An Introduction to Credit Card Surcharges

Created by Richard Moore, Modified on Tue, 05 Sep 2023 at 12:49 PM by Richard Moore

Credit card surcharges are additional fees that merchants may add to a customer’s bill when they choose to pay for their purchase using a credit card. Surcharges are intended to cover the fees that merchants incur when processing credit card transactions. In some cases, merchants pass on a portion or the entirety of this fee to the customer as a credit card surcharge.


Below is an example of a Create Payment for a given Account API request where a ten cent surcharge is added to a one-dollar payment: 


{{baseUrl}}/account/{{accountId}}/payments

{
  "amount": 110,
  "surchargeAmount": 10,
    "capture": true,
  "paymentMethod": {
    "creditCard": {
      "cardholder": "Surcharge Transaction",
      "number": "4242424242424242",
      "expiryMonth": "10",
      "expiryYear": "2027",
      "cvd": "123",
      "cvdIndicator": 1
    }
    },
    "customer": {
        "address": {
               "line1": "123 Test St",
               "city": "Scottsdale",
               "state": "AZ",
               "postalCode": "85251",
               "country": "USA"
    }
  }
}


Here are some examples of when credit card surcharges might be used:

  • Low-Priced Items: When the cost of credit card processing fees becomes a significant percentage of the purchase price, merchants might add a surcharge. For example, if the fee is a fixed amount or a high percentage for a low-priced item, the surcharge can help cover that fee.

  • High-Volume Transactions: Businesses that deal with a high volume of credit card transactions might implement surcharges to manage the cumulative impact of processing fees on their revenue.

  • Discounts for Cash Payments: Some merchants might offer discounts to customers who pay with cash. In this scenario, they might use credit card surcharges to recover the difference in revenue between credit card and cash payments.

  • Custom Payment Methods: If a business accepts various payment methods, including credit cards, PayPal, and other online payment systems, they might add surcharges specifically for credit card transactions to encourage customers to use other methods that have lower processing fees.

  • B2B Transactions: In business-to-business (B2B) transactions, credit card surcharges might be applied to encourage clients to use methods like bank transfers or checks, which usually have lower associated fees.

Credit card surcharges are regulated in many jurisdictions; while some regions prohibit surcharges altogether, others place limitations on the amount that can be charged or require businesses to clearly communicate the surcharge to customers before the purchase is completed. Regardless of jurisdiction, it is best practice to inform customers about any surcharges before making a payment.



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