regulations change rapidly, so stay up to date with the latest rules regarding surcharging in your area.

You also need to keep customers in the loop. Signs at checkout should clearly state something like, “A 3% surcharge applies to credit card payments.” Receipts should also break down the charge so it’s clear and easy to follow. And here’s a biggie: businesses can’t just make up a number. Credit surcharges must match the actual cost of processing the payment.

The signage posted must include that the surcharge is only applied when customers pay with credit cards, along with the exact percentage amount to ensure transparency. Guests also have to be presented opportunities to pay using other methods such as by cash or debit card.

These rules ensure customers don’t feel blindsided and keep businesses on the right side of compliance.

How Customers Feel About Surcharges

Nobody loves an extra fee, but the reaction to credit surcharges often depends on how they’re presented. Some customers might grumble, feeling like they’re being charged unfairly. Others understand that it’s just the price of convenience or the cost of earning rewards.

The key is communication. A quick explanation—something like, “Credit cards are expensive to process, and this helps us keep prices low for everyone.”—can work wonders. For businesses with particularly price-sensitive customers, offering a cash discount is another way to offset costs while avoiding the need to add a visible fee.

*Cash discounting is an incentive for customers to save money by paying in cash.

GoTab’s Credit Card Surcharging Solution

Let’s be real—credit card processing fees can feel unnecessarily complicated. At GoTab, we’re here to cut through the noise and help you manage your costs with clarity. If credit card fees are putting a dent in your bottom line, we’ve got you covered with our credit surcharging feature.

While credit surcharging isn’t for everyone, it’s a smart way to save money if it fits your customer base. Some customers might push back against a visible credit surcharge, but for others, it’s a seamless way to recover costs without hurting loyalty.

GoTab's point-of-sale (POS) is designed to automatically distinguish between credit and debit/prepaid cards so your staff has less training and fewer discussions about relevant fees. Plus, with mobile wallet payments, the credit card surcharge will only show up if a credit card was selected for payment.

Transparency and Compliance Made Easy

GoTab’s credit surcharging feature is built to keep everything straightforward. By design, surcharges apply only to credit cards—debit cards, prepaid cards, and gift cards are excluded. State regulations also come into play. For example, surcharging is prohibited in Connecticut, Maine, Massachusetts, and Oklahoma, while Colorado limits it to 2%.

Transparency is at the heart of compliance. GoTab makes it easy by automatically displaying credit surcharges on guest checks, receipts, and customer-facing screens. Physical signage at entrances and transaction points is still required, but with GoTab’s tools, staying compliant is a breeze.

Setting Your Team Up for Success

A little prep goes a long way. Guests may have questions about credit surcharges, so it’s essential to train your staff to explain how and why they’re applied. Adding disclosures to menus and seating areas can also help keep everything crystal clear. Customers are much more likely to accept credit surcharges when they understand the fees cover real costs—not padding profits.

Save Money, Keep It Transparent

GoTab’s credit surcharging  feature is a practical way to take control of your credit card  processing costs. For the right business, it’s a smart, transparent tool to recover expenses while staying compliant and maintaining trust with customers.

Curious if this is the right move for your business? Drop us a line at info@gotab.io or request a demo today. Let’s help you save money and keep your customers happy.

‍

This article offers general guidance and resources for implementing credit card surcharging with GoTab and is not a substitute for professional advice. Surcharging regulations and compliance requirements vary by location, so it’s essential to consult local authorities and seek legal, financial, or business expertise to ensure adherence to local laws and the smooth operation of your business.

‍