Surcharging is a pricing practice where businesses add a small fee to the total purchase price when customers pay with a credit card. This fee helps offset the merchant’s credit card processing costs, which can be significant for many businesses. Unlike the Cash Discount Program, surcharging explicitly adds an extra charge to card payments rather than offering a discount for cash payments.

Surcharging became widely regulated after the 2010 Durbin Amendment clarified the rules around how merchants can recover processing fees. Today, surcharging is legal in most U.S. states but subject to strict compliance requirements. Merchants who choose to surcharge must follow card network rules, including proper disclosure before purchase and clear signage at the point of sale.

For many businesses, surcharging provides a transparent way to manage processing costs without raising prices for all customers. Card users pay the listed price plus the surcharge, while cash and debit card users pay the base price.

However, surcharging is not allowed in some states, and card brands like Visa and Mastercard impose specific limits on the maximum surcharge amount (generally capped at the merchant’s cost of acceptance or 4%, whichever is lower). Merchants must also ensure that surcharges are clearly disclosed on receipts and at checkout to remain compliant.

While surcharging may deter some card users, many businesses find that the fees recovered more than offset any potential loss in sales or customer goodwill.

Implementing surcharging requires compatible POS terminals, clear communication with customers, and adherence to legal requirements. When done right, it can help merchants maintain healthier profit margins without changing their overall pricing strategy.