When businesses accept credit card payments, they often face processing fees that eat into their revenue. To offset these costs, many merchants consider implementing a credit card surcharge or a convenience fee. But what’s the difference between the two, and which one is right for your business?
What Is a Credit Card Surcharge?
A credit card surcharge is an extra fee added to transactions when customers choose to pay with a credit card. This fee helps cover the credit card processing fees that businesses usually absorb.
Key facts about credit card surcharges:
- Only applies to credit card transactions, not debit or cash payments.
- Businesses must disclose the surcharge before completing the transaction.
- The fee cannot exceed 4% of the transaction total.
- Surcharges are regulated by card networks (Visa, Mastercard, Amex) and state laws.
What Is a Convenience Fee?
A convenience fee is a charge applied when customers use a specific payment method that is different from the business’s standard option. Unlike a surcharge, a convenience fee can apply to both credit and debit card transactions.
Common scenarios where convenience fees apply:
- Paying rent or tuition online instead of in person.
- Purchasing event tickets over the phone.
- Making government-related payments, such as taxes or fines.
Key Differences Between a Credit Card Surcharge and a Convenience Fee
To help clarify the distinction, here’s a side-by-side comparison:
| Feature | Credit Card Surcharge | Convenience Fee |
| Applies to | Only credit card transactions | Specific payment methods |
| Fee Amount | Up to 4% of transaction | Varies by business policy |
| Legal Restrictions | Some states prohibit surcharges | Fewer restrictions |
| Must Be Disclosed? | Yes, before the transaction | Yes, before the transaction |
| Common Usage | Retail stores, service providers | Online payments, event tickets |
Can Merchants Charge a Credit Card Fee?
Yes, but they must comply with certain regulations. Here’s what businesses need to know:
- Legal restrictions: Some states, such as Connecticut and Massachusetts, prohibit surcharges.
- Registration requirements: Visa and Mastercard require businesses to notify them 30 days before applying surcharges.
- Customer notification: Clear signage must be displayed at point-of-sale terminals and online checkout pages.
Why Businesses Are Adopting Credit Card Surcharges
Many businesses are turning to surcharge credit card processing as a way to manage costs and improve profitability. By passing processing fees to customers, merchants can:
- Protect Their Margins – Reduce the impact of rising credit card processing fees.
- Maintain Competitive Pricing – Keep base prices lower for customers who pay with cash or debit.
- Encourage Cost-Effective Payments – Offer fee-free alternatives like ACH and debit transactions.
With the right approach, surcharging can be a seamless and transparent way to offset expenses while keeping customer satisfaction high.
How to Properly Communicate a Surcharge Payment to Customers
Transparency is key when implementing a surcharge. Here are best practices:
- Use clear signage – Display notices at entry points, checkout counters, and on invoices.
- Educate staff – Ensure employees understand and can explain the surcharge.
- Offer fee-free alternatives – Provide debit card, ACH, or cash payment options.
Why Choose VANX Software Solutions for Surcharging?
VANX Software Solutions simplifies surcharge credit card processing, ensuring businesses remain compliant while maximizing revenue. Our solution is powered by Strictly, offering an automated, hassle-free experience.
Benefits of VANX Surcharge Payments
- 100% Legal Compliance – We handle all state and card network regulations.
- Seamless Integration – Works with your existing POS, payment gateway, and online checkout.
- Zero Cost to Business – Customers cover the processing fees, so you keep more profits.
- Automated Fee Calculation – Ensures accurate surcharge application.
- Transparent Customer Experience – No hidden fees; full disclosure at checkout.
- Dedicated Support – Our team assists with setup, compliance, and troubleshooting.
Should Your Business Implement a Surcharge or a Convenience Fee?
If credit card processing fees are impacting your bottom line, adding a surcharge payment or a convenience fee may be a smart strategy. Surcharges work best for businesses handling high credit card transaction volumes, while convenience fees apply to specific payment scenarios.
For a seamless and compliant way to manage surcharges, consider VANX Surcharge Payments
