credit card Surcharge

Surcharging is the practice of adding on a small fee to a credit card transaction to cover the merchant’s costs for processing the payment. Instead of the merchant having to absorb this expense, the customer who chooses to pay by credit card pays for the credit card processing fees. By law, the surcharge amount is capped at 4%, although CardX only imposes a 3.5% surcharge.

Debit Cards & Pre-Paid Cards

Consumer businesses cannot surcharge credit card processing fees on a prepaid card or debit card; you can only do so on credit cards. Even transactions processed using signature debit (often referred to as “running a card as credit”) are still debit and are therefore exempt from surcharging.

CardX's patent-pending technology immediately distinguishes card type and state of origin keeping you 100% compliant. Additionally, you only incur 1% + $0.25 on debit/pre-paid cards.

governmental & educational institutions

Governmental and Educational Institutions are allowed to surcharge the processing fees on both Credit and Debit Cards.

Card processing fees explained

Merchants pay a variety of fees every time they process a transaction.

One of the credit card processing fees is called an Interchange Fee which makes up 70-90% of the cost to process a credit/debit card. Interchange fees are paid to the bank that issued the credit card to your customer (Visa, Mastercard, Amex, etc.) For each transaction, there will also be a small network fee that goes to the credit card association as well as your provider’s markup.

How Credit Card Interchange Rates Are Calculated

Credit card interchange rates vary widely due to a number of factors, and there are hundreds of possible rates that you might have to pay. Below are a few of the most significant factors affecting interchange rates. Many other minor factors can influence your interchange costs.

Debit v/s Credit Card
Card-Present v/s Card -Not-Present Transactions (eCommerce, mail order, telephone)
Transaction Category (i.e., restaurants, gas stations, general merchandise, etc.).
Rewards Cards
Credit Card Brand
Card Owner
Use Of Address Verification Service (AVS)

The Upcoming April 2021 Interchange Adjustments Will Add a Net $889 Million to Merchants’ Costs

Hardest hit will be business-to-business transactions, followed by eCommerce, full-service restaurants, subscriptions, etc.

Find out more